WA SECTF - Work Group - Licensing - Public Meeting
(June 30, 2021) - Social Equity Retail Allotments

Marijuana Retail Stores Per Capita
[ Event Details ]

Members learned about specific laws and factors regulators had to consider when changing cannabis retail allotments, evoking several questions and suggestions from participants.

Here are some observations from the Wednesday June 30th Washington State Legislative Task Force on Social Equity in Cannabis Licensing Work Group (WA SECTF - Work Group - Licensing) Public Meeting.

My top 2 takeaways:

  • Christy Curwick Hoff, lead staffer for the task force, provided a presentation on statutory requirements for cannabis retail allotments to the work group (audio - 24m, Presentation). 
    • Work Group Co-Lead Monica Martinez introduced Hoff, stating that her briefing would address “statutory considerations for determining how many licenses should be allocated” and include information on “population growth, safety and security, retail stores per capita, and growth in sales over time.” She explained there would be a question and answer (Q&A) session for work group members afterwards and Washington State Liquor and Cannabis Board (WSLCB) staff were in attendance to “answer some questions, hopefully.” Once work group members had asked questions, the Q&A would be opened up to members of the public in attendance.
    • Hoff began by describing what laws would apply for “the LCB to issue additional licenses...what those requirements would be.” Her presentation laid out three applicable statutes:
      • “RCW 69.50.345 – LCB has authority to determine the number of retail outlets licensed in each county (consideration to population distribution)”
        • RCW 69.50.345(2) described WSLCB staff authority to determine how many retail outlets could be licensed. Hoff said agency officials needed to consult with the Washington State Office of Financial Management (WA OFM), apportion stores “by county,” and consider:
          • “(a) Population distribution;
          • (b) Security and safety issues;
          • (c) The provision of adequate access to licensed sources of marijuana concentrates, useable marijuana, and marijuana-infused products to discourage purchases from the illegal market; and
          • (d) The number of retail outlets holding medical marijuana endorsements necessary to meet the medical needs of qualifying patients.” 
        • Hoff suggested the work group could weigh these aspects as part of a recommendation to WA SECTF to request more retail allotments. She noted Washington State Department of Health (DOH) Medical Marijuana Program Manager Allyson Clayborn had reported on that program earlier in the meeting so work group members could better consider cannabis patient needs.
      • “RCW 69.50.335 – LCB has authority to open retail license applications for social equity applicants (unused, current allotments)”
        • Hoff reiterated that “the current number is 38” available licenses but she anticipated “that will change” as more retail licenses qualified as “unused.”
      • “RCW 69.50.336 – Any recommendation of the SECTF to increase the number of retail outlets must be approved by the legislature.”
        • Hoff acknowledged that the “co-leads and several of our members have explicitly stated in this meeting” that they believed additional retail licenses were warranted. She shared that staff assessment of the laws was that “Legislative action is required to increase retail license allotments specifically for the social equity program.” Although WSLCB leaders possessed “the authority to issue additional licenses, it wouldn’t be able to do that and set them aside for the social equity program,” she argued. Any new licenses would be “available, sort of, generally” and not specifically for prospective social equity applicants.
    • Hoff then spoke to “some data that I pulled together which I think could shed some light on....what does the industry look like right now...can it support more retail licenses” and “if so, how many?” She asked the work group to consider “what are the other metrics and data points that you would want to know” beyond the subjects she identified.
    • Hoff noted that limited demographic data available for current retail licensees from WSLCB staff indicated that, of active licenses, 82% self-identified as “White.” She added that Washington state’s population was “67% White, and yet our retail licensees are 82% White, so we definitely have a disparity there.”
      • Seven percent of retailers self-identified as Asian American, with nine percent of the state’s population being part of that community.
      • Three percent self-identified as Black or African American while four percent of the state’s population were from that community.
      • Only two percent of retailers were Hispanic/Latina/Latino, while 13% of the population were from that community.
      • Four percent of retail owners self-identified as multiracial and another two percent as “other,” with a breakdown of the latter group provided. Hoff indicated that “Native Hawaiian/Pacific Islanders and American Indian/Alaskan Natives both make up one percent of the population.”
    • Considering “equity,” Hoff noted that “cannabis convictions and arrests have not been felt equally across our populations,” citing data provided at the first WA SECTF meeting in October 2020. Her presentation included statistics showing disparities in the arrest rates for cannabis possession among communities of color in Washington in the years before passage of Initiative 502, which she noted hadn’t included equity provisions. She posited that retail ownership could counterbalance the negative impact of disparate enforcement from “the war on drugs” as work group members prepared to offer “long-term goals” for equity in cannabis licensing to the task force.
      • In 2019, WSU researchers shared a presentation on post I-502 cannabis arrests in Washington, finding a 14% decrease in the disproportionality of African Americans arrested for cannabis possession between 2009 and 2015. However, the same data revealed a 127% increase in the proportion of African Americans arrested for cannabis sales. 
  • Work group members and public participants had several inquiries and remarks about retail license allotments, suggesting increased licensure, tax changes, and ways to incentivize local controllers.
