WA Senate LC - Committee Meeting
(February 10, 2025)

Here are some observations from the Monday February 10th Washington State Senate Labor and Commerce Committee (WA Senate LC) work session.

My top 3 takeaways:

• Nicola Reid, Deputy Director of Administration in the Licensing Division at the Washington State Liquor and Cannabis board (WSLCB), briefed committee members on cannabis license ownership while lawmaker questions suggested potential blind spots in agency assessments.
  • Reid started with a straightforward count of cannabis licenses by type, “You will see that there [are] 794 producer/processor licenses, 157 producer only, 195 processor only, and 471 for cannabis retailers” (audio - 2m, video - TVW, presentation).
    • This estimate likely does not account for cannabis retailers on tribal lands within Washington state which a WSLCB provided spreadsheet from November 2024 indicated covered 31 retail stores. Research staff from the Washington State Institute for Public Policy (WSIPP) confirmed they’d asked WSLCB whether their licensing numbers had included stores opened through a cannabis compact, and confirmed those locations weren’t included in remarks to legislators in March 2024. At publication time, the most recently adopted tribal compact was with the Lummi Nation in June 2024.
    • Vice Chair Steve Conway sought clarity on the distinction between producer, processor, and producer/processor licenses, (audio - 2m, video - TVW) and on how distribution requirements led to the establishment of the transportation license type (audio - 1m, video - TVW).
  • Reid spoke about how the agency had the responsibility to investigate individuals with any ownership interest or who exercised control of a cannabis license, known as true parties of interest (TPI). She acknowledged their review involved background checks with fingerprinting, verification of in-state residency, a review of financial documents, and verifying no “ownership in what we would consider a cross-tier relationship” as vertical integration—when a producer/processor also owned a retailer license—was prohibited (audio - 5m, video - TVW).
    • Reid indicated that some business arrangements weren’t considered TPI, in particular landlords without common ownership, employees receiving bonuses, consultants receiving a flat rate, those with “an option to purchase” the license in the future, other entities contracting with a licensee, or financial institutions. She also noted that cannabis business financiers (“any individual or business entity contributing money to the cannabis business”) without an ownership interest or business control were exempt from the in-state residency requirement.
    • Considering licensee demographics, Reid’s presentation referred to statistics from a self-reported survey of owners from June 2021 which showed that “approximately 15% self-identified as Black or Brown” in the producer/processor category, and for retailers 19% reported their race as African American or Hispanic.
    • Reid explained that a 2019 law allowed for cannabis licensees to enter into contracts with outside businesses related to topics “such as intellectual property and branding agreements.” These contracts had to be reviewed by WSLCB staff to ensure contracts avoided creating TPI violations or vertical integration.
  • Chair Rebecca Saldaña asked about ownership constraints, specifically “how many stores people are able to own” (audio - 1m, video - TVW).
    • Reid stated someone could only own up to three producer and/or processor licenses, or up to five retail licenses.
    • Conway checked whether this limit was set by the 2012 legalization initiative or the legislature. Reid responded that it was set by the board initially, and that a law passed in 2017 raised the maximum number of retail licenses from three to five.
  • Senator Drew MacEwen raised concerns about management agreements circumventing the law on the five retail locations, pointing out, “I've heard of instances where there's…subsequently up to 15 [stores], because of the way they structure it on paper so that they circumvent the five…is LCB looking into that situation? And what actions are we taking?” (audio - 2m, video - TVW)
    • Reid answered that WSLCB officials reviewed management contracts provided to the agency and looked for what they "deem to be like control, buying power, and how much the contracted entity is being paid.” If there was suspicion “that a licensee is operating outside of the means of the initially reviewed contract, that is when Enforcement would come in [and] if warranted, do a complete audit on the business, the financials,” she said.
    • When MacEwen followed up to ask about consequences, she noted a range of possibilities depending on Enforcement findings, “which could be anything from a fine up to cancellation of the license.”
  • Conway wanted to understand whether retail density was evaluated by Licensing staff when considering approval of multiple licenses for one ownership entity (audio - 2m, video - TVW).
    • Reid responded that the original initiative mandated their agency coordinate with the Washington State Office of Financial Management (OFM) and agency leaders chose to contract with BOTEC to look at population data in determining the allotment of retail locations by city and county. “So the number of stores isn't really contingent on the location itself,” she told Conway, “you could hold five in Seattle if five allotments were available…the numbers is specific to the individual or entity, and then the numbers for each city or county was in response to the BOTEC report.”

