City of Seattle - City Council - Council Meeting
(August 9, 2022) - Social Equity Ordinances

After months of deliberations, the city council referred three cannabis equity ordinances drafted by staff of the mayor’s office to the Finance and Housing committee for consideration.

Here are some observations from the Tuesday August 9th Seattle City Council (City of Seattle - City Council) Council Meeting.

My top 5 takeaways:

• For several months, city council members had been vetting topics for ordinance language to address concerns about employee and licensee equity in the cannabis sector in conjunction with staff from the Seattle mayor’s office.
  • The Seattle City Council Finance and Housing Committee heard input from stakeholders and city officials on the cannabis market and worker equity during months preceding the city council meeting.
    • On July 20th, representatives of Mayor Bruce Harrell’s office briefed on a trio of potential ordinances covering worker retention, a possible social equity category for Seattle cannabis licensees, and an ordinance positioning the city for future equity steps.
    • At that time, Committee Chair and City Councilmember Teresa Mosqueda expected the draft ordinances to appear on an introduction and referral calendar “that first week of August.” The draft legislation was sent by the mayor’s office to the city clerk on July 27th.

• Council Bill 120391 (CB 120391) - “establishing the City’s commitments and plans for supporting cannabis workers and supporting communities disproportionately harmed by the federal War on Drugs.”
  • The summary and fiscal note background established that “The federal War on Drugs disproportionately impacted Black, Indigenous, and People of Color. Cannabis businesses operating in the City of Seattle must be licensed by both Seattle and the State of Washington; and Seattle cannabis businesses are owned primarily by White men.”
  • The council bill memorialized “the City intent to take a series of actions:
    • 1. Include issues of cannabis equity on the City’s 2023 State Legislative Agenda.
    • 2. Include issues of cannabis equity on the City’s 2023 federal Legislative Agenda.
    • 3. Continue to advocate partnership with King County to seek the expungement of cannabis convictions handed down prior to 2014.
    • 4. Use summer legal interns to work on expungement of cannabis convictions.
    • 5. Continue to partner with organizations that represent communities negatively impacted by the federal War on Drugs to ensure increased opportunities to ameliorate that damage including, but not limited to, cannabis related business ownership.
    • 6. Partner with organizations advocating for the advancement, safety, and retention of cannabis workers.
    • 7. Pursue funds from the State and federal governments to support this work.
    • 8. Fund a Cannabis Needs Assessment to provide demographic information about workers currently employed in Seattle’s cannabis industry; determine the highest training needs of those workers wishing to advance in the cannabis industry and become owners; and include recommendations about whether and how to fund such training.
    • 9. Appoint an advisory committee comprised of workers, industry members, and community members impacted by the federal War on Drugs.”
  • Fiscal implications of adopting the measure indicated a need to “fund a Cannabis Needs Assessment, which is estimated to cost $250,000. There is currently no identified source of funding for the Cannabis Needs Assessment.” 
  • The memorandum notes that the assessment would:
    • “clarify investments and improvements that could be supported by the City;
    • provide demographic information about cannabis industry workers; evaluate and determine the training needs of workers to advance beyond entry-level positions and those seeking to become new owners; and 
    • make recommendations on whether to fund training and, if so, how.”
  • The memorandum also mentioned “one potential amendment identified for the Committee’s consideration during the August 17 committee meeting. Proposed Amendment 1, sponsored by Councilmember Mosqueda, would add a new Section 10 to CB 120391 to provide additional guidance on the preferred characteristics for the organization selected to conduct the Assessment.”
  • Learn more about the proposal from the bill text and legislation details.

• Council Bill 120392 (CB 120392) - “relating to licensing cannabis businesses in Seattle; establishing social equity applicant criteria for cannabis businesses; setting fees for cannabis businesses; expanding the purposes for which a cannabis license may be issued in the future; updating references in the code to ