WA Senate LC - Committee Meeting
(February 19, 2024)

Here are some observations from the Monday February 19th Washington State Senate Labor and Commerce Committee (WA Senate LC) Committee Meeting.

My top 3 takeaways:

• The committee hosted a public hearing and executive session on HB 1453, “Providing a tax exemption for medical cannabis patients,” resulting in recommendation of the bill.
  • Introduced in 2023, the bill was granted a public hearing by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) in January. That February, the bill went to the Washington State House Finance Committee (WA House FIN) where members adopted substitute bill language, which, according to the committee bill report, clarified “that the exemption for medical cannabis for qualifying patients from the 37 percent excise tax is permanent and does not require Joint Legislative Audit Review Committee review.”
  • On February 8th, the bill was added to the House calendar and a supermajority voted to pass the measure the next day.
  • WA Senate LC Senior Staff Counsel Susan Jones briefed from the bill report, describing the effects of the legislation (audio - 1m, video):
    • Provides a permanent tax exemption from the 37 percent cannabis excise tax for qualifying patients and designated providers with a recognition card on purchases of cannabis products that are labeled as Department of Health (DOH)-compliant product and tested in accordance with the DOH's rules.
      • Jones added that retailers were required to maintain records of sales where the tax preference was applied and the tax change was “exempt from the ten-year expiration date for new tax preferences and the requirements to include a tax performance.”
    • Ranking Minority Member Curtis King had staff confirm that patients would need a card showing registration into the DOH database to get the tax break (audio - <1m, video).
    • The fiscal note on HB 1453 showed a cost of $49,142 for WSLCB. Staff analysis noted “about 1% of [fiscal year] FY22 sales were retail sales tax exempt (made to cardholders). In fact, the percentage of tax-exempt sales appears to be declining almost every year since 2017.” Agency representatives assumed field time for enforcement staff would be the main expense under the bill.
  • Lukas Hunter, Harmony Farms Director of Compliance and Government Affairs (audio - 1m, video)
    • Hunter argued that medically compliant items constituted “less than one and a half percent of the cannabis products sold in the marketplace.” He said a few companies “have done amazing work and research to make medical cannabis products,” and thought the “bill would greatly increase the market demand to allow for better products to be made, and also…bring in some currently illicit sales…into the cannabis marketplace.” Hunter added “this is medicine, we should not be taxing medicine to the degree that we are.”
  • Caitlein Ryan, The Cannabis Alliance Executive Director (audio - 2m, video)
    • Ryan said her organization backed the “small but important legislation,” pointing out that prior versions of the legislation had “passed this committee three times.” She pointed to the town hall event her group hosted in December 2023 with patients and DOH staff where “we surveyed the attendees about their medicine. The response showed that registered patients are spending between $500 and $1,000 a month taxed at 37% and really are only getting about a third of that medicine in regulated stores.” Responses indicated that “patients feel forced to make up the gap in a mostly illicit market because of cost,” she argued.
    • Ryan expressed confidence that the medical program was “set up to prevent a ballooning impact after the passage of this bill,” yet compliant products carried “a more stringent standard and as such are at a premium price point.” She concluded the existing system was “truly a tax on medicine which we don't really want to do,” urging action on HB 1453.
  • Ezra Eickmeyer,Producers Northwest Founder (audio - <1m, video)
    • Eickmeyer was in favor of the bill, and commented “we have to do that if we're going to see medical cannabis…out in the markets and with consumers.” He saw a need “to incentivize companies to do [research and development] to get products approved by Department of Health” in order to “fulfill the potential of medical cannabis.”
    • King wondered about the accountability around issuing patient recognition cards, feeling the process shouldn’t be “like it was…15 years ago where everybody could go get a medical card.” Ryan noted the state law limiting authorizations to “very significant conditions…that need to be met by a physician.” Eickmeyer believed “there [was] a huge open door years ago, and we had what we called the ‘authorization mills’ during…gray area medical cannabis markets.” Having lobbied in the medical sector at that time, “we gave a lot of input to help craft the current laws…and we plugged most, if not all, of those loopholes,” he said. Ryan brought up that she would also share written testimony since patient Jeremy Robbins “who ha[d] signed up to testify remotely went into the hospital last night” (audio - 2m, video).
