WA Task Force on Social Equity in Cannabis - Public Meeting
(January 25, 2021) - Motions

WA Task Force on Social Equity in Cannabis - Public Meeting (January 25, 2021) - Zoom Screenshot
[ Event Details ]

Task force members recommended expanding the qualifying criteria for the social equity program to include race and opening the technical assistance grant program to current licensees and retail title certificate holders.

Here are some observations from the Monday January 25th Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis) public meeting.

  • The leader of a new task force work group proposed a method to allocate technical assistance grant program funds to existing minority-owned I-502 businesses before the current appropriation expired.
    • While the social equity program the task force was designed to advise on was administered by the Washington State Liquor and Cannabis Board (WSLCB), the technical assistance grant program included in the enacting law would be organized by the Washington State Department of Commerce. 
      • The grant program was included in WSLCB request legislation developed in partnership with Commerce leadership in September 2019.
      • The legislation had been developed significantly by the time it was signed into law in March 2020. It included the grant program, which was encoded in statute as RCW 43.330.540, to “provide technical assistance grants to marijuana retail license applicants under the [WSLCB Social Equity] Program.” Activities eligible for funding included, but were not limited to:
        • Assistance “navigating the marijuana retailer licensure process; marijuana-business specific education and business plan development;”
        • Training for regulatory compliance, financial management, and assistance in seeking financing;
        • Connecting applicants “with established industry members, tribal marijuana enterprises, programs for mentoring, and other forms of support approved by the LCB.”
    • The supplemental biennium budget allotted WSLCB $348,000 from the Dedicated Marijuana Account (DMA) for fiscal year (FY) 2021 to implement the new law. Commerce was appropriated $1,100,000 as an annual DMA appropriation in RCW 69.50.540(1)(i) “to fund the marijuana social equity technical assistance competitive grant program.” The final fiscal note followed the bill’s passage with revised costs for the WSLCB, the Office of the Attorney General (WA OAG), and the Governor’s Office.
    • At the inaugural meeting of the task force in October 2020, lead staffer Christy Curwick Hoff explained that Christopher Poulos would represent the Department on the task force. At the following meeting in December 2020, several work groups were established, including the Technical Assistance Grant/Mentorship Work Group. Licensed producer Raft Hollingsworth offered to lead the group, retailer Pablo Gonzalez expressed an interest in joining, and Co-Chair Paula Sardinas floated the idea of enabling current minority licensees to apply for the funding (audio - 1m).
    • WSLCB Director of Legislative Relations Chris Thompson discussed the grant program as a factor in the agency’s biennium budget negotiations when talking to the Cannabis Advisory Council (CAC) on January 6th (audio - 4m).
      • He stated that since the start of the social equity program was “significantly delayed” agency staff raised concerns with the Governor’s Office and the Washington State Office of Financial Management (WA OFM) at a “very late stage of the budget development program.” The FY 2021 appropriation of $1.1 million for the technical assistance grant program could be lost as “there was a good likelihood that those funds would not be able to be awarded prior to the end of the fiscal year,” Thompson said. In order to avoid a “loss of funds to the program,” WSLCB asked that the Governor’s proposed budget include “an effort to try and recapture those funds for this program out into the next biennium.” This was added into the final proposal, he continued, with “half into each fiscal year.” This would allow the grant money to be used when WSLCB and Commerce implement “the guidance from the task force,” Thompson added.
    • Towards the end of the January task force meeting, Hollingsworth said he had organized a meeting “with minority-owned I-502 businesses just about technical assistance” and the allotment of the first year’s grant money in the week following the task force’s December meeting (audio - 5m, video).
      • He told task force members the group included “most of” the state’s “Black-owned cannabis shops...and the consensus was before we allot these new social equity licenses we should support” existing cannabis businesses “that fit the social equity criteria.” Hollingsworth argued there had been public support to use grant funding for producer and processor licenses, and that ahead of bringing new licenses into the cannabis market, state officials should “create a system that’s going to support those licenses.” Allocating grants for current businesses “would support them and, and would create a system of mentorship” for successful equity applicants .
      • The group composed and sent a letter to task force members to “communicate the urgent need for the social equity task force to act. We feel the $1.2 Million in technical assistance funding that is earmarked for HB 2870 can help assist I-502 Washington small businesses.” After describing hardships induced by the pandemic and spending guidelines, the letter suggested “the first success of the task force can be the issuance of this grant money to help save those already operating in this space.”
      • The letter included the following signatories:
