WA House APP - Committee Meeting
(February 22, 2022) - SB 5796 - Public Hearing

Staff briefed on a bill with complex changes to recommended cannabis tax appropriations before testimony emphasized benefits for transparency, social equity, and local governments.

Here are some observations from the Tuesday February 22nd Washington State House Appropriations Committee (WA House APP) Committee Meeting.

My top 4 takeaways:

• Staff briefed on SB 5796, "Restructuring cannabis revenue appropriations," delving into the items lawmakers intended the dedicated marijuana account (DMA) to fund, and potential changes to allotments for public health, public safety, substance abuse prevention, and disbursements to local governments (audio - 8m, video). 
  • Initiative 502 originally included proposed spending from cannabis revenue on various topics. While the exact language and amounts approved by voters were non-binding and had been repeatedly modified by legislators since enactment, much subject matter has remained consistent. While the statute doesn’t constitute legislative appropriations outright, it was cited as justification for spending from the DMA for specific agencies and purposes in the state operating budget in odd years, and the supplemental budgets in even years.
  • Among other things, the spending recommended in the statute supported:
    • Consultation by the University of Washington Addictions, Drug, and Alcohol Institute (UW ADAI) with officials on “deciding which programs and practices to fund.”
    • An appropriation “to fund the marijuana social equity technical assistance competitive grant program under RCW 43.330.540,” part of the cannabis social equity program.
    • Contracting with the Washington State Institute for Public Policy (WSIPP) “to conduct the cost-benefit evaluation and produce the reports described in RCW 69.50.550.”
  • The bill, sponsored by Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) appointee Senator Rebecca Saldaña, received a hearing and was recommended by the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA). The legislation was subsequently heard and recommended by the Washington State Senate Ways and Means Committee (WA Senate WM). SB 5796 was passed by the senate on February 14th, resulting in an engrossed second substitute.
  • During the hearing, WA House APP Fiscal Analyst Andrew Toulon acknowledged that “current law provides direction to the legislature in the appropriation of monies” from the DMA, and cited the bill report on the measure’s effects:
    • “Rename[d] the Dedicated Marijuana Account to the Dedicated Cannabis Account.” 
    • Restructured, modified, and took out “certain appropriations to agencies, local governments, and the state general fund.” 
      • He noted this included some funding for “the Basic Health Plan Trust Account.”
  • Toulon remarked that the bill text “does not make for easy comparison of how the bill would change things” so he would review a Comparison of Cannabis Revenue Appropriations prepared by staff of the Washington House Office of Program Research (WA OPR). He told the committee that its projections were based upon approved spending from the 2021 biennium budget and the economic forecast from March 2021 covering “about $521 million in” DMA revenue.
  • Toulon identified agencies and areas which would experience change under SB 5796:
    • Washington State Department of Health (DOH) would “go from about $10.6 million in fiscal year [20]23 funds to about $11.2” million to pay for programs on “education, public health, poison control” and the “marijuana authorization database” for medical patients. Additional money would cover “tobacco and vaping education as well as marijuana education.”
    • Washington State Department of Commerce (WA Commerce) would receive increases of $1.35 million for equity grants and loans and $41,000 more towards the mentorship program.
    • Washington State Department of Agriculture (WSDA) would get an additional $8,000 for cannabis pesticide testing work.
    • Washington State Department of Ecology (DOE) would experience an “approximately $188,000 difference” for the organization’s “implementation of accreditation of marijuana product testing laboratories.”
    • Washington State Health Care Authority (WA HCA) was budgeted money for several programs:
      • The Basic Health Plan Trust Account would have “about a $7 million decrease.”
      • The WSIPP “cost-benefit evaluation which would increase by about $50,000.”
