WA Senate WM - Committee Meeting
(March 7, 2018)

Wednesday March 7, 2018 9:00 AM - 11:00 AM
Washington State Senate Logo

The Washington State Senate Ways and Means Committee (WA Senate WM) considers the operating and capital budget bills and related legislation, including the authorization of state debt.  The committee also deals with tax policy and other fiscal issues such as pension policy and compensation in addition to bills with operating budget fiscal impacts.

Public Hearing

  • HB 2334 - "Regulating the use of cannabinoid additives in marijuana products."

Executive Session

  • HB 2334 - "Regulating the use of cannabinoid additives in marijuana products."

Engagement Options

In-Person

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

SHR 4

Observations

On short notice, two speakers offered supportive remarks on legislation allowing CBD as a cannabis additive before committee passage, sending the bill unchanged to the floor hours later.

Here are some observations from the Wednesday March 7th, 2018 Washington State Senate Ways and Means Committee (WA Senate WM) committee meeting.

My top 3 takeaways:

  • Legislation allowing cannabidiol (CBD) as an imported additive in legal cannabis products was rushed through a senate finance committee public hearing and executive session one day before the conclusion of the 2018 legislative session.
    • HB 2334 was heard on the first day of the session then amended and recommended for passage by the Washington State House Commerce and Gaming Committee (WA House COG) in their first executive session that year. It was then heard, revised, and recommended for passage by the Washington State House Appropriations Committee (WA House APP) on February 6th, the last day for bills to be moved by a fiscal committee in a house of origin. The legislation was deemed “necessary to implement the budget” (NTIB) and a substitute version passed by the Washington State House of Representatives (WA House) on March 6th - about 15 hours prior to this meeting.
    • The following day, WA Senate WM heard several NTIB bills after Vice Chair David Frockt moved to suspend a portion of WA Senate rule 45 requiring “At least five days' notice shall be given of all public hearings held by any committee.” He remarked the suspension was needed “due to the recent referral of bills” to the committee before members approved the motion by voice vote (audio - 1m, video).
    • WA Senate WM Revenue Counsel Alia Kennedy provided the staff briefing on HB 2334 for the committee, saying the bill on “cannabidiol products” pertained to an additive with “no or very low levels” of tetrahydrocannabinol (THC) that was “often used as an enhancement in medical marijuana products.” She stated that items possessing a “THC content of 0.3% or less do not meet the statutory definition of marijuana and are not considered a controlled substance.” Kennedy said Washington law did not bar licensed cannabis processors from buying “CBD outside of the market regulated by” the Washington State Liquor and Cannabis Board (WSLCB) and the Washington State Department of Health (DOH) - including CBD with “toxic substances that are undetected” (audio - 2m, video, Bill Analysis).
      • HB 2334 would allow licensed “producers and processors to use CBD as an enhancement to any authorized cannabis product, provided that the CBD product is purchased from a licensed marijuana producer or processor,” said Kennedy. CBD “purchased from a source not licensed” as a cannabis producer or processor had to have a “THC level of 0.3% or less and meet certain toxic testing standards,” she added, covering any “product containing or consisting of cannabidiol.”
      • Kennedy told committee members that WSLCB would be granted rulemaking authority to implement the bill, but not for “rules over the industrial hemp industry or any CBD products that are sold outside of the state regulatory framework.”
      • Kennedy indicated that the legislation included a fee increase for producer, processor, and retail cannabis licensees of $81 “beginning July 1st, 2018” which the fiscal note by WSLCB staff projected would generate “$239,000 per year.”
      • Senator Randi Becker asked about the fiscal impact of HB 2334, specifically if the state would end up collecting less money than was needed to administer the bill. Kennedy answered that “the total additional cash receipts from [the fee] increase is $238,000 per year” and administration of the legislation would cost $175,000 for the existing biennium, and “$238[,000] next biennium” (audio - 1m, video). 
  • Two speakers testified and one signed in favor of the legislation, including a lobbyist for the state chamber of commerce who fielded several questions about the bill and unrelated cannabis policies.
    • Mary Catherine McAleer, Association of Washington Business (AWB) Director of Government Affairs (audio - 2m, video)
      • Saying AWB represented “hundreds of cannabis farmers, retailers, and...analytical labs” as Washington’s oldest and largest statewide business association,” McAleer testified that there had been a lot of public dialogue around THC but “we haven’t talked about CBD.” She confirmed that using CBD made outside of Washington in cannabis products had been occurring in I-502 “but it’s currently unregulated.” McAleer argued that “when it comes from overseas, particularly Chinese manufacturers of CBD, it is produced much more cheaply than anyone in the United States, but that’s partly because they use pesticides without penalty, and they also use their hemp fields to actually remediate contaminated soils, because hemp is good at pulling heavy metals out of soil and then storing it.” She attested that the “end result is that the Chinese manufacturers are selling contaminated CBD for less than a quarter of what our American hemp manufacturers can sell it for.” Additionally, Washington had “limited supply based on statute.”
