WA House RSG - Committee Meeting
(January 9, 2024)

Here are some observations from the Tuesday January 9th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 4 takeaways:

• WA House RSG Counsel Peter Clodfelter provided lawmakers a briefing on HB 1650, "Requiring voter approval for local government prohibitions on cannabis businesses." 
  • Under Initiative 502 (I-502) commercial regulation of cannabis was primarily the regulatory responsibility of the Washington State Liquor and Cannabis Board (WSLCB). However, in 2014 zoning and local approval of cannabis businesses was determined by Washington State Attorney General Bob Ferguson to be the purview of local governments, whose rights to pass moratoriums or bans on cannabis companies was subsequently upheld in state court. Since then, varying jurisdictions have maintained restrictions on cannabis operations.
  • HB 1650 was introduced in 2023 and first heard by the committee that January. The legislation was passed the following month, but the bill wasn’t advanced further that year.
  • In the hearing, Clodfelter reviewed the basics of the legislation from the bill report (audio - 4m, Video - TVW):
    • “Prevents local governments from prohibiting cannabis retail businesses in their jurisdiction after July 1, 2027, unless a majority of voters in the jurisdiction voting in a general election vote to approve an ordinance prohibiting cannabis retailers.”
    • “Establishes state preemption of the regulation of cannabis retail businesses except for the authorization for voter-approved bans and limited exceptions.”
      • Clodfelter noted these exceptions were “retaining zoning authority. Also, local governments could continue to apply generally applicable ordinances to cannabis businesses that apply to all businesses and if local governments choose to prohibit all retail businesses in the jurisdiction, then they could continue to prohibit cannabis retail businesses without a vote.”
    • “Reallocates certain cannabis excise tax revenues until July 1, 2032.”
      • Specifically, he said cannabis tax revenue “generated from the future retail stores that are in jurisdictions that currently have a ban…until 2032 that tax revenue would be dedicated 50% to substance use disorder prevention, 50% to cannabis research, and then after 2032…funds would revert back to being distributed through the dedicated cannabis account.”
  • Referring to the proposed substitute language from bill sponsor and Co-Chair Sharon Wylie, Clodfelter indicated the revisions were “purely technical, it moves dates” on the effectiveness of state-preemption without a local vote from 2027 to 2028, and moved back the initial date when local governments can have a vote from 2023 to 2024.
  • 15 individuals registered their support and eight individuals registered their opposition on the bill (testifying, not testifying).

• Co-Chair Sharon Wylie gave an endorsement citing the benefits of the “consistent approach” in her bill.
  • Wylie spoke about her bill, she stated she didn’t “lightly take on an issue" knowing there were objections by local authorities. “I spent a lot of my career working for those entities,” she remarked, “but I was also on the committee…when we implemented” I-502. She recalled there’d been “an assumption that we were building on our alcohol system and it's been 10 years. A lot of the things that communities were nervous about haven't come to pass” (audio - 3m, Video - TVW).
    • Wylie acknowledged there wasn’t enough data around what level of "illegal material" was making its way into jurisdictions with bans or moratoriums, but recognized “in our alcohol system communities [were] allowed to be dry cities or communities by taking a vote.” After ten years of legal cannabis and the “lessons learned,” a similar process could be put in place.
    • Communities allowing cannabis businesses could expect more revenue for law enforcement, she argued, feeling there should be more leeway for licensees who had demonstrated a willingness to “observe the law.” Wylie noted the timeframe in the bill helped local governments save money “by combining it with other things that are on the ballot.”
    • Washington was one of few legal cannabis states to “have taken away…a more consistent approach” to zoning by allowing local preemption, and she commented that the process in her bill was more “fair.”

