WA House COG - Committee Meeting -
(January 14, 2022) - HB 1855 - Public Hearing

Testimony on a craft cannabis endorsement was weighted in favor of those who saw the proposal increasing fairness in the cannabis market, but others were not so sure.

Here are some observations from the Friday January 14th Washington State House Commerce and Gaming Committee (WA House COG) Committee Meeting.

My top 4 takeaways:

• Committee members heard a staff report on HB 1855, "Concerning a craft cannabis endorsement" for qualifying licensed producers and processors.
  • Licensure for the production of craft cannabis had been previously proposed as a way to reflect the quality of products, or indicate the business type of a producer.
    • 2020: HB 2279
      • Policy committee hearing
      • The site WashingtonCraftCannabis.org was established to advocate for the legislation.
    • 2021: HB 1260
    • At publication time, state laws distinguishing craft cannabis growing had been enacted in Illinois and were proposed in Rhode Island in 2021.
  • Committee Counsel Matt Sterling reviewed the bill analysis (audio - 3m, video):
    • “Establishes a craft cannabis endorsement available to qualified cannabis producers and processors.
      • Sterling stated this meant “producers could not use more than a total of 10,000 square feet of indoor production canopy at all licensed premises.” 
    • Authorizes the holder of a cannabis producer and processor license with the endorsement to make retail sales from a single licensed premises pursuant to rules adopted by the Washington State Liquor and Cannabis Board” (WSLCB).
      • Under current law, producers or processor licensees “may not be licensed as retailers, or make any retail sales of cannabis,” he said, but the bill would allow producers and processors holding craft endorsements to sell to persons 21 and older, subject “to the same retail sales limits” and taxes. Sterling explained that WSLCB officials would set the annual fee for the endorsement which “could not exceed $500 annually.”
      • By the beginning of 2023 the agency would “be required to adopt rules that will regulate the sales of endorsement holders and would establish hours for retail activities” that would be “more restrictive” than the hours in place for retailers, Sterling said. 
    • A business entity holding an endorsement couldn’t “have an ownership or management interest in any other entity with a cannabis license in Washington,” he told lawmakers. Even if the endorsement holder had multiple producer/processor licenses they could still only make sales from one facility, added Sterling. The bill didn’t alter “allowable square footage,” number of facilities for “any licensees,” nor the total number of cannabis licenses. 
    • Representative Brandon Vick sought clarity around the size limit for indoor production (audio - 1m, video).
  • The two fiscal notes for HB 1855, released one day apart, show a revision in staffing and costs anticipated by the Washington State Office of the Attorney General (WA OAG):
    • Fiscal Note - 63540 - Released on January 13th, the revenue from endorsement fees wasn’t projected, though expenditures for WSLCB from the state dedicated marijuana account were estimated to be:
      • 2021-23 - 5.4 full time employees (FTEs) costing $1,514,052 
      • 2023-25 - 11.7 FTEs costing $2,924,053 
      • 2025-27 - 11.3 FTEs costing $2,687,722
      • The following agency divisions anticipated staffing needs due to the bill:
        • Board
        • Finance
          • Carrying the largest cost of any division due to auditing new locations where cannabis tax was collected, the note claimed, “The agency would need 5 additional auditors (Revenue Auditor 2), which would also require an additional supervisor (Revenue Auditor 3) and an audit manager (WMS2).”
        • Licensing
        • Enforcement
        • Information Technology
    • Fiscal Note - 63553 - Released on January 14th, the note kept the same costs for WSLCB. While revenue from fees was still not estimated, it was “assumed to equal the Legal Services Revolving Account (LSRA) cost estimates” WA OAG staff would incur “for legal services rendered” to the agency stemming from the bill. This amounted to:
      • 2021-23 - $211,000 
      • 2023-25 - $227,000
      • 2025-27 - $82,000

• 150 people backed the measure, with a dozen speaking to the possible positive impacts on licensee sales, patient access, and product quality.
