WA House - Session - Evening
(March 6, 2018) - HB 2334 - Second and Third Reading

At the end of session, representatives considered two amendments to a bill permitting importation of CBD for use as a cannabis product additive before passing it to the Senate.

Here are some observations from the Tuesday March 6th, 2018 Washington State House of Representatives (WA House) evening session.

My top 3 takeaways:

• HB 2334, a bill to authorize the use of cannabidiol (CBD) sourced from outside the legal cannabis market as an additive in cannabis products to enhance their CBD content, reached the floor for its second and third reading having been deemed necessary to implement the budget.
  • The bill was heard on the first day of the 2018 legislative calendar and amended and recommended for passage by the Washington State House Commerce and Gaming Committee (WA House COG) during their first executive session of 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 final day for legislation to be moved by a fiscal committee in its house of origin. HB 2334 awaited floor action from February 12th until after the house of origin cutoff date for all legislation except bills “necessary to implement the budget” (NTIB).
  • In addition to the bill report and second substitute text, a third fiscal note was released on February 19th showing revenue from the bill due to the addition of an $81 annual fee for all producer, processor, and retailer licensees. Staff estimated the fee would generate $238,707 each fiscal year (FY) starting in FY 2019, collected from “2,947 marijuana producers, processors, and retailers.”  Expenditures were unchanged from the previous fiscal note.
    • The original fiscal note for HB 2334 was released on January 8th.
  • Deputy Speaker Pro Tempore Tina Orwall called the bill up for a second reading, with a staffer’s difficulty pronouncing “cannabidiol” leading to a lighthearted moment for the chamber (audio - <1m, video). 
    • At time of publication, Orwall was serving as WA House Speaker Pro Tempore.

• Two amendments to HB 2334 were voted upon, including one restricting the Washington State Liquor and Cannabis Board (WSLCB) from adopting “rules pertaining to either the production or processing practices of the industrial hemp industry.”
  • Amendment 1412 - Republican Caucus Chair Matt Shea proposed a change to the second substitute draft of the bill which “Restricts the rule making authority of the liquor and cannabis board by prohibiting the adoption of rules pertaining to either the production or processing practices of the industrial hemp industry or any cannabidiol products that are sold or marketed outside of the regulatory framework established under chapter 69.50 RCW” (audio - <1m, video).
    • Shea called the move a “simple amendment to make sure that we are clarifying jurisdictions over CBD” and that WSLCB “stays in their lane, Department of Agriculture stays in their lane in regards to hemp” (audio - <1m, video) 
    • Representative David Sawyer reported that the majority caucus agreed with Shea’s amendment (audio - <1m, video) 
    • Orwall presided over a voice vote of the chamber that was unanimous in support of adoption (audio - <1m, video). 
    • Amendment 1193 - Shea withdrew this amendment from consideration without objection as it applied to the first substitute version of the bill which wasn’t considered by the chamber (audio - <1m, video).
    • Shea did not seek re-election in 2020 following a series of controversies that included a manifesto he distributed titled Biblical Basis for War, his involvement with domestic terrorist organizations, and fines stemming from his damaging the steps of the Capitol during a protest, as well as a history of racist, anti-Semitic, and inflammatory rhetoric.
  • Amendment 1413 - Representative Jim Walsh proposed an amendment that “Eliminates the eighty-one dollar annual licensing fee increase” for cannabis licensees (audio - <1m, video). 
    • Walsh, representing the 19th legislative district, told his colleagues that removing the fee aligned with his legislative philosophy of "protecting the little guys", in what was "a new industry here, full, by law, of small operators." He argued that state officials had “been nickel-and-diming the operators with fees, and taxes, and costs, and this bill contains yet another increase to the license fee paid by these small operators.” Opposing “one fee too many,” Walsh pointed out that lawmakers had “nicked” cannabis businesses in 2017 in order to pay for a traceability system. “That was supposed to help participants in the industry to comply with the law” he said, but the system had been “an almost complete failure, and caused great hardship for the industry.” Walsh described how his amendment removed the increase from the bill language and asked for support to “help these small operators continue to grow and thrive” in a business sector he hoped “emerges as a...good employer and a good tax generator for the state” (audio - 2m, video).
      • In October 2017, a transfer of cannabis traceability functionality to vendor MJ Freeway was delayed for months, in part due to a “cybersecurity incident.” Criticism of the company’s competence persisted well beyond the 2018 legislative session. At publication time, the state was preparing for the end of the business relationship with MJ Freeway in June 2022.
    • Sawyer asked for a vote against the amendment, saying that although he did “agree with the sentiment" Walsh conveyed, “we do have the lowest fees in the country” comparing the “about $1,400” charge for licensees under HB 2334 with “our neighbors to the south, Oregon, [who] charge $5,000.” He viewed the $81 fee as “a reasonable addition” (audio - <1m, video).
      • The Marijuana Policy Project (MPP) has a webpage breaking down state cannabis licensing costs. At publication time, Washington state fees were the lowest for cannabis businesses---except for testing laboratories---of any state.
    • Orwall called for a voice vote, which was divided, and declared “the amendment fails” (audio - <1m, video).

• A member of the majority and minority caucus offered final comments on the bill before lawmakers voted to pass it as amended.
  • Orwall received no objection from members to suspend rules and put HB 2334 on its third and final reading (audio - <1m, video).
  • Sawyer said cannabis consumers “expect...us...to make sure that our products” were safe, but “currently we do not test our cannabinoid products that are coming in from overseas, we don’t know what kind of toxins are in ‘em, we don’t what kind of pesticides are in ‘em.” He explained the bill would require that “any time [a processor] adds an additive” into the legal market, “from hemp, that we are making sure that they’re going in the same testing requirements as we do in our legal [Initiative-]502 system.” Sawyer urged passage “for the health and safety of our state” (audio - 1m, video).
  • Representative Cary Condotta found there was “some merit to the policy” but agreed with Walsh’s assertion the bill was an example of lawmakers "nickel-and-diming" licensees. “If we need to raise our fees, we need to raise them in general,” he commented, but found several bills that session amounted to “add a fee here, add a fee there.” He said the entire sector had been struggling with traceability after “they’ve already been charged for a system that isn’t working properly.” But the wider issue to Condotta was that regulators had authorized "too many producers, the price has dropped to a new low and the fact is many of them are going to go out of business as it is” (audio - 1m, video).  
  • Orwall presided over a roll call vote of members. The WA House Clerk reported the legislation passed with mostly Democratic support (“58 yeas, 40 nays”) and Orwall declared the bill had passed (audio - 1m, video).
  • The amended legislation was delivered to the Washington State Senate (WA Senate) where it was scheduled to receive both a public hearing and executive session the next day at the March 7th meeting of the Washington State Senate Ways and Means Committee (WA Senate WM) on the day before the end of the 2018 session.

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