      • Spending on Community Health Centers; prevention and reduction of substance abuse; and the Washington State Healthy Youth Survey (HYS) would be “combined into one bucket” and receive a budget “decrease of about $4.5 million.”
      • WA HCA would see a total decrease of “about $11.5 million.”
    • Washington State Liquor and Cannabis Board (WSLCB) would be given $892,000 more to administer legal cannabis under the state Uniform Controlled Substances Act.
    • Washington State Office of the Superintendent of Public Instruction (WA OSPI) would receive a “modest” $17,000 increase for the Building Bridges program.
    • Washington State Patrol (WSP) would be allotted another “$370,000 for their…drug enforcement task force.”
    • University of Washington and Washington State University funding for “marijuana research” and “education materials,” would go up $99,000.
    • Some money set aside “in special appropriations for furlough days last year” would go to other agencies “for some compensation costs,” decreasing that allotment by $332,000.
    • With “the remaining funds going into the general fund” there was a “net difference in money that goes to the general fund [of] about $7.6 million. Of that, the amount that would be appropriated for general purposes is about a $3.2 million increase under the bill.”
    • The amount “distributed to locals would be about $4.5 million” higher under SB 5796.
  • Toulon informed the committee that some of the appropriations were “ongoing,” and that others ended “at the end of this biennium.” The ones that would end included the DOH “database, money for the Department of Ecology for [laboratory] accreditation standards, the state patrol,” and the WSDA program “for pesticide testing.”
  • He indicated that the bill language would “not be completely consistent with house bill 1859,” which that chamber passed on February 12th and “makes some appropriations.” Should representatives pass SB 5796, they may “need to do some work to align the bills,” remarked Toulon. He concluded with the note that some ongoing appropriations were “not driven by a percentage calculation, the bill requires an inflation factor in future years that would be based on the consumer price index for the Seattle area.”  
  • Representative Cyndy Jacobsen noted the “complicated” nature of the bill and asked for “the reasoning behind the adjustments." Chair Timm Ormsby remarked that was “more of a policy question" best answered by the prime sponsor, and sought to avoid staff “speculation” on legislator intentions (audio - 1m, video).
  • Representative Tana Senn inquired about the immediate funding changes compared to the “percentages” of cannabis revenue that “will dictate how future dollars are spent.” Toulon agreed the chart created by staff used a revenue forecast “when the budget was enacted,” but the legislation hadn’t “dramatically change[d] the story.” The decrease in WA HCA funding “was a little bit less” and increased cannabis revenues could “change the impact a little bit.” Regardless, the agency would still “get a chunk of that money whether or not the bill passes” (audio - 2m, video).
  • Representative Gerry Pollet wanted to know more about the reduction in WA HCA funds, noting that rather than the $11.5 million for prevention programs, they were in “one lump bucket and there’s no differentiation, but the bucket is smaller?” Toulon responded that the amounts were “driven by a percentage of the remaining revenues that happen after some of the agencies get their established amount.” This percentage after these appropriations would result in a smaller amount than what WA HCA “would be getting under the current” spending, he said. Toulon explained how the Basic Health Account money was matched by federal subsidies, so “if you pull that money out from [the DMA], those costs are still going to happen in the health care authority.” Lawmakers could either “add the funds through the state budget or direct the health care authority to reduce funding elsewhere to cover that,” he stated. Pollet understood that some of the revenue lost intended for Medicaid matching, “so we have to pay it one way or the other,” but otherwise there was “no direction for how [cuts get] distributed.” Toulon described how health centers currently received a percentage from the DMA, while prevention and HYS had “set amounts.” Under the “new construct” in the legislation WA HCA leaders could use the total sum “for all three areas” (audio - 4m, video).