  • Vice Chair Emily Wicks, the primary sponsor of HB 1855, presented her bill as a way to “support, bolster, and prepare” craft producers and stop “big conglomerates from taking over our state cannabis industry with the imminent federal legalization” (audio - 7m, video).
    • The bill would create “a pathway to market for the cannabis farms that are independent and struggling to make ends meet,” Wicks testified. A cap on the number of retail locations gave those licensees “more negotiating power,” she argued, especially on “the price of the product.” With this pattern already evident in the state, Wicks asked the committee to “imagine the effect that the Walmart of cannabis will have on the small farmers and our existing retailers when federal legalization occurs.”
    • Wicks spoke to issues and concerns she’d already heard raised:
      • “Growers are limited to a maximum of 10,000 square feet of canopy indoor, and 90,000 square feet of seasonal outdoor canopy,” adding that “production capacity and revenue of a 10,000 square feet indoor operation is very similar.” Outdoor production was “much more environmentally friendly, so this bill encourages potential new licenses…to invest in an outdoor grow and more sustainable forms of cannabis farming.”
      • Acknowledging that the fiscal note estimated “the number of potential producers who would qualify may seem rather large,” the number would be lower after “spelling out [business structure] requirements through an amendment.” Applicants would have to be “operating as small, craft, independent” businesses, she asserted, “requiring them to attest to no other ownership” of cannabis licenses to “secure this type of endorsement.” 
      • “Retailers who might be concerned about the competition” should keep in mind that Washington had “one of the lowest ratios of retailers” per capita. Colorado had more than twice as many stores per capita and collected more cannabis revenue despite a lower tax rate than Washington. Moreover, “competition is also important to a thriving economy.”
      • “Right now, cannabis [retail] licenses are the only LCB licenses that are capped,” unlike for alcohol licensing, resulting in “an industry that has historically criminalized people of color…limited to less than 500 active licenses.” This “arbitrary” distinction “continues to perpetuate harms against people of color,” Wicks said, and the bill would lead to a “stronger environment for aspiring producers and processors” to have “success from the start.”
    • Wicks opposed leaving the status quo in place, as doing so would make “it harder for those without privilege and resources to enter the system and be successful.” Finding small producers to be “at the mercy” of retailers, she said some had “experienced reprisal in the past for speaking up about this legislation.” Wicks concluded that HB 1855 was about “helping the underdogs, supporting that small mom-and-pop shop, and helping our craft industry flourish.” Her bill used the same “farm-to-table concept that is encouraged and celebrated by all of us when it comes to other Washington-grown produce and beverage products.” Wicks added that the legislation wouldn’t circumvent local restrictions on cannabis businesses and “would still be respected.”
    • Representative Melanie Morgan asked for further comment on the social equity implications of the measure, concerned securing an endorsement would pose “an extra burden” in the event the social equity program was expanded to include production licenses. Wicks, offering her appreciation for Morgan’s work on the issue and separate legislation “to support and provide resources” for communities in need, expressed an amenability to improving her bill. She was concerned that without “the opportunity available” to succeed, people would avoid joining the cannabis sector altogether, leaving her open to making the endorsement process easier (audio - 3m, video).
      • At publication time, Morgan chaired the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) and sponsored HB 1827, “Creating the community reinvestment account and community reinvestment program,” which was requested by Governor Jay Inslee in order to fund ​​Community Reinvestment Grants.
      • Wicks was also the prime sponsor of HB 2022, “Concerning social equity in the cannabis industry,” which expressed many recommendations of the social equity task force including creation of additional producer, processor, and retail licenses for social equity applicants through 2029 while waiving application fees.
  • Scott Berka, Full Throttle Farms, BroCo LLC, and Aloha Botanics Owner (audio - 5m, video)
    • Berka commented that all his licenses would qualify as craft under the bill and that he was likely to seek an endorsement for one of his tier 3 licenses. He said the businesses had been built on “a defunct cherry tree farm” with “about 50 total retail customers, of which we consistently sell to about half that number.”