      • Robbins talked about his medical challenges at the Cannabis Alliance town hall near the end of 2023.
  • Hana Keefe-Guerrero (audio - 2m, video)
    • A medical cannabis patient who “was diagnosed with an…aggressive and recurrent form of third grade brain cancer” in July 2019, Keefe-Guerrero had to undergo Magnetic Resonance Imaging (MRI) “every six months for the rest of my life. I'm now 32 years old.” Following surgery she was “dependent on Social Security Disability to cover costs of treatment,” plus “civil programs such as free healthcare and food assistance services.” She “barely had enough monthly for rent and utilities, let alone the cost of medical cannabis.” She’d fortunately learned about the Advanced Integrative Medical Science Institute (AIMS), as cannabis had been “clinically proven to specifically help with brain cancer patients by inhibiting growth of cancerous brain cells.”
    • Keefe-Guerrero had found relief with medical cannabis for symptoms including “crippling anxiety, increasingly serious digestive issues resulting from chemo that may otherwise make it difficult to do something so simple as leave my apartment.” She was testifying for the “fourth time to come back to ask…that you folks pass this really important piece of legislation.”
      • Keefe-Guerrero testified on an earlier iteration of the bill in 2021 and 2022.
  • Bri Crofton, Tacoma Human Rights Commissioner (audio - 2m, video)
    • Testifying in a personal capacity, Crofton explained that they’d “had chronic pain for 14 years and had spent most of that time on prescription opiates,” but found cannabis to be “a complete game changer for me.” However, after being able to manage pain “for the first time in my life, after a year and a half dispensaries were closed and I had to start buying my medicine at recreational stores. My cost more than doubled overnight in no small part due to the 37% excise tax, which is the highest in the country.”
    • Crofton said as cannabis became less affordable, “I made a desperate decision. I ended up on two drugs that are prescribed for chronic pain, both of which had side effects including nerve damage [and] I did have permanent side effects from them.” They asked the committee members to help “by removing this exorbitant sin tax on people's medication.”
  • Along with those testifying in favor, 141 people signed up in support of the bill. Only Megan Moore, Washington State Public Health Association (WSPHA) Executive Director signed in as opposed (testifying, not testifying).
  • Following caucus, the committee took a vote and most members recommended passage of HB 1453, directing the bill to the Washington State Senate Ways and Means Committee (WA Senate WM), where it was scheduled for a hearing on Thursday February 22nd. Three Republican members voted ‘without recommendation’ in opposition (audio - <1m, video):
    • Republican Leader John Braun
    • Senator Drew MacEwen
    • Senator Mark Schoesler

• Senators heard favorable testimony on HB 2151, “Reassigning the accreditation of private cannabis testing laboratories from the department of ecology to the department of agriculture [WSDA].”
  • The bill to revise transfer of accreditation for cannabis testing laboratories from the Washington State Liquor and Cannabis Board (WSLCB) by July of 2024 was first heard by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on January 15th. On January 22nd, members amended and recommended the bill for passage. From there, it received a hearing in the Washington State House Appropriations Committee (WA House APP) on February 1st before being amended and recommended on February 3rd. The revised substitute language passed the full House one vote short of unanimous on February 12th.
  • Jones explained the impacts of HB 2151 based on the bill report (audio - 2m, video):
    • Reassigns agency authority and responsibility for accreditation of cannabis testing laboratories to the Department of Agriculture, effective July 1, 2024, and authorizes expedited rulemaking.
      • Jones mentioned that WSDA staff were required to consult with WSLCB partners in rulemaking.
    • Modifies authorization related to the fee that may be imposed for the administration of the cannabis product testing laboratory accreditation program, and modifies a provision requiring destruction of cannabis in the context of a sample not meeting applicable quality assurance and product standards.
