WA Governor - Bill Action - Afternoon
(May 20, 2025) - SB 5167

As budget cuts impacted many state agencies, a few cannabis-related programs involving health and testing received reduced spending as Governor Ferguson signed his first operating budget.

Here are some observations from the Wednesday May 20th Washington State Office of the Governor (WA Governor) bill action ceremony.

My top 13 takeaways:

• Governor Bob Ferguson offered remarks on the 2025 legislative session operating budget, SB 5167, as well as comments on his partial vetoes (audio - 6m, video - TVW).
  • Before signing the operating budget, Ferguson emphasized a balanced approach to addressing a “$16 billion budget shortfall” by preserving core services and making significant investments, while instituting difficult cuts and tax measures.
    • Find out more about the state budgeting process from the previous operating budget signed into law by then-Governor Jay Inslee in April 2024.
  • Ferguson stated that SB 5167 was the last of the budget bills to be signed and required "everybody here and many others who couldn't make it, who really dug in to bridge” the budget shortfall. He remarked on the challenges to lawmakers settling on cuts as well as changes he’d made that were "not easy for anybody.” Ferguson noted how “core services” would be preserved related to investments in education and healthcare. He mentioned areas like nutritional aid programs and legal aid for asylum seekers as well.
  • Ferguson mentioned making vetoes to the operating budget totaling $25 million, but he insisted there were going to be "more fiscal challenges in our future, and funding cuts from the federal government." This led him to want the Washington State government to be "as lean as possible.”
    • He also thanked budget writers, naming Senator June Robinson, Representative Tim Ormsby, Senator Derek Stanford, Representative Nicole Macri, and Representative Mia Gregerson, as well as Ferguson’s team led by Washington State Office of Financial Management (WA OFM) Director K.D Chapman-See, acknowledging their hard work in a difficult budget landscape. Ferguson recognized it could be a “bonding experience...going through the budget process.”

• $5,937,000 was appropriated for fiscal years (FY) 2026-27 for the Washington State Administrative Office of the Courts (WA AOC) to manage implementation of the State v. Blake decision related to knowing substance possession, including vacating past convictions.
  • Section 114(5) of the session law provided money from the Blake-specific judicial stabilization trust account, “solely to establish a direct refund process to individuals to refund legal financial obligations, collection costs, and document-verified costs paid to third parties previously paid by defendants whose convictions have been vacated by court order due to the State v. Blake ruling. Superior court clerks, district court administrators, and municipal court administrators must certify and send to the office the amount of any refund ordered by the court. The court order must either contain the amount of the refund or provide language for the clerk or court administrator to certify to the office the amount to be refunded to the individual.”
  • Find out more from the special session in May 2023 where lawmakers passed SB 5536 (“Concerning controlled substances, counterfeit substances, and legend drug possession and treatment”) in response to the court case.

• $67,541,000 was allocated to the Washington State Department of Commerce (WA Commerce) from the community reinvestment account (CRA) for economic development, legal assistance, intervention and prevention services, and reentry services programs, as well as other funds from the dedicated cannabis account (DCA) to support social equity efforts.
  • Section 129(3) provided WA Commerce funds for Community Reinvestment Project “grants for economic development, civil and criminal legal assistance, community-based violence intervention and prevention services, and reentry services programs. In making distributions under this subsection, the department must award funds among these program areas in similar proportions to awards made during the 2023-2025 fiscal biennium for these purposes.”
  • Section 132 included $3,706,000 for FY 2026, and $3,831,000 for FY 2027 from the DCA to the Office of Economic Development to support technical assistance grants related to the social equity in cannabis program.
    • WA Commerce staff last discussed their work supporting the social equity program with legislators in December 2024.
  • Section 134 had $2,000 in DCA money for both FY 2026 and FY 2027 for WA Commerce “program support.”

