WA Governor - Bill Action
(April 16, 2021)

Here are some observations from the Friday April 16th Washington State Office of the Governor (WA Governor) bill action.

My top 3 takeaways:

• Following the legalization of hemp production in Washington in 2019, regulators had identified and in some cases begun to address difficulties around hemp processing, use of cannabidiol (CBD) in food and drinks, and export of hemp products.
  • The 2018 Farm Bill nationally legalized hemp---cannabis containing less than 0.3% tetrahydrocannabinol (THC)---and Washington lawmakers legalized hemp farming via SB 5276 in 2019.
    • SB 5276 modified a hemp pilot program administered by the Washington State Department of Agriculture (WSDA) into a production licensing program. Passage resulted in an influx of applicants to WSDA weeks later.
    • SB 5276 did not require licensing of hemp processors, allow for hemp or CBD in food or beverage products, nor normalize export of hemp crops or extracts.
    • WSDA leadership continued to restrict usage of CBD in food based upon federal guidance on “Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol.” The document stated that use of cannabinoids in foods or dietary supplements was prohibited under​​ Federal Food, Drug, and Cosmetics Act (FD&C) rules, though “ingredients derived from cannabis that do not contain CBD or THC might be able to be used in foods and dietary supplements if all other FD&C requirements are met.” 
  • WSDA officials continued to engage with hemp licensees, stakeholders, and the public through webinars:
    • Hemp THC Testing RFQQ (Mar 31, 2020)
    • Hemp Program Overview (Mar 17, 2021)
    • Hemp Pesticides and Organics (Mar 24, 2021)
    • Hemp Plant Services (Mar 31, 2021)
    • Hemp Exports and Food Safety (Apr 7, 2021)
  • A Washington State House Commerce and Gaming Committee (WA House COG) work session on CBD in April 2019 featured discussion on implementation of the hemp program. Washington State Liquor and Cannabis Board (WSLCB) leaders talked about the agency’s role in helping to develop the hemp program in July 2019 and learned about WSLCB messaging on hemp and CBD in October 2019.

• Governor Jay Inslee signed SB 5372, "Concerning hemp processor registration and a hemp extract certification," amending the state hemp program to mandate the creation of a voluntary registration process and method for certifying processor facilities (audio - <1m, video).
  • Take a look at the Washington State Senate (WA Senate) policy committee public hearing, executive session, and passage of SB 5372 on March 9th. The bill received a public hearing and executive session in WA House COG, and was passed by the full Washington State House of Representative (WA House) on April 6th. The bill as passed by the legislature was delivered to Inslee’s office on April 12th.
    • While RCW 15.140.030(2) stated, in part, “All rules relating to hemp, including any testing of hemp, are outside of the control and authority of the liquor and cannabis board,” in the WA House COG hearing, WSLCB Director of Legislative Relations Chris Thompson successfully lobbied to have section 4 added to SB 5372 allowing agency officials to test products represented as hemp on cannabis licensed premises.
  • Inslee said the bill “will help Washington’s hemp farmers and processors to be more competitive with other states” as it “opens up domestic and international markets for Washington hemp and hemp-derived ingredients.” He thanked Senator Derek Stanford, the primary sponsor of SB 5372, before signing the measure into law.

• Following the bill’s signing, Washington State Department of Agriculture (WSDA) staff initiated two rulemaking projects to implement the law - but then issued emergency rules on hemp extract facility certification on November 30th.
  • On September 15th, WSDA hemp program staff filed a CR-101 to start rulemaking on voluntary registration of processors. On November 2nd, a CR-102 was filed which proposed amendments to hemp rules in WAC 16-306 to outline “the process for hemp processors to voluntarily register with the department, including specifying the information required on the registration application as well as the registration fee.”
    • The document stated other changes involved fees, “an amount that will fund the implementation of this chapter and sustain the hemp program. It was determined that the appropriate fee for registration with the department be set at $1,200 for a three-year registration ($400 per year). Additionally, the department added clarifying language to distinguish between hemp processors and hemp producers and removed obsolete language regarding hemp producer licensing fees.”
    • A public hearing on the proposed rules was scheduled for Tuesday December 7th.
  • Earlier on July 20th, WSDA Food Safety officials took initial steps towards regulating hemp processing by filing a CR-101 to initiate rulemaking for hemp extract certification. At publication time, no additional formal actions had been taken on that rulemaking project.
  • However, on November 30th, department representatives announced an Emergency Rulemaking Order which took effect immediately and would remain in effect until March 30, 2022. The order created WAC 16-171 for Hemp Extract Certification, with officials arguing that although rulemaking related to SB 5372 was underway, “other states are also making changes to their hemp programs and establishing new markets for hemp products at an unprecedented pace. Many of these new opportunities require that hemp extracts...be sourced from a state that regulates hemp extracts under a food safety program.”
    • The “Reasons for this finding” in the CR-103E elaborated that one “crucial example of this is the recent passage of California’s Assembly Bill 45 (AB 45), which will allow for the inclusion of hemp extract in consumable products within the state.” That bill mandated that out-of-state hemp extracts “be inspected under a food safety program,” presenting “a substantial opportunity...it is expected that many major national consumer product companies will rapidly introduce a number of food, beverage, and other branded products in the state. Supply lines and relationships for hemp ingredients to be included in these products will form rapidly.” 
    • Due to AB 45, the new hemp market in California “will undoubtedly draw hemp processors from around the country who are seeking to export their hemp products to California. Those processors who are able to promptly establish supply relationships to provide hemp products early on will have the opportunity to secure a market position that could last for many years to come.” This “very significant opportunity for Washington’s hemp processors” had allegedly been limited by “the timeline necessary to establish permanent rules regarding hemp extract certification” leaving all “extract processors in this state at a severe disadvantage.”
    • WSDA staff were convinced that “the economic consequences of failing to have Washington’s hemp extract certification process in place at the time of California’s regulations are implemented would be expansive,” and “if the processors miss out on the opportunity to establish key supply relationships at the onset of the California market, it will set Washington hemp industry back significantly and will exacerbate the existing competitive differences between the states.” As this would have “a long-lasting effect that will likely take many years to remedy if it can be remedied at all,” WSDA leaders “determined that establishing a temporary hemp certification process until the permanent rule can be adopted is necessary to protect the general welfare of Washington’s hemp industry.”
    • The announcement indicated that those wishing to discuss “implementation and enforcement of the adopted rule” should contact David Smith, WSDA Food Safety & Consumer Services Division Food Safety Program Manager.