• All testimony backed the bill, including representatives of local governments, a substance use prevention organization, and the Washington State African American Cannabis Association (WSAACA), as well as 46 people signed in favoring the legislation.
  • Candice Bock, Association of Washington Cities (AWC) Government Relations Director (audio - 1m, video)
    • Bock appreciated that the measure “does include a modest increase" for funding to local governments as her organization had a history of working with legislators on “cannabis revenue sharing.” She said the current biennium budget had “fully funded that” but the revised formula would make that sum “bump up a little bit.” She looked forward to seeing disbursement amounts to local governments increase “as revenues to the state increased.”
  • Linda Thompson, Washington Association for Substance Abuse and Violence Prevention (WASAVP) and Greater Spokane Substance Abuse Council (GSSAC) Executive Director (audio - 1m, video) 
    • Thompson said that the original initiative “promised that 10% of overall revenue” would go to prevention spending by DOH. In 2015, “the legislature reduced that amount,” changing the statute to instead say “up to 10%,” she reported. She commented that the $10.7 million received by DOH in 2022 was two percent of cannabis revenue, and while SB 5796 did increase the sum, it now had to cover “commercial tobacco prevention” as well. Concluding that cannabis prevention spending was “grossly underfunded in our community," allegedly impacting youth and “those with inequitable enforcement of marijuana,” Thompson suggested an appropriation of “$15 to 20 million would truly support prevention efforts across this state” and better reflect the percentage imagined by voters.
      • Thompson’s budget request was subsequently presented in an amendment to HB 1816 by Representative Paul Harris. The amendment was adopted by WA House APP on February 23rd, providing $15 million “solely for tobacco, vapor product, and nicotine control, cessation, treatment and prevention, and other substance use prevention and education, with an emphasis on community based strategies. These strategies must include programs that consider the disparate impacts of nicotine addiction on specific populations, including youth and racial or other disparities."
      • SB 5693, the senate version of the supplemental operating budget, was approved by that chamber on February 25th and the amendment was incorporated in the latest version by the house the next day.
  • Jim Buchanan, WSAACA President (audio - 1m, video) 
    • Wanting “full transparency of the cannabis tax money," Buchanan also expected help for “community infrastructure and investment.” He relayed that WSAACA members appreciated Saldaña's work drafting the legislation, feeling it was “crucial that all the tax monies are appropriated effectively and efficiently.”
      • At publication time, Buchanan was a relatively new member of WA SECTF work groups on Licensing and Community Reinvestment.
  • Philip Petty, WSAACA Vice President (audio - 2m, video) 
    • Petty was glad to be “figuring out where money is going” from cannabis taxes, saying he felt SB 5796 helped transparency in addition to Washington “communities that were harmed” under cannabis criminalization. He supported prevention spending as well as “investment in creating some legacy in Black and Brown communities.”
  • Julius Caesar Robinson (audio - 1m, video) 
    • A self-described “concerned citizen," Robinson said he’d witnessed “the impact of what this is doing in the communities as far as making sure the…wrongs are righted" after “decades of harm and inadequacies in the institutional policies” around cannabis.
  • Dawn Mason, King County Equity Now (KCEN) Board Member and former state representative (audio - 2m, video) 
    • Mason said in her time in the legislature she’d been the “sole African American in the minority party” and experienced “new industries and new economies” filling the state coffers, mentioning Costco, casinos, and horse racing. She remembered being told these areas would be “really important to my constituency…because it would bring participation and ownership, etcetera.” Mason encouraged committee members to "look at all of this collaboration that is coming together" on the bill.
  • Terry Jones (audio - 1m, video) 
  • Isaac Joy, KCEN President (audio - 2m, video) 
    • Joy viewed the legislation as increasing “the level of transparency in cannabis tax revenue" and helping “remedy a market that has entirely excluded the Black community, and other communities of color, from a now billion dollar state industry.” Arguing that state institutions “exerted systematic violence in destruction of Black communities" through roughly 10,000 cannabis possession arrests annually for a quarter century, he accused the perpetrating entities of harboring “anti-Black racism as evidenced by the arrest rates which saw the Black communities arrested at a rate three times more than Whites.”
    • After legalization, the Black community had been excluded from the legal market, Joy said, resulting in “only one percent of cannabis selling or producing businesses are Black owned.” He called the bill “a first, necessary step” in creating an equitable cannabis sector.
  • Elmer Dixon, Seattle Central District resident (audio - 1m, video) 
    • WA SECTF Community Reinvestment Work Group Member and Seattle Chapter of the Black Panther Party Founding Member
  • Signed in to testify “pro,” but unavailable:
    • David Caine, WSAACA
    • Jeffrey Cranford
    • John Page
    • Kelonda Petty
    • Bertram Williams
  • Signed in “pro” but not testifying (46):
    • Joani Ashby, WSAACA
    • Marcus Baca  
    • Elsa Brown, City of Seattle
    • JoAnn Buchanan
    • Leland Buchanan 
    • W. Joseph Buchanan  
    • Claude Burfect  
    • Kiera Condon, WSAACA 
    • Beth Ebel, WCAAP 
    • Dian Ferguson, Workable Solutions / My House 2 Yours 
    • Estevan Garrido
    • Darryl Glover  
    • Elinor Graham, Washington Chapter of the American Academy of Pediatrics (WCAAP)
    • Winona Hollins-Hauge
    • Julius Hubbard, WSAACA
    • Ricky Hubbard , WSAACA
    • Robert Hubbard, WSAACA
    • Teisha Hubbard, WSAACA 
    • Jessica Justice 
    • Christina Koch 
    • Herb Krohn, SMART Transportation Division/United Transportation Union
    • Doug Levy, Outcomes By Levy, LLC representing the cities of Renton, Lake Stevens, Fife
    • Roderick Long 
    • Jim Makoso, Flowe Technology CEO, Lucid Lab Group Director, WA SECTF appointee
    • Mellani McAleenan, Washington State Association of Counties (WSAC)
    • Cristina Mateo, FMS Global Strategies Chief of Staff 
    • Chris Mulick, Washington State University 
    • Debora Munguia, Capitol Consulting representing the cities of Cheney, Edmonds, Olympia and Shoreline; Mason and Thurston Counties
    • Briahna Murray, Gordon Thomas Honeywell Vice President, Contract Lobbyist for the cities of Tacoma and Spokane Valley 
    • Janis Murray, WSAACA
    • Stacey Okland, Okanogan County Community Coalition Executive Director
    • Cheryl Peterson 
    • Ray Peterson, WSAACA 
    • Lelach Rave, WCAAP 
    • Robert Redwine, WSAACA
    • Victor Rodriguez, WA Governor Council on Health Disparities Vice Chair
    • Robyn Rogers, WCAAP
    • Albert Sardinas, FMS Global Strategies and WA Build Back Black Alliance (WBBA) 
    • Crystal Shen, WCAAP
    • Micah Sherman, Raven Co-Owner and Washington Sun and Craft Growers Association (WSCA) Board Member 
    • Patty Seib,  Washington Academy of Family Physicians
    • Teresita Torres, Waypoint Consulting representing the City of Kirkland 
    • Scott Waller, WASAVP 
    • JaNaiya White
    • Aaron Williams 
    • Jesse Wineberry 