• Reid then reviewed the status of the cannabis social equity program, highlighting barriers to entry and efforts to reduce them, along with emphasizing the power of local control over where equity businesses would be allowed to operate.
  • Starting with the background of the social equity program, Reid relayed that it had been created by HB 2870 in 2020 and was revised through SB 5080 in 2023. The changes in SB 5080 included increased retail allotments, and added new allotments for producer and processor licenses, she indicated (audio - 5m, video - TVW).
    • Agency leaders briefed lawmakers on the program in December 2024.
  • As of that morning, Reid stated that nine applicants had successfully secured their license and opened their businesses. Two other applicants had found a location, and 33 were still in the application process. According to Reid, finding a location that met the qualifications was considered a "big win.” The top obstacles communicated by applicants were finding a location, getting city or county permitting, and securing funding.
    • Locations were especially challenging, she said, “due to a landlord not wanting to rent to a cannabis business, or having really high rental amounts to do.” 
    • Reid said local bans and moratoriums had also been an obstacle as some local governments were uninterested in accommodating equity stores, or in some cases any cannabis businesses at all.
    • Finding start-up capital for a new business was also difficult, Reid noted.
  • Reid assured the committee that WSLCB was continuing to look at ways to reduce barriers to market entry for equity applicants. They were providing official letters to local authorities or prospective landlords explaining an entity’s status as a successful equity applicant, “hopefully to assist with some negotiations.”
    • WSLCB staff had also contacted local governments related to their cannabis licensing restrictions and offered to have the agency work with them. She mentioned that a 2015 ordinance in the City of Pacific restricting cannabis businesses had been revised in December 2024 following conversations with WSLCB representatives (audio - 1m, video - TVW).
    • The agency had also sent a survey to local officials to ascertain what they knew about their cannabis ban or moratorium or their ability to set local cannabis zoning. Reid shared that the survey language stressed that local governments didn’t have to cap the number of retailers in their jurisdiction anymore. “So for example, though [the State has] a 1,000 foot buffer, a local government…can change the buffer down to 100 feet for everything except for elementary, secondary school, and playgrounds,” she explained.
    • Following a question by Conway, Reid stated that approximately 80 total bans or moratoriums were active throughout the state. She did not have the data on what percentage of the state population they covered but committed agency staff to look into it (audio - 1m, video - TVW).
  • After highlighting the agency social equity blog, Reid concluded her remarks with process changes agency leaders planned to implement for the next equity licensing window. She relayed that applicants would register through a WSLCB portal which would transmit their information directly to the social equity contractor who reviewed eligibility. Applicants also wouldn’t have to register with the Washington Secretary of State nor pay a Business Licensing Services fee in order to apply. Once an applicant was “made aware that they're the successful applicant moving forward, then at that point, they would go and…form the entity if they'd like to apply through Business Licensing Services, and we, of course, would be available to assist and answer any questions throughout that process” (audio - 3m, video - TVW).

• Following the briefings, committee members raised questions about how population changes could impact licensing decisions and reflected on the impact of cannabis bans and moratoriums.
  • Saldaña expressed interest in seeing updated data around how population density had been changing. She commented that legislators had been “looking at updating the numbers overall for retail and producers because of the population change, and it hadn't been updated for many years.” Retail density had also come up during lawmaker consideration of the social equity program, she noted (audio - 1m,  video - TVW).
    • Director of Licensing and Regulation Becky Smith promised the Director of Legislative Relations Marc Webster would get back to them with that information.
  • Conway raised concerns about the distribution of licenses, given that some areas had bans and unnamed people had testified to oversaturation of retail, saying, "I think a lot is due to the fact that we have areas where we cannot locate these licenses.” He encouraged greater “understanding” of the dynamic, and he then drew a parallel between the restrictions and “dry areas like we used to [have] in liquor” (audio - 1m, video - TVW).

Here are some observations from the Monday February 10th Washington State Senate Labor and Commerce Committee (WA Senate LC) committee meeting.