    • In his eighth year as a licensed producer/processor, Berka said “for the first time…I’m extremely worried about our future and upcoming season.” This was due to “the declining price-per-gram in our market” which was “dangerously close to falling below our cost of production,” he reported. Growing more was the best option, but Berka had found this typically impacted the quality of the crop. He saw HB 1855 as further incentivizing “higher quality, and not more volume,” which could raise his sale price and ultimately the taxes the state collected from cannabis.
    • All businesses experienced “competitive pressure,” observed Berka, but “we need a little help leveling the playing field in this highly-regulated and unbalanced” marketplace. Admitting he preferred prior iterations of craft cannabis legislation, he nonetheless considered the bill “a huge step in the right direction to help empower small business owners.”
  • Gary Green, Vancouver Weed Company Owner (audio - 4m, video)
    • As a smaller tier 1 grower, Green had found after six years in the cannabis sector that the industry was “very leveraged against the small farmer.” His crop cost between one and two dollars per gram, while “large farms can get it down as low as 15-30 cents a gram.” As stores understood this dynamic, Green said it was common practice to “leverage smaller farms to lower their prices to compete, or to price us out of the market.”
    • Green viewed his cannabis as having “massive desirability,” since retailers were “marking the product up 300-400%” to sell it, but the result was “a system where the state is making more…money per gram than the producer/processors that grow the products.” He suggested the bill would prepare the state for “vertical integration into the next system when federal legalization comes in” and also be “direct from the farm to [their] store to the customer,” a system that could be “a lot simpler and easier process to retain quality control standards.”
    • Green summarized that the legislation would “go a long way in solving a lot of problems” and allow for “more producer/processors to exist,” adding that the state had lost “over half” of those licensees from “regulatory compliance and rulemaking.” He insisted that without action, “tier 1s will be gone” from the market.
  • Richard Montoure, Good to Grow Owner (audio - 3m, video)
    • Montoure believed the bill would help “the small guys” like him, as there was a need for tier 1 and craft growers who were “propelling the industry” to get “fresher, cleaner, better product.” His business was in an area that was “pretty impoverished” and the nearest retailer was 30 miles away. Given direct sales at Green’s facility, he thought he could become the biggest employer in Grayland.
    • Skeptical about opposition claims that HB 1855 encouraged “box store[s]” or a “flood of product,” Green felt when a business had “good product…it sells itself.”
    • Morgan liked Montoure’s passion and savvy, asking about his plans for communities of color in Grays Harbor County. Stating he’d grown up in the “inner city" and was now in a rural area, he was in “the beginnings of things out here” but he hoped the ability for direct sales would attract more people and economic engagement in the area (audio - 2m, video).
  • Gregg Harrison, Str8fire Farms Owner and Washington Sun and Craft Growers Association member (WSCA, audio - 3m, video)
    • Harrison, proprietor of a “Black owned” business, said he’d appreciate the bill’s passage to help “our progress and a better development going forward” as the endorsement would be an asset for “craft cannabis growers.” He felt retail licensee opposition to the legislation was a way for those interests to maintain control, driving “the small farmer out of business.” Harrison remarked that the bill’s passage would be “a major asset” to small and minority-owned businesses, as he was currently selling his crop “wholesale” as he lacked the “means” to do otherwise.
    • Chair Shelley Kloba asked about Harrison’s current canopy and distribution network (audio - 2m, video).
  • Caitlein Ryan, The Cannabis Alliance Interim Executive Director (audio - 2m, video)
    • Ryan said HB 1855 “fits right in the wheelhouse” of issues her group supported, stating it would “continue to develop the maturity of the cannabis industry.” Previous concerns around vertical integration had been addressed and the bill would enable a “more intimate relationship between consumers and the product they are buying” without undercutting retail sales. “Not unlike wine sales at a vineyard, this bill would support more informed consumers,” Ryan testified, as well as helping “patients and patient access to high-quality cannabis.”
    • “With an eye on the rapid movement towards consolidation across the country as adult use continues to become more the norm,” Ryan argued that passing the bill protected “the independent operators” and was necessary to maintain “the value of Washington state cannabis” in possible national and international markets. She added that the legislation was also a “potental[ly] powerful tool for supporting greater equity” in the market and supported amendments for it to “explicitly be used as a mechanism for further addressing the need for equity in the cannabis industry.”
  • Shane Elliot (audio - 3m, video)
    • Elliot said he had authorization as a medical patient to grow 15 plants, which produced “up to two pounds per plant” annually, and had worked at licensed production facilities. Calling attention to Governor Inslee’s leadership on climate change policy, he said that “natural regenerative farming” practices furthered that effort while leading to quality cannabis. Elliot asked that endorsements for craft cannabis go to producers who had demonstrated they could farm “in ways that doesn’t kill the planet.” Warning of waste and pollution in the existing cannabis sector, he asked legislators to “remember our roots” in the “medical cannabis community.”
  • Adam Smith, Craft Cannabis Alliance (CCA) Founder (audio - 4m, video)
    • Explaining that his alliance had been working with cannabis producers along the west coast as part of the Alliance for Sensible Markets, Smith said “thousands” of cannabis businesses faced issues related “largely” to market access. He said as legalization policies became common, “we face a stark choice: we can adopt and maintain policies that will lead inexorably toward a forced consolidation” of the market that would benefit only the largest participants. Or, he argued officials could support “a far more broadly beneficial industry with thousands of small farms and businesses thriving.” Smith saw HB 1855 as a move to a “more environmentally and economically sustainable” marketplace.
    • Identifying craft producers and allowing them direct sales to consumers and patients would “help solve that market access problem,” said Smith. This would be important in a future where legal cannabis items could be sold between states, he asserted, as without this access small farmers would “be hard pressed to maintain their brands’” market share, he warned. Smith was confident that a craft designation and direct sales “will do as much, or potentially more, to support and save Washington small craft farmers than almost any other policy change.”
  • Joshua Rutherford, Dutch Blooms Owner (audio - 3m, video).
  • Mark Seegmueller, Mad Mark Cannabis Farms Owner (audio - 2m, video)
  • Shawn DeNae Wagenseller, Washington Bud Company Co-Owner and WSCA Board Member (audio - 3m, video)
  • Jeremy Moberg, CannaSol Farms Owner and WSCA Board Member (audio - 3m, video)
    • Saying his business used “sustainable and organic production” including development of “living soils,” Moberg backed the measure on behalf of WSCA, the “largest association representing exclusively licensed producer/processors.” He said the state’s market was already “tilted against producers” due to a lack of “canopy restrictions and enforcement” and “synthetic cannabinoids,” but the situation could improve with craft endorsements. “We have seen the benefits of craft laws in other industries,” Moberg asserted. He thought those benefits would skew towards rural and agricultural areas, saying he planned to employ an “agricultural tourism model, with vineyards growing next to cannabis.” More consumers seeking “cannabis that is sustainably grown” could be a secondary effect of this market change
    • Moberg challenged concerns that craft endorsement holders would become “de facto retailers,” as local zoning restrictions would leave “many hurdles ahead of craft farmers to realize the benefits of this endorsement.” “Also, regarding the question of ownership,” Moberg stated that “LCB allows for 10% interest as a financier with no disclosure, and theoretically a license[e] could be a majority owner by a group of 10% owners that would be invisible to the LCB with their current vetting process.”
    • Moberg felt the distinction between indoor and outdoor production was “unique to cannabis.” Tier 2 indoor producers could grow “as much, or more, than a tier 3 outdoor license” due to year round growing and the fact that “indoor cannabis commands a higher price in the market.” He thought the bill would protect a “large and diverse economy of small businesses.”
    • Vick asked whether Moberg would support “any craft bills.” Moberg responded that WSCA members would be open to legislative efforts “that address the massive inequality that has been created in this industry” (audio - 1m, video).
