WA Senate LBRC - Committee Meeting
(November 30, 2020)

Monday November 30, 2020 8:00 AM - 10:00 AM Observed
Washington State Senate Logo

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.

Work Session

  1. Recreational cannabis, medical cannabis, and social equity within the cannabis industry.
https://app.leg.wa.gov/committeeschedules/Home/Documents/28018

Observations

State and local officials as well as cannabis industry stakeholders discussed the Social Equity in Cannabis Task Force, excise taxes on medical marijuana, and a cannabis research commission.

  • Committee Chair Karen Keiser stated that she planned to sponsor medical cannabis legislation to reduce or remove the excise tax for patients during a presentation on medical cannabis by SMJ Consulting Founder Mary Brown (audio - 5m, video) and patient advocate Lukas Barfield (audio - 4m, video).
  • Lara Kaminsky, representing The Cannabis Alliance told lawmakers the group planned to lobby for a revised commodity commission bill to create a Producer-funded organization to pursue cannabis research (audio - 3m, video). The move was supported by Alan Schreiber, executive director of two existing agriculture commissions (audio - 4m, video).

During a panel on medical cannabis, Senate President Pro Tempore Karen Keiser announced previous legislation to make cannabis more affordable for medical patients would be reintroduced.

  • WA Senate LBRC Chair Karen Keiser announced she planned to sponsor legislation to remove the excise tax on medically compliant products for patients registered with the State, as she’d heard allegations that “since we’ve gone to retail licenses medical cannabis has become less available” (audio - 1m, video).
    • In 2019, Keiser was the prime sponsor for SB 5234 which would have modified “the excise tax for medical marijuana patients with recognition cards for products identified as beneficial for medical use.” Medical cannabis access was merged with the fledgling recreational market in 2016 via SB 5052.
    • In preparation for the work session, Washington State Liquor and Cannabis Board (WSLCB) staff produced their own history describing a timeline and the agency’s role in the merger of the less regulated medical marketplace into the I-502 system.
      • Describing how “dispensary growth exploded” following the passage and partial veto of SB 5073 in 2011, the history asserts “U.S. Attorneys for Western Washington (Jenny Durkan) prosecuted few, perhaps emboldening dispensary operators.”
      • In describing the WSLCB’s role implementing SB 5052, the agency history emphasizes the priority application system was structured by lawmakers: “The Legislature created a three-tiered system for prioritizing applications for the new retail licenses. The first priority was defined by law as including those who met all four of the criteria set by the Legislature…”
      • The history concludes with a note that “law enforcement and county prosecutors varied in their approach to the transition” and highlighted Thurston County Sheriff John Snaza who visited each unlicensed medical dispensary personally.
    • Keiser’s interest in the legislation was driven in part by lobbying from patient advocate John Kingsbury who had been surveying and analyzing patient needs since 2017. 
      • Kingsbury explained to Cannabis Observer that he’d reached out to Keiser because ‘patient issues almost never come up to bat, and when they do, it is usually industry-driven with a “for patients” sticker slapped on to it.’
      • He articulated the driving principles of the bill were “to do as much as possible with one chance” and to “focus on the things that patients themselves say they need” which he’d determined was a “lack of pesticide testing in available products, lack of appropriate products in stores, and cost.” To that end, he articulated the goal of the bill as making “higher-quality, and inherently more expensive, product attainable for patients” and added that “the Cannabis Alliance has taken the lead on this bill this session.”
      • Kingsbury explained how HB 5234’s “fiscal note estimates that the tax loss realized will be $45,000 per year. I actually hope that this fiscal note will grow over time as patients discover that this excise tax break ends up making appropriate products more available and accessible to them.”