• 112 signed in against the bill, but as none offered public testimony nor indicated organizational affiliations, opposition to the bill remained abstract.
  • Cannabis Observer has made a public records request for written comments on SB 5796 in the hopes of gaining additional understanding about the individuals signed in against the legislation.
  • Signed in “con” but not testifying (112):
    • Cory Aeschliman  
    • Bethany Altobelli  
    • Janet Baker
    • Melissa Bauska
    • Charles Bauska  
    • William Bauska  
    • Monica Berry
    • Scott Berry
    • Joseph Bisom  
    • Anne Bladow 
    • Benjamin Bladow 
    • Elizabeth Bladow
    • Michael Bladow
    • Angela Blair 
    • Garrett Brown 
    • Michele Brown  
    • Lisa Buchanan 
    • Rachel Boyes 
    • Vickie Carper 
    • Sherry Christensen 
    • Nancy Churchill
    • Erika Clough
    • Bradley Corner
    • Leah Davis
    • Kevin Day
    • Nadezhda De Mars  
    • Lindy Doyle  
    • Kim Dutcher
    • Mallory Fisher
    • Stephanie Fiskum   
    • Linda Fletcher 
    • Eileen Forney
    • Craig Forney  
    • Katrina Gamble
    • Tamara Gambill  
    • V Ganow 
    • Tessa Garwood 
    • Karen Graff
    • Karen Green  
    • Dena Gregory  
    • Jeremy Hammer  
    • Monika Hancock  
    • Ron Hardy  
    • Gary He 
    • Janet He
    • Qichang He
    • Yan He
    • Linda Hee
    • Kathleen Hensley 
    • Russell Hensley 
    • Becky Hewlett  
    • Nessa Holmes  
    • Jennifer Holmes 
    • Troy Holmes  
    • Bethany Hunt  
    • Jennifer Husting 
    • Patrick Husting 
    • Lyudmila Ianosel  
    • Lori James 
    • Richard James 
    • Brian Johnson 
    • Gina Johnson
    • Laurie Langley  
    • Ted LaPoint
    • Deborah Leyde  
    • Dongfang Li
    • Brenda Mabus, CLW 
    • Jennifer Mazurkiewicz 
    • Matt McKee
    • Stacy Morford 
    • Rondi Mossman 
    • Emily Mullen 
    • Kevin Mullen 
    • Marcie Mullen
    • Val Mullen  
    • Lorinda Newton 
    • Stephanie Olmstead  
    • Debra Papenthien  
    • Tracy Pham  
    • Bobbie Piety 
    • Janet Pinto 
    • Rose Ragan 
    • Jenifer Rein 
    • David Reynolds
    • Gregory Reynolds 
    • Carl Ricks 
    • Angie Riggsby 
    • David Riggsby  
    • Cameron Robinson 
    • Christopher Rohwer
    • Michelle Schilter
    • Leanne Shipley  
    • Karen Snyder 
    • Michelle Storlie   
    • Jeanette Tiemersma  
    • Dee Tole  
    • David Tripp  
    • Bowic Tse 
    • Daniel Tse  
    • Angel Tucker 
    • Rhonda Uhrich  
    • Alan Van Cleave
    • Kim Van Cleave
    • Sylvia Vasilik 
    • Lauren Welch  
    • David Westhaver
    • Nancy Yan
    • Ann Yan
    • Deborah Yenubari  
    • Lydia Zibin 

• Several amendments seeking to revise the bill were proposed ahead of its executive session on February 28th - but all were withdrawn after a House Democratic Caucus member proposed striking the bill down to conduct a study instead.
  • The striking amendment was proposed by WA House APP Vice Chair Mia Gregerson (audio - 1m, video) and removed “all changes to how revenues from marijuana related activities are to be appropriated by the legislature. The Dedicated Marijuana Account is not renamed the Dedicated Cannabis Account. Requires the Joint Legislative Audit and Review Committee to conduct a review of the appropriation and expenditure of cannabis revenues and report to the appropriate legislative committees by July 1, 2023” (after the 2023 legislative session). The amendment was unanimously adopted by voice vote.
  • The resulting amended legislation was recommended by the body and referred to WA House RUL. The diminished bill would have until March 4th to be calendared, debated, and passed by the house. The senate would need to concur with or dispute any new bill language before the conclusion of the regular session on March 10th in order for the bill to be enrolled for executive action by the governor’s office.

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