    • The revised fiscal note showed both revenue and expenditures move from DOE to WSDA, and no fiscal impact for WSLCB. WSDA did not expect any costs between FY2024-25 and their staff analysis projected revenue of $40,000 a year thereafter. The department would cover costs for a chemist, microbiologist, and management analyst who would assist in administering accreditation totalling $376,700 in FY2025-27 and FY2027-29.
  • Trecia Ehrlich, WSDA Cannabis Programs Manager (audio - 2m, video)
    • In support of the bill, Ehrlich called cannabis labs “a public health necessity that protects Washington State's consumers and agricultural land from pesticides, residual solvents, and beyond.” Along with an effort to minimize fee increases on these labs, she said there was “important talent at the WSDA who can support our lab industry…with continuous service as we have two chemists and a microbiologist who have already developed relationships with our stakeholders,” since department officials were in charge of the Cannabis Lab Accreditation Standards Program (CLASP), which included representatives of WSLCB and DOH.
    • In explaining the work WSDA personnel would do under HB 2151, Ehrlich stated, “we need to write expedited rules with three major distinctions”:
      • “Full accreditation at significantly reduced fees,
      • “Allowance for hemp matrix in proficiency testing [PT],
      • “Not immediately accrediting labs to different matrices”
    • Vice Chair Steve Conway observed, “we've had a lot of debate in this committee about synthetic products,” curious about WSDA’s role “in evaluating those synthetic…cannabis products as well.” Ehrlich responded that “accreditation and the standard speaks to analyzing cannabinoids and testing for a variety of cannabinoids. We are working with the LCB to consider how expansive that should be.” She said the accreditation process had pertained to “detecting cannabinoids in the plant and testing for the [legal retail] marketplace.” She acknowledged cannabinoid regulations passed at the urging of WSLCB in 2023 which were still being implemented by the agency, “and as we consider the expansion of cannabinoids what labs might do and need to be accredited for [was] an evolving conversation” (audio - 1m, video).
  • Annette Hoffmann, DOE Environmental Assessment Program Manager (audio - 2m, video)
    • “Ecology strongly supports” the bill, Hoffmann remarked, noting some of the background since the 2019 law that originally established the transfer of accreditation to her agency, which had “expertise in environmental science, [whereas WSDA] has expertise in plants, crops, and food science.” While DOE “would have to hire highly technical specialized staff,” WSDA could “utilize existing staff creating cost savings for the State.”
  • Lukas Hunter, Harmony Farms Director of Compliance and Government Affairs  (audio - 1m, video)
    • Hunter felt having WSDA staff handle lab accreditation was “awesome,” warning that there had already been “an attrition of labs since the bill that was passed in 2019. We've actually lost almost half…from 13 and we're now down to seven.” He expected accreditation costs for these labs to “vastly decrease…as it sits now would be somewhere around $6,000 a month.”
  • Caitlein Ryan, The Cannabis Alliance Executive Director (audio - <1m, video)
    • Ryan stated that Cannabis Alliance members also supported the bill, and “applaud the Department of Agriculture for taking this on, for all the reasons that you've heard.”
  • Ezra Eickmeyer, Producers Northwest Founder (audio - 1m, video)
    • “Everything's going to function better" with WSDA accrediting cannabis labs, Eickmeyer expected, as “we have labs that are very, very concerned” about their costs if HB 2151 didn’t pass. Although “not an expert in testing and licensing,” he commented that the lab owners and staff he’d talked to “desperately wants” the legislation passed. Testing was an important part of the legal market, he said, as licensees were “competing with the illicit market [which] still has about 25% of the state's cannabis sales.”
  • Amber Wise, Medicine Creek AnalyticsScience Director (audio - 2m, video)
    • Wise, noting her company would be “directly affected” under the bill, called the transfer of accreditation a “good idea” which was “a long time coming and we hope this will instill more trust and transparency in the compliance testing process.” She said, “our existing methods are already quite close to fulfilling these proposed requirements and we welcome having the WSDA oversee the cannabis testing methods and accreditation process.”