      • Kingsbury last addressed the Washington State Liquor and Cannabis Board (WSLCB) about the agency’s Quality Control (QC) Testing and Product Requirements rulemaking project on November 18th where he advocated for a “floor for testing standards” that achieved “medically appropriate quality assurance” (written comments, audio - 4m).
  • Mary Brown, SMJ Consulting Founder and AIMS Institute Cannabinoid Therapy Educator (audio - 5m, video).
    • Brown last addressed legislators in November 2018 where she called attention to “the lack of compliant medical cannabis products on the market and warned against banning edible product types which patients rely on.” In the fall of 2019, Brown was an appointed member of the WSLCB Cannabis Potency Tax Work Group.
    • Brown explained that she had been involved in “cannabis therapy” and advocacy for “over a decade.” She explained that part of the Institute’s mission included “integrative therapies allowing patients to combine traditional treatments as well as current treatments” and this included the “integration of cannabinoid therapy.” To that end, the Institute tracked medical cannabis research and assisted “practitioners in dosing considerations and creating education” about the plant’s medical utility, Brown stated.
    • She noted patient challenges around medical cannabis affordability, quality, and sustainability caused many authorized patients “to go off-market” instead of using the regulated system. Brown said her group had concerns about licensees’ “ability to achieve licensure or maintain licensure” as well as producers and processors “being able to produce high-quality products” in compliance with existing regulations with additional costs to attain medically compliant status.
    • Brown said her organization worked with patients and practitioners to ensure that “people who are using cannabis for true medicinal purposes,” whether it was “anxiety” or other conditions, procured it through the regulated market. Saying the cannabis excise tax in Washington state was “quite substantial in comparison to other states,” Brown noted that even though exempting patients from the excise tax may impact state revenues she nonetheless asked for incentives for patients to “be able to access their medicine in the legal system.” She explained that patients continued to have concerns about legal risks incurred joining the patient database maintained by the Washington State Department of Health (DOH), stigmatization, and accessibility of medically endorsed retailers.
  • Lukas Barfield, patient representative on the WSLCB Cannabis Advisory Council (CAC), and member of the Tacoma Area Commission on Disabilities (audio - 4m, video).
    • Barfield thanked his Senator, Steve Conway, acknowledging he’d talked to Conway “many times” about the issue. Barfield told committee members that patients tended to have a “debilitating condition” and were often individuals “with disabilities” regardless of whether they registered with DOH’s database.
    • Barfield turned attention to the patient excise tax, saying a bill like the one Keiser mentioned "will help lower costs" and enable patients to access more medical cannabis. He expected increased demand would lead producers and processors “to produce more of those goods which will, in turn, just lower costs overall.”
    • Barfield told a story about sharing a discount with his friend, a veteran and patient, in order to buy more cannabis at once than either of them could afford individually. Still a bit shy from obtaining the product both wanted, Barfield said they settled for cheaper cannabis which turned out to be “some of the worst cannabis I’ve ever seen” and he didn’t “know what to do with it.” He summarized the “situation is a blind person with a disability and a veteran basing their healthcare off a discount code on a lighter and getting bad product.”
    • Though Barfield understood “Washington state needs its tax revenue,” the original bill had a “low fiscal note” so he viewed it as a viable way to help patients “restart the medical system in the state.”

Senators heard a status report on the social equity task force, concerns from past and prospective applicants, and a rebuttal from WSLCB staff on licensing decision making.