My top 3 takeaways:

• Senior Staff Counsel Susan Jones briefed the committee on SB 5206, “Concerning cannabis retailer advertising” (audio - 3m, video - TVW).
  • Jones acknowledged that a previous bill on cannabis advertising had been heard by committee members during the prior legislative session. She brought up how existing regulations specified requirements for cannabis signage and advertising, including that retailers may not display any signage outside their premises except for two signs identifying a retail outlet, its location, and the nature of the business. Signs could be no larger than 1600 square inches and had to be permanently affixed. Additionally, there were regulations against depicting cannabis plants and images appealing to children, and while local governments could adopt more restrictive rules for outdoor advertising, they were responsible for enforcing them.
  • Using the bill analysis, Jones shared that SB 5206:
    • “Modifies restrictions and requirements for advertising signs for licensed cannabis retailers.
    • “Places the regulation of trade name signs for licensed cannabis retailers under the authority of local jurisdictions.”
    • The legislation would increase the number of allowable advertising signs outside an establishment from two to four, not including trade name signs or billboards. Signage could be affixed to the building or hang in the window of the licensed premises. Signs less than 512 square inches were not considered advertising signs if they didn't include brand or trade names, cannabis imagery, and only limited information, "such as that the business is open or closed.”
    • The bill specified that sign content could not relate to alcohol, tobacco, or motor vehicles. Advertising signs had to indicate that products were only for those 21 and older “in a text that's…a reasonable size to the consumer,” though products could still be sold to authorized medical patients under 21.
    • Licensees could not advertise products for less than acquisition costs. The signage restrictions did not apply to Adopt a Highway signs erected by the Washington State Department of Transportation under a valid sponsorship.