    • Micah Sherman, work group member and Raven Co-Owner, was curious about the comparison between alcohol and cannabis tax revenue, noting that the “concentration of access points” in cannabis retail was vastly different from the “around 18,000” diverse venues where alcohol was sold in Washington. He said there was a different scale of “market power” between the products and “when we’re talking about equity, that’s about power, and that’s about relative power, and how it’s distributed.” Sherman found that because the “path to market is funnelled through a very narrow moment, the retail store,” cannabis “concentrated” power in that tier (audio - 6m).
      • Hoff said it would be “significant work” for WSLCB staff to break the 18,000 licensees into the various license privileges such as on site consumption, but they could do so if the work group requested it. Sherman and Hoff agreed that his point was made without “a parsing of the data.”
      • Paul Brice, Happy Trees Owner and WA SECTF Advisory Member, wondered if there was an increase in liquor sales once that industry was privatized in 2011 and the number of licensed spirits retailers increased dramatically.
      • Martinez mentioned the relative tax rates imposed on alcohol and cannabis, asking if any increase in spirits sales after privatization could be evaluated with sales data. WSLCB Chief Financial Officer (CFO) Jim Morgan assured members agency staff could check on any change in sales and get information to the work group.
    • Sherman then sought to confirm his understanding that the initial number of cannabis retail stores allotted was decided by WSLCB officials based on the quantity of state-owned liquor stores before privatization. Hoff relayed her understanding that this was the "primary way" the number was determined, and WSLCB Director of Legislative Relations Chris Thompson confirmed in the chat log. Pablo Gonzalez, WA SECTF appointee, suggested there had been other distinctions like hours of liquor sales and “other policy changes.” Sherman felt the number was functionally “arbitrary” (audio - 2m).
    • Sheley Anderson, Craft Cannabis Coalition (CCC) Policy Advisor and Washington State Legislative Task Force on Social Equity in Cannabis Technical Assistance and Mentorship Work Group (WA SECTF - Work Group - TA and Mentorship) member, wondered about the excise tax appropriation and if the task force was “able to make recommendations on how that tax revenue is allocated, specifically with a focus to social equity licensees and” disproportionately impacted communities. She wanted to see tax “re-allocating more with a social equity lens.” Hoff said there were specific issues the task force had to make recommendations on, but she interpreted an opportunity for “broader recommendations to the legislature” in the task force’s mandate to advise on a “more equitable cannabis industry.” She mentioned that the TA and Mentorship work group might consider also making a recommendation on the issue to the wider task force, adding that there had already been a presentation reviewing equity investments in other jurisdictions. Hoff said she had “hope” the call for more cannabis equity spending would be endorsed by WA SECTF (audio - 2m).
    • Brice asked about local control, wanting to know the “the ability of the cities to stop the allotments,” as it had impacted his path to cannabis licensure before. He argued that WSLCB leaders had “pretty much doubled” allotted stores in counties during a medical retail application window in 2016, including counties hostile to cannabis retail operations. Saying there was sure to be a mix of jurisdictions which wanted more stores and those that didn’t, Brice called attention to a resolution from the City Council in Tacoma in July 2020 calling for more retail shops for social equity purposes and wondered if there was anything that could be done to stop other jurisdictions from opposing new equity licensees (audio - 10m).
      • Martinez remarked that “we do not need to move forward with the current system that exists with our recommendations” and that the task force could advise that new equity businesses be “roamable." She presaged that the August 25th work group meeting would “be tackling bans and moratoria” and one idea was for an allotment increase only in areas without bans and moratoriums.
      • Hoff said Washington was a “local controlled state” which meant that municipal authorities were allowed to ban cannabis retail directly “or they can use their zoning laws in order to make different restrictions.”
      • WSLCB Board Member Ollie Garrett, the agency appointee to WA SECTF, stated that licensing staff had been “reaching out to all of those areas” and “trying to educate them on cannabis” to learn their concerns in hopes local officials might “reconsider” their opposition.
      • Sherman encouraged participants to get “innovative” in making their case. While working “to establish craft cannabis” via legislation, he’d evaluated “adding something that allocates a portion of the excise tax to the municipality where the transaction occurs” to encourage more participation. He believed local leaders lacked an economic argument to end a ban or moratorium in places where cannabis businesses weren’t popular. Sherman also suggested lawmakers could reduce cannabis taxes at equity cannabis businesses to help their competitiveness against established retailers. Martinez commented that she believed the Disproportionately Impacted Communities Work Group (WA SECTF - Work Group - Disproportionately Impacted Communities) was “tackling” the possibility of recommending the task force ask legislators for tax changes, though Hoff was uncertain.
    • Mike Asai, former dispensary owner and work group member, inquired about a tax exemption from the business and occupational (B&O) tax for medical cannabis collectives “from June 30th of 2015 to July 1st of 2016” that was included in SB 5052 in 2015, a law which merged Washington’s unlicensed medical and licensed recreational markets. He reasoned that if “it has been done before” it “should be done” to assist cannabis equity applicants (audio - 4m).

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