• $46,796,000 was budgeted to the Washington State Liquor and Cannabis Board (WSLCB) from the DCA and liquor revolving account to support agency regulation, with funding specifically for the systems modernization project (SMP) and implementation of revised cannabis advertising statutes.
  • Section 147 appropriated $14,486,000 for FY 2026, and $14,966,000 for FY 2027 in DCA money for WSLCB activities.
  • Section 147(2) set aside $8,208,000 from the account “for the tax and fee systems replacement” which was part of SMP.
    • WSLCB leadership talked about the ongoing project on May 14th.
    • $9,019,000 which had been allocated “solely for the modernization of regulatory systems and [we]re subject to the conditions, limitations, and review requirements of section 701 of this act” from the liquor revolving account wasn’t included in the final budget.
  • Section 147(3) allocated $117,000 from the liquor revolving account for implementation of SB 5206 (Cannabis Retailer Advertising) which was signed into law on May 20th.
    • The fiscal note on the law drafted by WSLCB staff anticipated costs greater than $100,000 per biennium. Identified expenditures were primarily due to an increased Enforcement and Compliance workload estimated at 0.3 full time equivalent (FTE) staff, “derived from contacts, ad complaints, support and education to licensees and local officials, and notices to correct.”
  • Section 147(7) was a budget proviso mandating the agency to use their appropriated funds for work first outlined by HB 1551 (Social Equity Program Evaluation). Although that legislation wasn’t passed before the end of the 2025 legislative session, this section required an evaluation by WSLCB in consultation with WA Commerce to be submitted to lawmakers by December 1st, 2025.
    • In language similar to the text of HB 1551, the proviso directed the agencies to “evaluate the cannabis social equity program as provided in this subsection and submit a report to the governor and appropriate committees of the legislature with findings and policy options.” In addition to collecting public comment on the program “from communities throughout Washington," the evaluation was to include past feedback, examinations of licenses issued or reissued, as well as grants made by WA Commerce, demographic information of applicants, as well as barriers to equity applicants opening or succeeding as a business after licensure.
    • Factors specified to consider included permissible locations, license mobility, existing licensees and title certificate holders as program applicants, use of a third party vendor for applicant prioritization, restrictions on transfer of licenses to non-equity applicants for five years, and the statutory definition of a "social equity applicant."

• $218,000 was allocated to the Washington State Public Employment Relations Commission (WA PERC) from the state general fund to support a law related to cannabis agricultural worker unionization.
  • Section 150(2) provided the money for implementation of HB 1141 (Cannabis Production Unions) which was signed into law on April 22nd. According to the bill report the law:
    • Creates collective bargaining procedures for certain agricultural workers involved with cannabis production and processing.
    • Authorizes the Public Employment Relations Commission to administer and enforce these procedures.

• $122,842,000 in DCA funds was directed to the Washington State Health Care Authority (WA HCA) for community health centers, the Community Behavioral Health Program, and prevention services.
  • In Section 211, money for FY 2026 allocated to WA HCA for Medical Assistance was reduced by $5,000 from the initial budget proposal in the senate to $19,780,000. The budget set this funding for FY 2027 at $20,850,000, which was $2,000 higher than the proposed budget.
    • Subsection (28) indicated this money was to be used “for contracts with community health centers under RCW 69.50.540 in lieu of general fund—state payments to community health centers for services provided to medical assistance clients, and it is the intent of the legislature that this policy will be continued in subsequent fiscal biennia.”
  • Section 214 included DCA money for the Community Behavioral Health Program, $28,515,000 in FY 2026, and $28,517,000 in FY 2027.
    • The bulk of these funds were allocated in subsection (16)(a)---$11,590,000 in both FY 2026 and 27—related to the RCW 69.50.540(1)(a) suggested appropriation “for administration of this chapter as appropriated in the omnibus appropriations act.”
    • RCW 69.50.540(3)(b) mentioned that WA HCA was expected to use a portion of their awarded funds to conduct the Washington State Healthy Youth Survey (HYS), as well as to “Develop, implement, maintain, and evaluate programs and practices aimed at the prevention or reduction of maladaptive substance use, substance use disorder, substance abuse or substance dependence; [and WA HCA leadership] must consult, at least annually, with the University of Washington's social development research group and the University of Washington's alcohol and drug abuse institute.”
    • Additionally, in subsection (69)(c) the agency received $2,000,000 from the opioid abatement settlement account “to maintain prevention services that address underage drinking, cannabis and tobacco prevention, and opioid, prescription, and other drug misuse among individuals between the ages of 12 and 25.”