  • WA Senate LBRC member Rebecca Saldaña was joined by the lead staffer for the Washington State Legislative Task Force on Social Equity in Cannabis to brief senators on progress and potential follow up legislation.
    • The first meeting of the task force was on October 26th; a second meeting was scheduled for December 14th.
    • Rebecca Saldaña, Senate Democrat appointee to the Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis, audio - 5m, video).
      • Saldaña acknowledged it “took a little longer” for the task force to get started but the group “had our first meeting, it was really grounding.” Lauding all who had so far participated, she said the group’s mandated report to lawmakers would be delayed and legislation "to help clarify the jurisdiction of the task force and to make sure that we have continued funding” was likely to be presented during the upcoming legislative session.
    • Christy Curwick Hoff, lead staffer for the WA Task Force on Social Equity in Cannabis (presentation, audio - 5m, video).
      • Hoff, a Health Policy Advisor and staff to the Governor's Interagency Council on Health Disparities, said all 18 members on the task force attended the first meeting. She identified task force responsibilities and goals and reported “a lot of good community engagement” at their inaugural meeting.
      • She said the task force would advise the Washington State Liquor and Cannabis Board (WSLCB) “including, but not limited to, establishing the social equity program for existing retail licenses” as well as make recommendations to the legislature and governor on how to “promote equity in the cannabis industry more broadly.” Hoff indicated task force members were already contemplating “whether the social equity program should be expanded to look at different kinds of licenses in addition to” retail.
      • Hoff said the council on health disparities had “a lot of experience working on equity and social justice issues broadly” although “the topic of cannabis is new to us.” She was learning about “the institutional racism that has existed in this industry to date so that we can redress those inequities as we move forward.”
      • Due to their late formation, Hoff reiterated past acknowledgement that the task force wouldn’t meet their first deadline on December 1st. However, they would “be coming up with priorities and a revised timeline” for lawmakers in the near future, she said.
  • Black Excellence in Cannabis members explained their experience pursuing WSLCB licensing and their ambitions for the social equity program, strengthened by testimony from a Co-Chair of the social equity task force.
    • Aaron Barfield and Peter Manning, Black Excellence in Cannabis (BEC) Co-Founders (presentation, audio - 10m, video).
      • Barfield began the group’s testimony by describing BEC’s work “fighting for inclusion for African Americans in Washington’s cannabis industry.” He said there was “less than one percent by African American ownership in the regulated cannabis industry...a shameful embarrassment to the state of Washington” and that a “more inclusive and diverse” industry offered both rectification and good policy.
        • WSLCB’s presentation claimed that the “self-identified race of majority or equal interest owners of the 483 active licenses on June 30, 2020” revealed 3% of retail owners identified as “Black or African American.” The corresponding survey of 1,335 producer and processor license owners indicated 1% African American ownership.
      • Barfield introduced Manning to describe “what dispensary owners went through” during the merging of the recreational and medical markets in 2016 via SB 5052, when the agency opened a second application window.
      • Manning explained that he and a partner, Jferrich Oba, applied for a business license in 2011 and believed they “did everything that we should have done and that we were required to do by law” in operating their Seattle-based medical dispensary. When retail cannabis was legalized by voters in 2012 and “the LCB got involved,” Manning reported that “a lot of medical patients suffered” and there was a “crackdown” on dispensaries from city officials, including social equity task force member David Mendoza. Manning said that he was told by city officials they would “face a penalty of $1,000 a day” if they continued operation but reassured that “LCB will most definitely grant you a license quickly.” As an applicant, Manning’s impression was that the agency “had every reason not to give us a license” and the licensing process was a “nightmare.”
        • Mendoza faced criticism for his work helping Seattle shut down medical cannabis delivery services in 2014 and dispensaries in 2016.
      • Barfield chimed in to say Manning’s situation reflected “all of the black owned dispensaries in all of Seattle” prompting Committee Chair Karen Keiser to ask how many “black owned medical cannabis stores” had been in Seattle. Barfield estimated “about 20-25%” of the city’s approximately 400 dispensaries had been owned by African Americans.
      • Manning stated WSLCB staff “froze out black participation” when merging the medical and recreational markets between 2015 and 2016. He alleged that white applicants were forgiven for tax or application errors that applicants of color were not. Manning said he’d been given “misinformation” from WSLCB staff before eventually being informed the paperwork they’d provided “couldn’t be used for anything.” He connected with a business partner who was white and saw them “take it to the same people that had denied us” and receive a retail license “in record time.” Asked later why that partner’s paperwork would be accepted, Manning relayed a WSLCB representative’s response that the partner “cleared it up” with a simple conversation and “that’s why the paperwork became good.”
      • “I personally believe it was by design,” Manning said, saying African American applicants had “completely right” applications rejected, “and then you take a white person with the same paperwork, and then they’re accepted.” He found it “crazy” for the State to study “why aren’t there any black people in the cannabis industry” as it seemed obvious that a WSLCB “licensing scheme” was the cause of the ownership disparity. Barfield commented that they’d brought their concerns to WSLCB for some time but that “a system of apartheid” remained in the 502 market.
      • Barfield was positive that “additional legislation” would be needed to supplement HB 2870, the law creating the social equity program and task force, “to build a real inclusive industry” which generated “huge” revenue for the State. Manning noted the “hypocritical side” of the issue, as African Americans had been disproportionately targeted for arrest when cannabis was illegal, but “now that it's profitable we’re excluded out of it.”
    • Sami Saad (audio - 8m, video). Former Owner of 12green, a Seattle dispensary.
      • Saad claimed he was the only Muslim dispensary owner “in this field” and “African” rather than African American, making him unique within the state’s black community. He predicted he would “file a lawsuit against all those people put me through [sic]” his shop closure, while a white owned retail shop was permitted to open nearby. Saad said that while his dispensary should have made him a “category 1” applicant when the medical and recreational markets merged, WSLCB staff told him a missing Limited Liability Company (LLC) status meant he was “pushed away.”
      • Saad expected that “meeting after meeting after meeting” was “not going to change anything” with WSLCB’s licensing.
      • Saad faulted WSLCB for not making materials available in the Arabic language, and continued profiling by local law enforcement. As a medical  patient, he hadn’t appreciated being required to “go and buy from somebody else.”
        • During the December 2nd meeting of WSLCB’s Alcohol Advisory Council, Director of Licensing Becky Smith said the agency made sure “we are providing information in other languages” for their applications and agency website as a social equity improvement (audio - 5m). At publication time, that information was available in the English, Spanish, and Korean languages.
      • Saad felt WSLCB Board Member Ollie Garrett “did not represent us” at the agency. He indicated Washington State Commission on African American Affairs (CAAA) Commissioner Paula Sardinas “never spoke to me again” following an initial introduction. Saad was concerned that he didn’t “want to be left all over” again.
      • Saad alleged that WSLCB staff engaged in a bribery scheme among wealthier applicants, something he’d mentioned in public comments at the agency’s June 24th board meeting. Keiser asked that he provide the committee with any evidence of criminal behavior, and Saad offered hearsay about an eastern Washington licensee with no prior cannabis expertise securing a license.
      • He also cited Shawn Kemp’s Cannabis as a business masquerading as minority owned while Kemp received “a percentage from certain people” to use his name and likeness.
        • Kemp’s affiliation with the business has drawn some backlash from the public after the retailer announced Kemp as a co-owner before clarifying their own “statement should not have been released. As a result, it has caused great distraction to this store’s intention.”
      • Saad restated that a lawsuit from himself, BEC, and others would target Director Rick Garza and challenge the agency’s practices which had the effect of disenfranchising minority license applicants. When Keiser asked Saad to conclude his remarks he tried to speak over her and was eventually muted.
        • Saad was a regular critic of the WSLCB and the regulated marketplace, first speaking at the February 22nd Cannabis Equity in Our Community forum hosted by the City of Seattle and HB 2870’s senate hearing. He also gave remarks during all three BIPOC sessions as well as the task force’s first meeting.
    • Paula Sardinas, CAAA appointee to and elected Co-Chair of the WA Task Force on Social Equity in Cannabis (audio - 15m, video).
      • Sardinas began with kudos to senate supporters of HB 2870, the task force’s enacting legislation, and acknowledged Black Excellence in Cannabis brought the topic to the CAAA whose members subsequently voted to back the effort. She believed there was “a credible case where they’d been wronged by the LCB.”
      • Sardinas sought to criticize biased licensing by WSLCB but clarified that “lumping the Board and the agency together” in this instance was “unfair.” She said the “licensing department...basically gave out misinformation” and that Director Rick Garza had become the focus of “legitimate, widespread concerns.” She questioned the agency’s ability to increase equity in the 502 market while behaving as “a policing agency" in contrast to "a regulatory mentality." Sardinas called out “a fundamental lack of diversity, equity, and inclusion that permeates the culture of the LCB.”