• Three representatives of local governments cautioned against a measure they believed diminished local control claiming that the funds generated were unlikely to outweigh costs of organizing local votes and oversight of cannabis licensees.
  • Paul Jewell, Washington State Association of Counties (WSAC) Senior Policy Director (audio - 2m, Video - TVW)
    • Jewell testified that local officials were “vested with the decisions to make local land use plans within their communities,” including for cannabis businesses, and that this represented “a core component of our Statewide planning framework.” He disagreed with the bill, claiming that voters “know that [elected officials will] be making those decisions. We believe it should stay that way.”
    • He told lawmakers “it may only be the alcohol issue where a zoning decision—which is essentially what this is—can be put to the voters,” and was against expanding the list of such requirements further. He warned the legislation could be "a pretty expensive proposition" for some communities.
  • Lindsey Huerr, Association of Washington Cities (AWC) Government Relations Advocate (audio - 3m, Video - TVW)
    • To Huerr, anyone in a community restricting cannabis stores could travel to “over 600 cannabis dispensaries” in the state. AWC staff undertook a “mapping analysis” and determined people in a town in the “very northeastern corner of our state…would have the farthest drive, they'd have to drive a little over an hour and 15 minutes.” These citizens already had to travel over an hour for a “big box store,” so she reasoned they were “used to a drive.” She argued there were no “cannabis deserts” anymore.
      • The number of cannabis retailers in Washington fluctuated based on the number of equity retail allotments, title certificate holders (licensees in areas with bans or moratoriums), and tribal stores operating under cannabis compacts, but had not reached 600 locations at time of publication. The highest number of 570 offered by a WSLCB board member in April 2021 included unopened equity and title certificate holders, while a 2023 graph from Statista indicated Washington had 476 stores as of 2021.
    • Huerr claimed a Washington State Joint Legislative Audit and Review Committee (JLARC) analysis of cannabis expenditures to local governments indicated such money was only “one third of one percent of a local government's general fund revenue.” She also claimed Colorado officials “generate about the same amount per capita in cannabis revenue and they have twice the number of dispensaries that we do.”
      • While cannabis may represent a fraction of a percent of a city’s general fund allotment, around 3%, or $102 million from 2015 to 2023, was allotted to local governments directly from the dedicated cannabis account, rather than going into the general fund first.
      • A 2023 study, Cannabis Retail Market Indicators in Five Legal States in the United States: A Public Health Perspective looked at sales in Colorado and Washington between 2014 and June 2022. Colorado had about a third more retailers than Washington, as well as both higher overall revenue and per capita sales.
    • Huerr further took issue with the idea that local ballot measures wouldn’t be costly. She insisted that, depending on when it was scheduled, elections could cost “tens of thousands of dollars.” Her estimate was that “if you take a mid-sized city, to put something on an average general election ballot, it's the equivalent in terms of scale of asking the State to spend over 13 million dollars in…general fund revenue.” Huerr conveyed the sense of AWC staff that “the costs are significant, the benefits, unfortunately, are not.”
    • Representative Melanie Morgan asked about the equivalent revenue data for alcohol or tobacco sales, finding “this is about the constituents and what they want in the city, not what elected officials are telling them that they want.” She reasoned cities were undertaking elections regardless of the specific ballot contents. Huerr responded that she had no data on alcohol and tobacco sales, “we're simply saying the voice of the people still belongs with their city councilors…my prior role was at a local jurisdiction where we reversed the ban on it, and had those robust local conversations, and I think that those are important and they should be had at the local level” (audio - 1m, Video - TVW).
      • Local officials exercise significant discretion in determining and scheduling what zoning and planning topics get discussed.
    • Chambers clarified that local governments with bans and moratoria retained the power to allow siting of cannabis licensees. Huerr affirmed they could do so through their existing land use planning and zoning development processes (audio - 1m, Video - TVW).
  • LaDon Linde, Yakima County Commissioner (audio - 4m, Video - TVW)
    • Having worked in a local hospital, Linde believed “substance abuse and addiction is our biggest problem and marijuana is a part of that problem. So I don't favor any measure that makes it harder to prohibit marijuana sales.” He found the idea that cannabis revenue could be used for treatment to be “a flawed argument,” doubting the money from cannabis was enough to stop a “gateway drug” he tied to treatment costs, alleging “the average cost that we've seen to get someone off in drugs is about six to seven million dollars.” Conceding this correlation was anecdotal, he nonetheless felt “even if it is not a gateway drug, it has significant impact on our youth and their brains.”
    • Linde testified that his wife had lived in Josephine County, Oregon, “where marijuana use was very prevalent.” He said she saw “years later that many members of community in the[ir] 50s that used marijuana regularly ended up needing help, home help because they can no longer take care of themselves.”
      • Josephine County has a history of cannabis cultivation that predated that state’s legal industry, which officials sued unsuccessfully to stop in 2018. A pattern of unlicensed farms in the region has led to more spending on cannabis enforcement which local officials have suggested in 2023 was having an impact.
    • What Linde liked about HB 1650 was that when local governments prohibited cannabis businesses, WSLCB would not be able to issue them licenses, as opposed to the current system in which the agency issued the license regardless of local policies.
      • Under 2023 law, SB 5080, WSLCB staff have been barred from issuing cannabis licenses if local governments submitted a written objection under a preexisting ordinance.
    • Additionally, he didn’t see a use for letting voters settle the issue, “as legislative authorities…we certainly seek input from people, but it's our job to make those decisions.” He asked that in the event the bill became law, that previous votes on the question in Yakima be recognized as justification for maintaining the ban on cannabis operations in the county.

• Cannabis Alliance Executive Director Caitlein Ryan supported passage of the bill, believing the proposal continued a tradition of voters deciding cannabis policies in their community (audio - 2m, Video - TVW).
  • Ryan described her support of the bill as being about “the importance of local democracy,” and giving Washington voters who approved I-502 a say in their local cannabis laws. “This bill is not about requiring local jurisdictions to have cannabis within their borders,” she said, “it's about understanding that this [was] approved by the electorate, and the electorate should be able to make that decision moving forward.” 
  • State officials remained the primary regulators as envisioned by the initiative, Ryan argued, but “as our industry has matured we have seen bans and moratoria in local jurisdictions that passed I-502 above majority, suggesting that sometimes there's a disconnect between the electorate and their officials.” She said the legislation would keep the decision and accompanying revenue in the hands of local constituents, plus “the bill preserves and enhances the needed support for substance abuse disorder prevention, as well as cannabis research.” She concluded the bill represented “a step towards responsible and community-driven cannabis…policies.”