• $580,000 in funding was awarded to the Washington State Criminal Justice Training Commission (WA CJTC) to support limited authority law enforcement training for WSLCB and other agencies.
  • Section 217(4) allocated $290,000 in FY 2026 and 27 “for academy training for limited authority Washington peace officers employed by the Washington state gambling commission, Washington state liquor and cannabis board, Washington state parks and recreation commission, department of natural resources, and the office of the insurance commissioner.”

• $27,987,000 was directed to the Washington State Department of Health (DOH) from the DCA and general fund for administration, Health Systems Quality Assurance, prevention and community health, as well as for the Washington Poison Center (WAPC).
  • Section 222 allocated DCA funds for general administration at DOH in the amounts of $442,000 for FY 2026, and $478,000 for FY 2027.
  • Section 225 included funding related to Health Systems Quality Assurance: $1,038,000 for FY 2026 and $1,062,000 for FY 2027.
  • In Section 226, money for prevention and community health in FY 2026 was reduced over the initial proposed budget from $11,329,000 to $11,268,000. Some dollars shifted to FY 2027, where funds were $9,000 higher than proposed at $11,629,000.
    • Subsection (17) detailed $1,035,000 in both FY 2026 and 27 from the general fund going to WAPC “in addition to funding pursuant to RCW 69.50.540.”
    • On May 14th WSLCB staff announced that they’d entered into an agreement with WAPC to obtain multi-year datasets “looking at any of the health impacts and implications around a variety of different calls.” 

• $4,452,000 was allotted for the Washington State Department of Agriculture (WSDA) from the DCA and general fund to support cannabis laboratory standards and pesticide testing.
  • Section 311 appropriated $1,484,000 in DCA revenue for FY 2026 and 27 as a basic disbursement to the department.
  • Additional money was directed from the general fund related to cannabis testing:
    • The most significant reduction in cannabis-related funding compared to the initial budget proposal was in subsection (7), impacting money for “the department to establish and maintain cannabis testing lab quality standards by rule.” Originally set to receive $849,000 in both FY 2026 and 27, the final sums for those years in the session law were $424,000 and $425,000, respectively.
    • Subsection (11) provided $318,000 in FY 2026, and $317,000 in FY 2027 “solely for compliance-based laboratory analysis of pesticides in cannabis,” only half of the amount in the first iteration of the senate budget.

• $1,295,000 was directed to the Washington State Office of the Superintendent of Public Instruction (WA OSPI), with a portion of the sum dedicated to the Building Bridges dropout prevention program.
  • Section 501(4)(a)(xii) directed DCA funds—along with an additional general fund appropriation—towards several statewide education programs dedicated to literacy and the Building Bridges program supporting student dropout prevention. 

• $767,000 was disbursed to the University of Washington (UW) for cannabis research, and funds were maintained for the Addictions, Drug, and Alcohol Institute (UW ADAI).
  • Section 606 appropriated DCA revenue in the amount of $377,000 for FY 2026, and $390,000 for FY 2027.
    • RCW 69.50.540(1)(e) and (f) advise appropriations to UW support making cannabis-related educational materials available, as well as continue to conduct research “on the short-term and long-term effects of cannabis use.”

• $413,000 was allocated to Washington State University (WSU) for continued support of standing appropriations for cannabis research.
  • Section 607 included DCA funds in the amount of $203,000 for FY 2026, and $210,000 for FY 2027.
    • Although the section did not state how funds must be spent, the money may support the advised disbursements in RCW 69.50.540 for studying cannabis effect on topics such as “formal and informal methods for estimating and measuring intoxication and impairments,” and providing research.

• $854,177,000 was allocated from the DCA to the Washington State Treasurer (WA Treasurer) for deposit into other accounts, along with funding related to previous legislation on cannabis revenue.
  • Section 801 sent $44,177,000 from DCA as an appropriation “for Cannabis Excise Tax distributions pursuant to” local governments under a 2022 law, SB 5796.
  • Section 805 sends hundreds of millions of dollars from DCA to two other accounts:
    • As requested by RCW 69.50.540(2)(d), $250,000,000 in both FY 2026 and 27 was directed to the Basic Health Plan Trust Account.
    • As requested by RCW 69.50.540(3)(d), $155,000,000 in both FY 2026 and 27 was routed to the state general fund.