      • McAleer claimed that adults purchasing at cannabis retail stores presumed that items “met quality assurance standards for our state and there’s no reason why the CBD from China, or anywhere else in the world, should receive less scrutiny than the THC that we grow in Washington state.” She clarified the bill was concerned with “CBD sold in the [Initiative-]502 recreational cannabis stores, not the CBD that’s being actively sold in head shops and vapor shops around the state” and that WSLCB officials were having a “separate conversation” on that issue.
      • Speaking to the fiscal impact of HB 2334, McAleer said “our flower farmers are always hesitant when there are fees involved because of the license structure” and “would always prefer that revenues from sales of cannabis are being used to support expenditures at LCB.”
      • McAleer left AWB in June 2018 to join the Weyerhaeuser Company as Public Affairs Manager for Washington State and Canada.
    • Seth Dawson, Washington Association for Substance Abuse and Violence Prevention (WASAVP) Lobbyist (audio - 1m, video
      • Dawson said WASAVP supported the bill “from the standpoint of public safety,” referring to supportive testimony from DOH Government Relations Director Kristi Weeks during the first public hearing on the legislation. He mentioned being “particularly appreciative of business support for this measure,” making clear that although his organization opposed Initiative-502, they considered HB 2334 a step in “properly implementing” it.
    • Vicki Christophersen, Washington CannaBusiness Association (WACA) Executive Director and Lobbyist, signed in advocating for the bill but did not wish to testify.
    • Senator Guy Palumbo asked whether it would “be better if we just tax out of state CBDs rather than tax all of the producers, would that be something AWB would support?” McAleer replied that she’d need to check with AWB members on that, but conveyed there were “many more” producers and processors than retail outlets which created “a bottleneck in the supply chain.” She said the prevailing attitude of industry members was that regulatory activities of WSLCB should be paid for with “the revenues that are coming from 502, which has been quite a windfall for the state” instead of fees that “directly impact those flower farmers” (audio - 1m, video).
    • Frockt asked about current restrictions on importation, and whether CBD was “non-legal under federal law,” to which McAleer responded with her understanding that the compound was “unscheduled” (audio - 1m, video). Senator Bob Hasegawa followed up Frockt’s inquiry to express his belief that CBD “is still scheduled and that it’s already illegal.” He asked how HB 2334 interacted with federal law and “the federal government’s regulations, or guidelines, on how we’re supposed to implement 502.” McAleer promised to follow up with Hasegawa, commenting that use of CBD as an ingredient was “already happening.” Chair Christine Rolfes remarked that “we should have somebody from the LCB here, but we don’t” (audio - 1m, video).
    • Becker wondered what health data on CBD was available, to which McAleer responded that testing laboratories in Washington ranked with “the best in the nation” that analyzed “all the products they receive, and that includes CBD.” Becker sought evidence of “adverse outcomes” like “contaminant exposure and, and patient safety issues,” which McAleer said she’d check on although that was “maybe a DOH/LCB question” (audio - 1m, video).
    • Assistant Ranking Minority Member Jim Honeyford had several questions bearing little relation to the bill, one on the effects of edibles (audio - 1m, video), another on interstate sales (audio - 1m, video), and one more on illicit cannabis trafficking (audio - 1m, video). 
    • Senator Barbara Bailey inquired about cannabis product labeling and warnings for consumers. McAleer answered that under testing rules at that time, “I don’t believe you have to disclose something like a heavy metal” but did have to “disclose mycotoxins, any fungus that might be present” along with “a panel of pesticide and herbicide analytes.” She also indicated that active legislation at that time required WSLCB staff to update rulemaking on packaging and labeling (audio - 1m, video).
  • Committee members voted to recommend the bill, which was then scheduled for floor action hours later - the day before the conclusion of the legislative session for that year.
    • Vice Chair David Frockt moved to recommend passage of HB 2334 without changes and, with no comments offered on the move, members voted to recommend the bill and refer it to the Washington State Senate Rules Committee (audio - <1m, video).
    • Several members opposed passage of the bill, almost all from the minority caucus:
      • Ranking Member John Braun
      • Assistant Ranking Minority Member Jim Honeyford
      • Senator Barbara Bailey
      • Senator Randi Becker
      • Senator Sharon Brown 
      • Senator Guy Palumbo
      • Senator Mark Schoesler 
      • Senator Judy Warnick

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