• The prime sponsor and several cannabis retail sector representatives gave their reasons for supporting an update to cannabis signage policies.
  • Senator Drew MacEwen testified as the bill sponsor, emphasizing practicality and an increase in local control. He pointed out that his 2023 legislation was passed by the WA Senate before it “stalled on the other side.” He called SB 5206 a pragmatic approach “to the sign regulation of the cannabis industry, but also retaining the local jurisdictional control so communities can decide what's best” (audio - 1m, video - TVW).
  • Ian Eisenberg, Uncle Ike’s Owner (audio - 1m, video - TVW)
    • Eisenberg testified that he owned five stores and had found cannabis retail signage rules were “quite cumbersome and create unnecessary confusion between local municipal advertising codes and the Washington State [Liquor and Cannabis Board] rules.” The updates respected local control and offered clear interpretations to help licensees comply with the rules, he argued. 
    • Eisenberg stated that the legislation placed the regulation of trade name signage under local jurisdiction, while cannabis-specific content rules remained under the purview of the WSLCB. He suggested this approach had worked well for alcohol regulation, and “I do believe this bill has support from the LCB itself.”
  • Scott Atkison, Zips Cannabis Owner (audio - 2m, video - TVW)
    • Atkison remarked that “clear and consistent signage regulation benefit both businesses and the communities we serve.” He expected retailers wanted to invest in compliant signage “that enhances the customer experience, supports public safety, and ensures our businesses are easily identifiable.”
    • Atkison praised the “predictable framework” in the legislation that would allow retailers to operate with the same certainty as other industries. He stated that the bill didn’t alter WSLCB authority to regulate the content of cannabis-related signage, ensuring appropriate restrictions remained in place. Passage meant a clearer operating environment for retailers, allowing them to operate responsibly and contribute to their local economies.
    • When questioned by Chair Rebecca Saldaña about the number of stores he owned, Atkison responded that he was “on five licenses.”
      • During a work session earlier in the meeting, MacEwen and other committee members questioned reports of licensees who controlled more than five retail licenses allowed in statute.
  • Brooke Davies, Washington CannaBusiness Association (WACA) Deputy Director (audio - 2m, video - TVW).
    • Davies emphasized that SB 5206 didn’t relax any restrictions on the content of trade name signs, nor did it address anything about use of billboards. She stated that under the bill, the WSLCB would maintain jurisdiction to regulate the content of what was on a store sign, including restrictions around making sure nothing promoted consumption or was appealing to children. Davies insisted that consistency in interpreting store signage rules had been elusive, creating uncertainty for retailers, specifically referencing the number of signs and the size of trade name signage.
    • An example offered by Davies was WSLCB determining any retail sign with their business logo “counted as one of their trade name signs.” She’d also heard of agency Enforcement Officers measuring signs and debating whether a border counted towards the size restrictions. Davies wanted them focused on the content instead of “things that are already baked into municipal codes.” She noted local jurisdictions already regulated signs based on the zoning of the property where the sign was located.
    • Davies stated that store signage was “incredibly expensive,” but the bill helped provide cannabis businesses with a clear regulatory environment and created efficiencies for the LCB by allowing them to focus their resources on advertising sign content.
  • Caitlein Ryan, Cannabis Alliance Executive Director (audio - 1m, video - TVW)
    • Ryan regarded the legislation as less about advertising and more about clarifying and allowing good information to reach consumers already seeking out these stores. She commented on her support for increasing the number of allowable signs and the clarification around signage for more neutral business information like hours of operation.
    • The “common sense” updates brought cannabis into alignment with other businesses but maintained strong safeguards in place “preventing youth targeted marketing, and ensuring clear penalties [and] violations,” she said. Ryan found the changes to be practical and consistent, and that changes were more about “clarifying and allowing for good information to reach folks who are already seeking out these locations.”
    • Ryan argued that SB 5206 maintained Washington's commitment to responsible cannabis regulation by keeping strict limits on billboard advertising, preventing youth-targeted marketing, and ensuring specificity on what constituted a signage violation.
  • Sara Eltinge, The Herbery CEO (audio - 2m, video - TVW)
    • Eltinge stated that WSLCB enforcement capabilities were limited, especially regarding signage rules, and when the “LCB issues a mandate for correction…businesses often respond by filing lawsuits” which led to lengthy litigation. Meanwhile, compliant businesses still incurred “unnecessary expenses and time correcting minor issues,” she remarked.
    • By allowing WSLCB staff to focus on other rule violations impacting public safety, Eltinge indicated SB 5206 helped licensees and the agency. She reiterated that WSLCB would retain oversight on the content of signage and local “enforcement could handle practical aspects like sign size.”
  • Bethany Rondeaux, Falcanna Owner and Washington Cannabis Licensee Association (WCLA) Board Member (audio - 1m, video - TVW)
    • A licensed producer, Rondeaux told the committee that the legislation streamlined and standardized signage language. She said WCLA was “100%” in support of the measure, and asked legislators to pass it.
  • Shea Hynes, Lux Pot Shop Co-Owner and WCLA Board Member (audio - 2m, video - TVW)
    • Hynes relayed that he had three retail locations in the Seattle area and participated in several cannabis trade associations. Echoing previous speakers, he stated that the bill would “support all the businesses in the cannabis industry,” and regulators at WSLCB.
    • Hynes testified that, “for years…the LCB has not been able to effectively regulate signage” due to various interpretations of case law. He added that signage issues were “mostly reported by members of the community and even competitors,” which took up the majority of enforcement's time spent on advertising. Hynes relayed that Enforcement Officers had told him directly that they wished they didn't have to deal with signage issues. He speculated Enforcement Officers could focus on larger issues such as diversion that were actually affecting the industry and youth access, if local jurisdictions oversaw signage. He mentioned that local municipalities collected money from businesses for signage, allowing them to recoup their costs for dealing with signage, citing Seattle as an example of a city where they pay for signage permits.
    • Finding the purpose of legalization was to “normalize cannabis and reduce the stigma,” Hynes argued national alcohol advertising was more permissive and “definitely much more targeted than cannabis advertising. As a parent, it's my opinion that preventing youth access starts with conversations with our children and not making cannabis more taboo.”
  • In addition to those testifying, eight signed in as supportive of SB 5206 (Testifying, Not Testifying).