  • Micah Sherman, Raven Co-Owner and WSCA Board Member (audio - 3m, video)
    • Sherman was in full support of the bill which he said was “modeled on the success of the craft brewing industry” which created “a direct path to market” for small brewers, an instrumental innovation in that sector’s “incredibly robust” success. Craft cannabis would give small operators a “unique path to market” and a chance to grow if they wish, he remarked. 
    • Mentioning “monopsony” (a “very small group of people that buy and a very large group of people that sell”), Sherman said this pattern had emerged in Washington cannabis as producers had only one legal path to selling their crop, while other industries had “multiple paths to market, and that diversity” led to a “dynamic economy.” He emphasized the bill could create a business ecosystem “that provides multiple options in how to run your business,” a more “collaborative, cooperative” sector than currently existed for cannabis.
    • Sherman, a WA SECTF appointee, observed that HB 1855 supported the goals of the task force by creating opportunities for prospective producer and processor equity applicants “to have a viable business ecosystem to exist in.”
  • Riley Johnson signed up to testify but wasn’t available when called.
  • Signed in but not testifying (137):
    • Braden Adams-Lewandowski
    • Benjamin Allen-Sloan
    • Alexander Anderson
    • Brittany Armstrong  
    • Jasmine Asuncion  
    • Lukas Barfield, WSLCB Cannabis Advisory Council (CAC) Patient Representative
    • Timothy Batson  
    • Curtis Becker 
    • Jennifer Berney 
    • Melissa Beseda, Wildwood Flower Farm
    • Craig Boggs 
    • Keith Boyce, New Day Cannabis
    • Joel Brattin
    • Craig Brazell, CCB Distributing LLC, Nexus One LLC, 9 Canyon Cannabis 
    • Delia Brands
    • Jeremy Bryant 
    • Jordan Calvert
    • Kendal Calvert
    • Ben Canales  
    • Heidi Cartmel 
    • Autumn Casey 
    • Bonnie Casey
    • Boyd Casey
    • John Chaisson, Atomic Budz 
    • Samantha Chandler  
    • David Chouinard 
    • Tommi Clark
    • Marilynn Cornish  
    • Kaye Dacio
    • Brigid Day
    • Harold A. DeHaven III, Five Leaves Trading Co. 
    • Isabel Delgado  
    • Jose Delgado   
    • Chad Dobson, Newday Growery Group 
    • Tara Drechsler 
    • James Dusek, Downtown Cannabis Company Owner 
    • Luc Dunton  
    • Kevin Eakes  
    • Mallory Eakes  
    • Brian Eisenberg  
    • Bailey Empey  
    • Olsen Evan
    • Christina Ferris  
    • Shelby Fitting
    • Ashley Flemming
    • Julia Fleener  
    • Kate Freja  
    • Diane Froelich 
    • Justin Fossum  
    • Kim Gaffi
    • Stacy Galando
    • Tracy M. Gleason, Leigh Enterprises 
    • Nicole Graf, Raven Co-Owner
    • Evan Gutierrez
    • Karen Hancock  
    • Jasmine Hargrove
    • Adam Hale, Olympic Mountain Bikes LLC
    • Jeremy Hatch  
    • Evan Hemphill  
    • Demaris Hendrix 
    • William Hendrix 
    • Noni Year Hight 
    • John Hight  
    • Maggie Hight 
    • Jilberto Iglesias, Atomic Budz 
    • Karen Johnson 
    • Terry Jones 
    • Lara Kaminsky, The Cannabis Alliance Government Affairs Liaison 
    • John Kingsbury, Patients United
    • Aaron Krumholz  
    • Neil Lequia, The Full Spectrum Founder
    • Kristine Lebow  
    • Jennifer LaBrec  
    • Laurence Leveen 
    • Nate Lewis, Oyster Bay Farm 
    • Chloe Linson
    • Zoe Lovato 
    • Wei Low 
    • Colin Lukey   
    • Caroline Koppelman
    • Peter Kretzman
    • Allison Krumley 
    • Matthew Madison  
    • Bryan McConaughy,  WSCA Lobbyist 
    • Kody McConnell, Chimacum Cannabis Co.