    • Wise was concerned that without HB 2151, “the existing fee structure laid out will be a huge increase in cost that will cause a domino effect of labs closing and the remaining few labs unable to share the larger costs of accreditation.” Additionally, the labs left standing may “not be able to handle the increased sample volume [leading] to a huge bottleneck…in the supply chain.”
    • Calling the role of labs “crucial” to the legal market, Wise felt a testing system where “all the labs are being held to rigorous scientific practices is an important part of ensuring safe products.”
  • In addition to those who testified, 18 people signed up in support of HB 2151 (testifying, not testifying).
  • During an executive session on Tuesday February 20th, committee members voted to recommend the bill without amendments. It was then referred to the Washington State Senate Rules Committee for potential floor calendaring.

• Senators modified and recommended HB 2320, “Concerning high THC [tetrahydrocannabinol] cannabis products,” without public input.
  • The legislation was first heard by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on January 16th. During a January 29th executive session, members recommended passage after approving a proposed substitute which removed a provision increasing the purchase age for products with over 35% THC to 25. Then, the Washington State House Appropriations Committee (WA House APP) heard the bill on February 3rd with less than a day’s notice that left prime sponsor Representative Lauren Davis as the sole speaker before the committee. They subsequently added a null and void clause to the measure on February 5th, resulting in another substitute version. The House Bill Report indicated:
    • Requires the Department of Health to develop optional training for retail cannabis staff as well as a notice that cannabis retailers must conspicuously post at the point of sale for consumers, related to possible health risks and impacts of high-tetrahydrocannabinol (THC) cannabis and available resources. 
    • Requires the Health Care Authority [WA HCA] to contract to develop and implement guidance and health interventions for health care providers, certain patients, and for other uses, with reports and subject to funding.
  • On February 9th, the full House voted on this version of the bill following remarks from Davis and others.
    • Following passage by WA House, a revised fiscal note from WA HCA officials mentioned that the agency would issue a “request for proposal (RFP) and contract with an entity to develop, implement, test, and evaluate guidance and health interventions” which had to “include, in the scope of work, data gathering on adverse health impacts occurring in Washington associated with consumption of high THC cannabis, and data gathered must be included in the reports submitted to the legislature,” in 2025, 2027, and 2028. Because this “version of the bill removes the University of Washington [UW] from leading the development and evaluation…cost estimate includes $100,000 ($50,000 [General Fund]-State) annually for data gathering and HCA assumes project management and report writing are included in the scope of work.”They projected $758,000 in costs between FY2025 and FY2028, and lower costs of $367,000 as the law sunsetted in FY 2029. Expenditures were listed as being split between state, and federal funds.
      • Although the source of federal funds wasn’t spelled out in the fiscal note, WA HCA administered programs with several types of federal funds, including state Medicaid spending as well as Block Grants related to behavioral health and recovery from the US Substance Abuse and Mental Health Services Administration (SAMHSA). The latter included the Community Mental Health Services Block Grant (MHBG) which “may be used to provide comprehensive community mental health services to adults diagnosed with a serious mental illness (SMI) and children diagnosed with a severe emotional disturbance (SED)” not otherwise covered by Medicaid.
  • The committee members heard SB 6220, the companion bill to HB 2320, on January 22nd, revised and referred that bill to WA Senate WM, where it received another public hearing on February 3rd.
  • In the executive session, Conway moved for consideration of striking Amendment S-5137.1 by Senator Drew Hansen, which changed the bill so that (audio - <1m, video):
    • Legislative intent is provided regarding funding to be provided to the Department of Health (DOH) to allow DOH to issue requests for proposals and contract for targeted public health messages and social marketing campaigns directed toward individuals most likely to suffer negative impacts of high THC products including persons under 25 years of age, persons reporting poor mental health, and persons living with mental health challenges.