      • “We kept asking [Director of Licensing Becky Smith] ‘how serious would you take these recommendations?’” Hollingsworth explained, wanting a commitment before the task force drew out the process for businesses that met the social equity criteria. “We can send this recommendation to the LCB immediately and we can see just how, how real our recommendations, and how much water and weight they’re going to hold with the LCB,” he said. In addition to helping existing businesses, this would “do as the laws initially intended” by furthering market stability for eventual social equity licensees. Hollingsworth called for action “right now” to approve the recommendations, saying it would be “a huge first step” for the task force. Then, he made a motion “to allocate those technical assistance grant dollars to existing I-502 businesses...that would fit the social equity criteria.”
  • Before considering the motion, legislative members appointed to the task force presented an update on possible revisions to the group’s mandate and addressed the appropriated grant money.
    • Co-Chair and Representative Melanie Morgan said, as her staff worked with Senator Rebecca Saldaña and her team, they had “come to the conclusion that House Bill 2870 has really put some barriers around this task force.” She reported that Saldaña’s staff had “crafted some language” for legislation “to widen our scope of work that we were tasked to do” (audio - 3m, video).
      • Hoff laid out several obstacles, including the enacting law’s “place-based approach” which defined and emphasized "disproportionately impacted areas." Unfortunately, she said definitions of place were complicated by “gentrification and some of the just, the technical ways” the areas were “defined in the legislation.” Despite repeated requests from stakeholders that “licenses get into the hands of...the Black and Brown communities that have been harmed by enforcement,” Hoff felt a "race-conscious or a very race-specific approach" was beyond the law’s language. She said the law utilized “proxy indicators” which “quite frankly...other states and other counties that have tried to do that same approach, they’re not really succeeding, and the licenses aren’t getting into the hands of those that they want them to.”
      • In 2019, media coverage reported on complaints around cannabis equity policies in Los Angeles and Massachusetts from applicants and some officials.
    • Saldaña outlined the “framework” she was developing into legislation which featured the issue being raised by Hollingsworth (audio - 5m, video).
      • “We do have the ability on retail...to make recommendations right now on social equity,” she commented. Saldaña intended to “make sure that we secure that fund for the purposes of what is in the spirit” of Hollingsworth’s letter “to make sure that the current owners and operators and producers” should be considered “an asset and a strength” of the current market. She didn’t want to lose “leaders and pioneers” in the cannabis sector who were “still fighting” from within the industry.
      • Saldaña backed creating an “incubator space” and equity licensee mentor program for what she called a “capital-heavy industry."
      • She highlighted retail title certificate holders as having “early pilot” potential for the “first round” of social equity licenses and backed allowing certificate holders to move their licenses to “ready partners” in receptive jurisdictions. She looked forward to having legislation “introduced as a vehicle” to improve the program.
      • Hollingsworth was in favor of the effort, and Morgan asked Hoff to draft a motion on the recommendations.
      • WSLCB appointee to the task force Ollie Garrett asked if the proposed motion was “going to be random, all certificate holders, or certificate holders based on qualifying under social equity?” Saldaña answered that “what we’re looking for is Black, Indigenous, People of Color” (BIPOC) which included “about 14” of the retail certificate holders (audio - 1m, video).
    • Four days after the task force meeting, Saldaña introduced SB 5388 - “Concerning social equity within the cannabis industry.” On February 1st, Morgan sponsored companion legislation in the House, HB 1443. That bill was scheduled for a public hearing in the Washington State House Commerce and Gaming Committee (WA House COG) on Friday February 5th following a work session “Update from the Social Equity in Cannabis Task Force” on Thursday February 4th.
  • A lengthy discussion among task force members and staff resulted in the proposal and adoption of two motions recommending modification of qualifying criteria for equity applicants and the technical assistance grant program.
    • Hoff displayed a draft proposed motion which “doesn’t reflect the full conversation that we’ve had” and shared uncertainty regarding “how to do that, cause I’m not sure where we’ve landed on our proposed motion.” The wording addressed changing equity applicant criteria “from one based on place to one based on race” but didn’t speak to the grant money, she noted (audio - 5m, video). 
      • Hoff asked if recommendations to the Department of Commerce about the technical assistance grant program should be added to the current motion. Morgan stressed that they didn’t intend to “delete” the criteria in law so much as expand “how to choose” them, and asked Saldaña to weigh in. Saldaña was receptive to modifying applicant criteria, which she believed should be voted on separately from task force recommendations about the grant funding.
      • Saldaña outlined wording for “current retailers, processors, operators, all licenses” who “identify as BIPOC and would possibly qualify under the social equity framework” to be considered “eligible for some technical assistance and can be part of a mentorship program.” Businesses that fit the existing criteria and “have made it this far” shouldn’t be pushed out of the market “by COVID or other things,” she remarked.
      • Saldaña wanted guidance to support minority-owned cannabis license types besides retail and “to be sure that we’re building an incubator” for new licensees along with “resources and staffing to make that successful.” However, she admitted that it “was a little gray” as to whether the task force’s existing mandate allowed for input to WSLCB on current licensees and non-retail licensing.
    • An urgent and at times hard to follow discussion amongst task force members ensued as the three hour meeting ran over its allotted time (audio - 6m, video).
      • For the 2021-23 legislative biennium, Hollingsworth asked for language on a separate motion to ask Commerce to allocate the technical assistance grant money “now, today.” Hoff said the allocated money was “specifically for the technical assistance grant program the way that it was written in [HB] 2870...and you can’t just take an allocation and do something else with it” unless the legislature gives the disbursing agency “very specific authority.” For this reason she believed new legislation would have to be passed in order for the proposed motion to have the intended impact.
      • Morgan supported drafting another bill to revise the task force’s power “to really do our equitable work.” Due to approaching legislative deadlines she said “we need to decide today” what any recommendations would look like. “I feel like we’re trapped inside the current bill that we’re working on,” she said, “and would love to give us more room to move.”
      • Gonzalez wanted to know the “criteria for these grants,” stating “if we are going to do this...I don’t think that, you know, that the ‘big guys’ that have more than one or two stores” should be eligible for grants. He was concerned that giving grants to “people that have already gotten licenses,” even himself, could be interpreted as “a disservice to, to the taxpayers.” Hoff commented that existing language in the law “provides the criteria for who” could receive social equity grant dollars and the motion draft would be requesting that “current licensees, not just new licensees, to be able to apply for that.”
    • Task force appointee Cheri MacLeod asked that the motion addressing the grant program “continues with the initial intent of that money” while incorporating the concerns in Hollingsworth’s letter on allowing “qualifying current licensees” to prevent the change from “being an open bank” for any cannabis businesses. Hollingsworth agreed, Hoff showed a revised motion draft, and Brice asked for assurance that changing the language didn’t mean retailers would lose out on future grant allocations. Asked about the possibility of losing the 2021 funding by Garrett, Hoff gave her understanding that “the current appropriation is for this current biennium and Commerce cannot actually start giving out the dollars because they’re still waiting” for WSLCB’s social equity program to start. “The appropriation for the current biennium, which ends at the end of June, is likely not going to be able to be used the way that it was appropriated for,” she reported, but “another $1.1 million in the next biennium” would be available as the program was “an ongoing appropriation” (audio - 5m, video). 
    • As the meeting ran long, Morgan excused herself and asked Saldaña to serve as acting chair (audio - 13m, video).
      • Saldaña observed that the task force had the authority to “make this recommendation to LCB and Department of Commerce” but their power was focused on retail and “the universe of the licenses.” To that end, she said that the group could advise that “qualifying current licensees [and] certificate holders can also receive technical assistance grants.”
      • Saldaña said it also sounded to her like there was support for “legislation that will authorize [us] to look at other licenses” owned by BIPOC individuals “to be part of a mentorship program incubating going forward.” She suggested a recommendation to WSLCB about the program qualifications, and a separate recommendation to lawmakers “to authorize the task force to be able to have more jurisdiction over other pieces.” Moreover, Saldaña considered this to align with the task force operating principles adopted at the December 2020 meeting as it kept “the impact on Black Washingtonians in particular” centered in the group’s decision making.
      • Hollingsworth asked if the group still had enough members present for a quorum. After staff confirmed they did, Saldaña read the first motion: “The task force recommends changes to the underlying criteria for social equity applicants from one that is not just place-based to one that allows for specific prioritization based on race.”
      • Next, Saldaña read the second motion: “The task force recommends changes to the underlying social equity grant program to ensure that qualifying” licensees of any type and title certificate holders could apply for the grants. She said the motion would “defend” the existing funding by calling for “legislative action.” Martinez confirmed that “disproportionately impacted areas” stayed as a criteria for applicant consideration but MacLeod warned that it would be difficult to “identify the areas as the legislation has put up for us as [a] framework.”
      • A member of the public didn’t get an answer when they inquired “how many task [force] members would benefit off this motion?”
    • Hollingsworth moved for a vote on the social equity applicant criteria and was seconded by Michelle Merriweather. The task force voted in favor of the measure with the exception of Gonzalez who opposed it (audio - 1m, video).
    • The next motion pertaining to the technical assistance grant program criteria was also proposed by Hollingsworth and seconded by MacLeod. Again the only dissenting vote was Gonzalez (audio - 1m, video).

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