    • Robert Miller 
    • Alexandra Mitchell 
    • Scott Montgomery  
    • David Nelson 
    • Fiona Nash  
    • Cindy OʼBryant 
    • Crystal Oliver, WSCA Board Member
    • Kevin Oliver, National Organization for the Reform of Marijuana Laws (NORML) Washington State Chapter Director
    • Maurice Olivier  
    • Ashley Olson 
    • Nathan Osborn
    • Franco Philips
    • Jason Powell 
    • Mary Frances Potasnik  
    • Paul Potasnik 
    • Rebeca Potasnik 
    • Christopher Rosso
    • Sydney Quimby
    • Ricky Ramos  
    • Nelia Rein  
    • Karriann Rizzieri  
    • Jessica Rowe  
    • Drew Sanderson, Golden Leaf 
    • Naomi Sandler 
    • Chris Schneider 
    • Ryan Sevigny. Landrace Brands President and board member for the Cannabis Alliance and WSCA
    • Mallorie Shellmer
    • Matthew Skadsen
    • Angelo Soriano
    • Clayton Sperry
    • David Stein, Five Leaves Trading Co. 
    • Jessica Straight, Eagle Trees Farm 
    • Allie Sullivan  
    • Dane Sydow 
    • Jill Tiedeman  
    • William Toone  
    • Brennan Tucker  
    • Jeff Uptmor 
    • Amy Vaglica
    • Rachel Vanslyke  
    • Dave Varshock, BroCo LLC Head Grower
    • Lisa Vatske  
    • Steban Waller 
    • Anna Watt 
    • Brendon Weinmann, Bellevue Cannabis Company 
    • Tamara Weinmann, Bellevue Cannabis Company
    • Juliana Weyand  
    • Chris White  
    • Corey Wilson 
    • Greg Yelnosky
    • Sara Zikeli
    • Terry Ziniewicz

• Twenty two people spoke or signed in against the bill, with most supporting the concept of craft cannabis but dubious of the legislation’s potential benefits for small producers.
  • Paula Sardinas, FMS Global Strategies President and Washington Build Back Black Alliance (WBBBA, audio - 3m, video)
    • Claiming she’d worked on “over 220 pieces of cannabis legislation in 18 states” including legislation creating the state’s social equity program and task force, Sardinas represented “214 Black Washingtonians that were left out” of the cannabis sector. While HB 1855 was “well intentioned, it does get ahead of social equity,” she said, noting that no licenses had been issued under that program to date. “Looking at Ohio, that does vertical integration” of medical cannabis production, Sardinas said she’d spoken with people who reported that vertical integration wasn’t “helping the African Americans there.”
    • Speaking on behalf of retail licensee Kushmart, Sardinas commented that they would be “deeply disappointed to see this endorsement putting additional White opportunities ahead of those African Americans that are still working to get equity.” Mindful that African American opinion was “not a monolith and no one person speaks on behalf” of the community, Sardinas still saw herself as someone with a long history of political activism and remarked that Wicks had not contacted her in drafting HB 1855. She was “strongly opposed” to the bill because she wanted to see that “the 1% of the industry that is Black and African American needs to have their seat at the table.”
    • Insisting the bill was not “real equity and equality,” Sardinas asked lawmakers to wait until equity applicants had joined the cannabis sector before passing legislation where “we push other people ahead” as the state was “not ready for vertical integration.”
    • In May 2021, Sardinas resigned from the Washington State Commission on African American Affairs (CAAA) and as Co-Chair of WA SECTF.
  • Adán Espino, Craft Cannabis Council (CCC) Executive Director (audio - 2m, video)
    • According to Espino, the retailers in CCC were confident that “allowing non-retailers to sell directly to consumers is not beneficial to a well regulated marketplace.” He noted that the initiative legalizing cannabis in the state specified “retail is to be clearly separate from production.” Allowing a craft endorsement with direct sales “fundamentally breaks away from this long-standing arrangement,” Espino argued, subverting retailers in a way they found “dangerously unfair.”