      • While “adjudication” of the relative racism of government activities was not within CAAA’s authority, Sardinas conveyed the Commission saw “structural racism as the underpinning of how a lot of agencies and policies work in Washington State” and that WSLCB had “become a suspect” of this manner of bias. Among the agency's failings, she said were “not enough employees who identify as black or African American,” a “flawed” licensing process, and “inflexible” decision making.
      • Despite institutional problems, Sardinas’ personal interactions with WSLCB showed her the Board was “honest” and “willing to do the right thing when given the tool,” citing the agency’s equity engagement events as an “emotional” example of this. Nonetheless, she saw police brutality around the nation as “egregious” examples of the same discrimination the panelists before her had experienced from cannabis regulators.
      • The African American community didn’t “want anything for free,” Sardinas remarked, “they want fairness.” While grateful for the committee’s attention, she believed the situation was “LCB’s mess to clean up.”
  • Director of Legislative Relations Chris Thompson provided a WSLCB perspective on the history of cannabis legalization and indicated positive steps the agency was taking in response to criticisms before specifically rebutting claims presented to senators.
    • Chris Thompson, WSLCB Director of Legislative Relations, (presentation, audio - 15m, video).
      • Thompson defended the agency. He explained that staff recognized a racial disparity in licensing, but highlighted the largest identified gap “between the licensee base and the population of the state” was among the Hispanic population who were “about 13% of the state and about 2% of the retail licensees.” He also noted Caucasian licensees were even more overrepresented among cannabis producers and processors. He reported that retail title certificate holders were a less disparate group of licensees but “were not able to open their businesses.”
      • Thompson walked the committee through a history written by WSLCB about the merger of the medical and recreational marketplaces.
        • Describing how “dispensary growth exploded” following the passage and partial veto of SB 5073 in 2011, the history asserts “U.S. Attorneys for Western Washington (Jenny Durkan) prosecuted few, perhaps emboldening dispensary operators.” At time of publication, Durkan served as Seattle’s mayor.
        • The history emphasized WSLCB’s role implementing SB 5052 included a priority application system structured by lawmakers: “The Legislature created a three-tiered system for prioritizing applications for the new retail licenses. The first priority was defined by law as including those who met all four of the criteria set by the Legislature…”
        • The history concludes with a note that “law enforcement and county prosecutors varied in their approach to the transition” and highlighted Thurston County Sheriff John Snaza who visited each unlicensed medical dispensary personally.
      • Thompson touted equity outreach already undertaken by the agency and said there was an effort for "more nuanced and holistic assessments" of equity applicant’s criminal history than had been used in earlier application windows.
      • Thompson explained that WSLCB was engaging with local governments to “explore ways of reducing the barriers” cannabis businesses face, potentially leading to the lifting of some regional bans or moratoriums.
      • Thompson then made a point of publicly addressing the specific case of discrimination raised by BEC. He said the agency was still looking at “what happened, was it proper, was it improper, and where do we go from here?” Thompson reported that Manning and Barfield’s application, for a proposed retail entity Cloud Nine, was being reviewed to “see where we would assess that at this point in time.” He attributed the prior change in the application’s priority status to “other applicants” who had made “a case for priority one status based on employment at” Manning’s former medical cannabis collective, Bella Sole. Thompson said a dispute emerged over who and how many people Bella Sole had employed which resulted in outstanding tax questions that ultimately compromised his application’s priority status. Thompson concluded that the Washington State Office of Administrative Hearings had adjudicated the Cloud Nine application and affirmed the lower priority status. Nonetheless, “we want to go back and review that,” Thompson said, to “address anything improperly done.”
        • Barfield interjected that Thompson gave “the final reason” for the application’s denial but failed to tell the full story (audio - <1m, video).
      • Turning to Saad’s application, Thompson said “he never did provide any documentation to support” a high priority status “and, as a consequence...didn’t receive a license.” He finished by affirming Garza had the “full confidence” of WSLCB on equity and other issues (audio - 1m, video).
        • Saad interjected that he’d called WSLCB staff about his priority status “and they refused me.” He protested the agency “did not say the truth” before Keiser eventually asked for his audio to be muted a second time (audio - <1m, video).
    • Wrapping up, Keiser credited Thompson’s “refresher course” on the history of Washington’s medical cannabis policies, and commended WSLCB’s “effort to change culture, it is not easy to change culture” (audio - 1m, video).

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