• A panel of substance use prevention and public health advocates regarded the proposed advertising changes in the bill as making cannabis use more appealing to those under 21 in their testimony against passage.
  • Linda Thompson, Washington Association for Substance Misuse and Violence Prevention (WASAVP) President (audio - 2m, video - TVW)
    • Thompson characterized Initiative 502 (I-502) as creating a responsibility for the government to regulate cannabis advertising so as to protect youth in the state. She stated that “passing this responsibility on to our communities does not align with the voters.”
    • Thompson claimed that coalitions across the state had reported issues with their own local sign ordinances, and it would take time and resources for counties and cities to be responsible for trade name signage. She also said that while the fiscal note mentioned ongoing costs for WSLCB, it didn’t account for the “substantial” staff, time, and resources that local jurisdictions would need.
    • Thompson cited research from the University of Washington (UW) that community norms and messaging significantly affected youth substance use. "The signs we allow in our communities carry messages to our youth of what we value in our community,” she said, “and if we're trying to say, as I-502 tried to say, ‘Let's protect our children and our young people from using,’ we need to minimize the impact of cannabis advertising and the promotion on minors.”
      • There have been studies on cannabis advertising at UW, as well as other research evaluating the social norms and messaging around cannabis.
  • Gay-Lynn Beighton, National Alliance on Mental Illness (NAMI) Snohomish and Island Counties Advocacy and Public Policy Contact (audio - 3m, video - TVW)
    • Beighton shared that she was the mother of a son who experienced schizophrenia in his 20s which she related to his teen cannabis use. She said he’d been offered cannabis at a party, and went on to consume it daily for three years, and she’d suffered “watching as he revolved in and out of hospitals, homeless shelters, and jail” and attempted suicide.
      • If you or someone you know has contemplated suicide, please reach out to the National Suicide Prevention Lifeline by calling 988, or find additional suicide prevention tools from the Washington State Department of Health (DOH).
    • Beighton shared that her son's schizophrenia had stabilized after he started taking anti-psychotic medications, “and most importantly, he stopped smoking cannabis because he couldn't get it.” She maintained his sobriety was helped by minimal signage as she expressed her gratitude for the restrictions on cannabis advertising.
    • However, Beighton warned that she still saw cannabis billboards on highway 99 near where she lived that were “plainly targeted at young girls with their rainbows and fanciful themes, or they target male youth with color schemes that copy major sports teams.” She felt a negative perception of cannabis was declining, “especially among youth and young adults whose brains are vulnerable to cannabis injury. I worry that the messages we send say ‘this is utterly harmless, and there's no problem here’...We don't need to loosen existing law.” She encouraged the committee not to advance SB 5206.
      • The Washington Healthy Youth Survey (HYS) data dashboard suggests the overall rate of reported use by teens has declined since cannabis was legalized in 2012.
  • Sarah Ross-Viles, Public Health - Seattle and King County Youth Marijuana Prevention and Education Program Manager (audio - 2m, video - TVW).
    • Ross-Viles told committee members about her concerns related to the bill, primarily that minimizing public promotion of the cannabis sector was a recommended indirect approach to preventing youth cannabis use, as “advertising has been repeatedly linked to use and to risk factors for use.” She regarded SB 5206 as “substantially” increasing cannabis promotion in communities, and cited a 2023 Washington State University (WSU) study which found “most teens reported passing by a cannabis retailer at least three times a week.”
    • Ross-Viles noted that Washington limits the youth appeal of retail cannabis by prohibiting certain elements in all promotion, including in product packaging. She discussed study results about what teens reported as appealing about cannabis packaging.
      • Nothing in SB 5206 would modify packaging rules.
      • The Washington State University Center for Cannabis Policy, Research, and Outreach (WSU CCPRO) hosted a lecture on February 4th regarding “Teens’ and young adults’ perceptions of cannabis edibles packaging” by researchers who talked to the WSLCB board on the topic in October 2022 along with Ross-Viles.
    • Ross-Viles stated that by doubling allowed advertising signs and exempting trade name signs from state oversight, the legislation would increase youth exposure to cannabis promotion. This was both “my assessment as a prevention professional, and it's my concern as a parent whose young child has pointed out cannabis retail signage to me, asking, ‘what is the sign with all the colors for?’” She believed that cannabis retail had expanded the most in areas of lower socio-economic opportunity in Washington, and that young people in these areas would see increased retail promotion with the new allowances in the bill.
      • Earlier in the meeting, local government control over cannabis businesses had been brought up during the WSLCB work session when staff detailed outreach to local jurisdictions which had instituted bans, moratoria, and restrictive zoning ordinances. The practice of concentrating businesses in economically disadvantaged neighborhoods had been likened to a form of reverse redlining, or “liquorlining.”
    • Ross-Viles concluded with an observation that since additional social equity retail businesses were opening over the next few years, communities would experience more public advertising, therefore it was not time for the increases proposed in the legislation.
  • In addition to those testifying, ten signed in opposed to the bill (Testifying, Not Testifying).  At publication time, the legislation was scheduled for an executive session in WA Senate LC on Tuesday February 18th.