    • Provides that the UW Addictions, Drug, and Alcohol Institute [ADAI], rather than the Health Care Authority, must develop guidance and health interventions for health care providers and patients at risk for developing serious complications due to cannabis consumption seeking care in certain settings.
      • As this reverts responsibility for developing guidance to UW ADAI, it's unclear whether the fiscal impact for the amendment would match the initial UW ADAI note, or the revised note by WA HCA where costs were split between the State and federal governments. The first estimate by UW ADAI cost $655,792 in FY2025, $1,315,584 between FY2025-27, and then $982,688 between FY2027-29, largely related to staff time spent on development. According to WA House APP staff, WA HCA’s estimated expenditures “increase about $100,000 over the UW’s earlier estimate,” though this was prior to WA HCA staff suggesting half their costs would be covered with federal funds.
  • Hansen remarked that he was offering the amendment at the behest of Davis (audio - <1m, video), following which it was adopted by voice vote (audio - <1m, video).
    • Hansen authored the revision to SB 6220, which was adopted on January 27th and required WSLCB “to define high THC products by July 1, 2026,” and delayed a ban on “cannabis products with THC concentration greater than 35 percent” from when the bill was enacted to when the agency defined the products.
    • It was Cannabis Observer’s understanding that Davis agreed to initially amend HB 2320 under the condition that it would not be further modified prior to passage. 
    • At UW ADAI, Research Scientist and Cannabis Education and Research Program (CERP) Director Bia Carlini had been one of the Institute’s top researchers of public and expert opinion on cannabis concentrates, and a frequent voice in support of Davis’ earlier bills on THC regulation. Carlini led an April 2023 webinar where she suggested cannabis policy committee leadership had been a “major barrier” to advancing Davis’ bills.
    • UW ADAI researchers had also begun to disfavor views of cannabis industry representatives and consumers when it came to providing policy guidance.
      • During concept mapping in 2022 as part of a public survey, UW ADAI grouped responses from industry, press, advocates, and consumers under the title "cannabis advocates," alongside other responses placed in "community" and "professional" groups. These same responses were subsequently re-labeled as “cannabis industry” when Carlini and UW ADAI staff published a paper in December 2023 funded by a $500K budget proviso from 2021. After having conflated those with positive views of cannabis with those who had financial stakes in the industry, the paper concluded: “Future studies should explore non-cannabis industry stakeholders’ willingness to work towards minimizing the influence of the cannabis industry in policy development processes to assure public health regulations prevail.”
      • Carlini followed up as lead author of a January 2024 article titled: Threat, Distract, and Discredit: cannabis industry rhetoric to defeat regulation of high THC cannabis products in Washington State, USA. The paper concluded that testimony against Davis’ prior bills occurred because “industry actors have leveraged several arguments employed by industry actors of other health compromising products to undermine initiatives to advance public health,” and “adapted rhetoric from other industries to the unique conditions of the cannabis regulatory landscape.” The study intended to “help public health advocates to develop counter arguments and disseminate alternative narratives that protect the public’s health and resonate with legislators and the public.”
      • Cannabis Observer Founder Gregory Foster called out State-funded research which could be stigmatizing of cannabis consumers to the WSLCB, as research had shown evidence of stigmas against consumers and in marginalized communities have persisted even after changes in cannabis policy.
  • After adopting the striking amendment as directed by the bill’s primary sponsor, HB 2320 was then voted on by the committee. The majority recommended passage but three Republicans—King, Braun, and Schoesler—voted without recommendation. The bill was subsequently sent to WA Senate WM, where it was scheduled for executive session on Thursday February 22nd, giving the bill no chance for public testimony in the chamber (audio - <1m, video).
    • If the Senate approved this modification of the bill there would have to be either a concurrence vote approving the Senate changes, or conference committee to negotiate differences between the bill as passed by each chamber. Given that nearly the entire House had voted for the previous iteration of HB 2320, members could request the Senate rescind their changes, but any House would take up limited floor time during the remainder of the session.