WA Senate LBRC - Committee Meeting - Morning
(March 19, 2019)

Tuesday March 19, 2019 8:30 AM Observed
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The Washington State Senate Labor and Commerce Committee (WA Senate LBRC) considers issues relating to employment standards, industrial insurance, unemployment insurance and collective bargaining.  The committee also considers regulation of business and professions and has oversight of commerce issues relating to alcohol, tobacco, cannabis, and gaming.

Engagement Options

In-Person

Cherberg Building, 15th Avenue Southwest, Olympia, WA, USA

Observations

The Senate Labor and Commerce Committee hosted a public hearing on HB 1794 – “Concerning agreements between licensed marijuana businesses and other people and businesses, including royalty and licensing agreements relating to the use of intellectual property.” 

  • Details on HB 1794's House policy committee public hearing and executive session. Engrossed Substitute HB 1794 (ESHB 1794) was passed by the full House on March 7th with one amendment.
  • Richard Rogers, Senior Counsel to the Committee, briefed senators on ESHB 1794’s effects (audio – 1mvideo). From the Senate Bill Report:
    • Updates terminology regarding authorized agreements that licensed marijuana businesses may enter with other parties related to goods or services with trademark or other intellectual property protections.
    • Specifies the authorization encompasses, among other agreements, agreements related to goods or services registered as a trademark under another state’s law or international trademark law.
    • Lists specific types of contract provisions that may be included in an agreement, such as (1) royalty fees subject to certain limits; (2) terms giving either party exclusivity to the use of intellectual property; and (3) quality control standards to protect the integrity of the intellectual property.
    • Exempts non-licensed parties to authorized intellectual property agreements from qualifying for a marijuana license for purposes of the agreement.
    • Provides that authorized intellectual property agreements are subject to recordkeeping requirements established under the Liquor and Cannabis Board’s rules.
  • Rogers cited WSLCB’s fiscal impact as $46,000 and noted the bill would take effect within 90 days of being passed into law.
  • Chris Marr, representing producer/processor Grow Op Farms (Phat Panda), said the legislature passed legislation in 2017 on the issue, but years later the state had “no promulgated rules in place.” He argued there was a constructive dialogue occurring but draft proposals so far were inadequate. He summarized, “Basically, HB 1794 aligns [intellectual property (IP)] laws effecting cannabis licensees with those in other industries and also other states that license cannabis intellectual property” (audio – 2mvideo).
  • Chris Masse, a Partner with the firm Miller Nash Graham & Dunn, supported the bill on behalf of clients and told members “being a little bit more prescriptive in the bill is both necessary and kind of helpful to the LCB” by outlining limits and expectations. She compared it to Coca-Cola not being able to monitor its recipe or build a brand and concluded “this is a way, especially for small business, to do that” (audio – 2mvideo).
  • Andy Brassington, CFO of Evergreen Herbal, testified that he had a lot of business expertise giving him experience “with the challenges of owning and operating, leading and growing small businesses.” He said ESHB 1794 was a “sensible” small-business bill allowing the industry access to knowledge and processes needed to “compete, both in the state, and in the nation” (audio – 2mvideo).
  • Tammi Hill, Counsel with Cannex Capital Holdings, explained she had previous IP expertise. She said the legislation was important to pass because of IP’s overall importance as an “intangible asset” to the U.S. economy and the value IP had in “how companies share technology and reputation with each other” (audio – 2mvideo).
  • Vicki Christophersen, representing the Washington CannaBusiness Association (WACA), began by apologizing for being “back before you with this issue.” She said the testimony they were hearing was “exactly the same testimony we were hearing in 2017. So we’re really not asking you to do anything broader” than previous efforts (audio – 1mvideo).
  • Chris Thompson, Director of Legislative Relations for WSLCB, supported the bill and mentioned the agency’s gratitude that industry stakeholders had worked with them and addressed concerns with the original version of the bill (audio – 1mvideo).
  • Committee Chair Karen Keiser closed the hearing noting six people signed in but did not wish to testify: five in support, one opposing.

The Senate Labor and Commerce Committee hosted a public hearing on HB 2052 – “Clarifying marijuana product testing by revising provisions concerning marijuana testing laboratory accreditation and establishing a cannabis science task force”

  • Details on HB 2052's House policy committee public hearing and executive session, and the House fiscal committee public hearing and executive session. HB 2052 was passed by the full House on March 6th without amendments.
  • Richard Rogers briefed senators on the bill’s proposed effects (audio – 1m, video). From the Senate Bill Report:
    • Transfers authority and responsibility for marijuana product testing laboratory accreditation requirements to the Department of Ecology (DOE), from the Washington State Liquor and Cannabis Board, effective July 1, 2022.
    • Requires DOE to determine, assess, and collect an annual fee to cover the direct and indirect costs of implementing the marijuana product testing laboratory accreditation program, subject to requirements.
    • Establishes the Cannabis Science Task Force (task force) to collaborate on the development of appropriate laboratory quality standards and to establish a work group on proficiency testing and another work group on laboratory quality standards.
    • Requires the task force to submit a report to the Legislature by December 2020, with findings and recommendations for laboratory quality standards for cannabis testing laboratories.
  • Carol Smith, Environmental Assessment Program Manager with the Department of Ecology (DOE), testified that her department was “in support of transitioning lab accreditation responsibilities” to DOE, but against the bill primarily due to its swift timeline. Citing “significant gaps in the existing lab accreditation system for cannabis” she predicted filling those gaps would take longer than the bill allotted. She praised the bill’s proposed task force, but cautioned that without her department’s suggested changes the state could potentially “cut corners on addressing these gaps” and “put the health and safety of consumers at risk” (audio – 1m, video).
  • Al Ralston, lobbying on behalf of the Cannabis Alliance, commended the legislation and said his group had helped develop it out of concern for “public safety” (audio – 1m, video).
  • Kyle Capizzi, co-chair of the Cannabis Alliance’s Science and Standards committee, said the group determined “changing standards for the labs was one area of risk.” He argued DOE control over accreditation and a stakeholder task force were important improvements (audio – 1m, video).
  • Nick Mosely, a Cannabis Alliance Board Member, spoke to the need for a “vital, ethical, and sustainable” cannabis industry, and that HB 2052 protects the industry from a “public health” and “judicial” standpoint. He called it a rational “revamping” of the program that balanced “expediency with thoroughness and thoughtfulness” (audio – 1m, video).
  • Jedidiah Haney, Executive Director of the Laboratory Guild, said he represented five accredited labs on the issue. Haney stated, “This bill passed the house with almost unanimous support, we have been working with [DOE and WSLCB] on this timeline discussion.” He added that longer timelines extended the costs, which he feared would get pushed onto labs and producers or processors (audio – 1m, video).
  • Jeff Doughty, Laboratory Guild president and CEO of Capitol Analysis, said the bill mattered because “honest businesses are currently suffering.” He said they’d support the bill even with a longer timeline, but were eager to work with agencies without cutting corners despite concerns about “implementation costs” (audio – 1m, video).
  • Chris Thompson said WSLCB supported both the bill and DOE’s request for a longer timeline (audio – 1m, video).
  • Seth Dawson, representing the Washington Association for Substance Abuse and Violence Prevention (WASAVP), said he supported the bill because it got WSLCB “out of the labs and into the field” (audio – 1m, video).
  • Chair Keiser noted that three people signed in to support the bill without testifying.

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