    • “The Walmart of cannabis is only strengthened when some producers can sell directly to consumers,” claimed Espino. The endorsement “opens a wide door for large, multi-state corporations to enter the market with an advantage in the future that we can’t compete with,” he said. Espino concluded by asking legislators to “keep the will of the voters at the forefront of the conversation.”
    • Kloba relayed her understanding that the endorsement would only go to those businesses “that do not have multiple ownership of other companies,” then asked Espino to explain the reasoning that “a large multinational would be able to enter the market.” Espino agreed that the bill itself wouldn’t permit “specific, multi-state operators to sell directly,” but contended, “in the future a door is opened for that” (audio - 2m, video).
  • Paul Jewell, Washington State Association of Counties (WSAC) Policy Director (audio - 3m, video)
    • Jewell reported that county governments were opposed to legislation allowing retail sales from production facilities as the counties were “vested with local land use and zoning authorities.” He suggested that land uses were only allowed “after extensive, robust, lengthy, and expensive public processes” whereas the bill would circumvent local governments and stakeholders by permitting retail sales at premises zoned for commercial production or processing. “Compatibility, infrastructure requirements, risk, other public health and safety concerns” were contemplated by local officials before zoning land under their jurisdiction, Jewell indicated. He found the bill wouldn’t “respect” local government power, therefore undermining them, and asked the committee to oppose the measure so long as there was a “mandate to allow retail sales.” Jewell apologized to Wicks for the lack of notice, saying they hadn’t been aware of HB 1855 until recently, and offered to share alternative language.
    • Morgan asked about community input for local cannabis bans and moratoriums, which diminished the viability of more than half of the social equity retail license allotments (audio - 2m, video).
    • Wicks sought confirmation from staff that, under the bill, those securing an endorsement had to comply with local regulations. Sterling replied that “the bill does not specifically call that out but also does not make any changes to that.” Wicks confirmed she was open to “adjustments on that” (audio - 1m, video).
    • Representative Kelly Chambers asked how many producer/processor licenses had been issued, but Kloba said WSLCB staff could speak to that (audio - 1m, video).
  • Paige Berger, Hygge Farm Owner (audio - 2m, video)
  • Vicki Christophersen,  Washington CannaBusiness Association (WACA) Executive Director and Lobbyist (audio - 3m, video)
    • Though appreciative of Wicks’ effort “to help craft cannabis survive in this state,” she disagreed with the approach of the legislation.
      • Christophersen noted that “only one license type, tier 3 indoor growers, would not be eligible for this.” Those who were eligible would “be able to hold up to three licenses,” potentially as much as 90,000 square feet, an amount she claimed was “not craft.” Amenable to helping tier 1 and 2 licensees who were “struggling,” the group drew the line at “the largest conglomerates that have three farms.”
      • Christophersen mentioned that other sectors defined craft “by the output” rather than business structure or facility size. In spirits, any business producing “less than 150,000 gallons” was considered craft, she commented, believing output volume was a better system to define craft than “square footage.”
      • Christophersen also found it “complicated and a bit confusing in the limitation” on investments an endorsement holder could have in other cannabis businesses.
      • “Direct sales doesn’t really help a lot of farmers,” Christophersen alleged, except those “in urban areas.” Rural producers wouldn’t get help “at all,” she claimed, at least as compared to other approaches like reducing the excise tax “at retail, for craft products” or tax credits for craft endorsed businesses.
  • Stacey Peterson, Apex Cannabis Co-Owner (audio - 3m, video).
  • Andy Brassington, Evergreen Herbal Owner and WACA Board of Trustees Vice President (audio - 3m, video)
    • Noting that all cannabis licensees in the state (“except, maybe, one”) met the definition of a small business, Brassington said, "we all suffer the same economic challenges," regulations, and “have a lot in common.” He was in favor of supporting “truly craft businesses,” but opposed HB 1855 as he felt it would “reward more urban” and “high population area” businesses and "penalize" rural producers.
    • Instead, Brassington backed targeted grants, “tax rebates, tax holidays,” tax credits for any “truly well-defined craft business.” He agreed with Christophersen that output was a better indicator of craft status than the facility size.
  • Signed in but not testifying (15):
    • Scott Atkison, Zips Cannabis Owner 
    • Daniela Bernhard, Uncle Ike’s Co-Owner
    • Rebecca Burghardi, Northwest Cannabis Solutions Assistant Director for Research and Development and WACA Board of Trustees President
    • KC Franks, Lux Pot Shop
    • Eric Gaston, Evergreen Market Owner 
    • Mike Graham-Squire, Washington Association for Substance Abuse & Violence Prevention (WASAVP) Co-Vice President
    • Shea Hynes,  Lux Pot Shop and CCC 
    • Ramona Leber, WASAVP Founding Member and Treasurer
    • Rob McKinley, GrowOp Farms
    • Stacey Okland, Okanogan County Community Coalition Executive Director
    • Troy Peterson, Apex Cannabis Co-Owner and WACA Board of Trustees Member
    • Russell Rosendal, Salal Credit Union CEO and WACA Associate Member Representative
    • Adam Simon, The Reef Cannabis 
    • Scott Waller, WASAVP Tribal Liaison
    • Lydia Zibin 

• WSLCB Director of Legislative Relations Chris Thompson testified neutrally on the bill due to social equity concerns, and three other people signed in as ‘other.’
  • First responding to an earlier question from Chambers, Thompson said there were “1,068 producer licensees out there.”
  • Thompson knew there were “good intentions” behind the bill, noting its similarity to agency request legislation around tier 1 producers and medical cannabis from 2020, but the “primary” issue with HB 1855 was potential impacts on the social equity program to be administered by WSLCB - even though “we’re not there quite yet” (audio - 2m, video).
    • Thompson talked about how staff estimated “up to 75%” of existing producer licenses would qualify under the bill, though the number “seeking the endorsement” might be lower. Nonetheless, Thompson said agency leaders were concerned that “a potentially large number" of producers would gain retail privileges “before the social equity applicants have the opportunity” to join the state cannabis market.
    • Wicks asked Thompson if the agency had data on “independently owned producers” that might narrow the list of licensees qualifying for the endorsement (audio - 3m, video).
      • Thompson replied that WSLCB staff lacked a “crystal clear picture" of what management arrangements would prohibit holding a craft endorsement under the bill. “We don’t know exactly if there are some that have contracts that would not constitute ownership or control,” Thompson stated, emphasizing Wicks was aware of 2019 legislation “that removed a requirement for the cannabis licensees to provide copies of contracts to the LCB.”
      • Wicks followed up to see if the estimate by the agency was “taking into account any rulemaking you would put in place” to implement the bill that would “limit the number of people that are able to get this endorsement.” Thompson was unsure that rules could be crafted to “curtail” eligibility as the scope of an endorsement was “defined completely by statute.” He noted the bill language in Section 1(3) required that the “owner of a business, legal entity, or commercial entity with a marijuana producer and processor license and a craft cannabis endorsement may not have an ownership interest in, have a management role in, or exercise control over any other separately organized business, legal entity, or commercial entity with a marijuana license issued under this chapter.” Thompson remarked that this was the “operative” factor limiting the endorsement aside from “the factors already mentioned” like tiers and canopy. He was open to discussing amended language that would give agency representatives more leeway.
  • Signed in ‘other’ but not testifying (3):
    • Bob Cooper, WASAVP Lobbyist
    • Joshua Estes Pacific Northwest Regional Strategies LLC Managing Partner and Kushman Lobbyist
    • Sean O’Sullivan, Pacific Northwest Regional Strategies LLC Managing Partner and The Kushery Lobbyist

Information Set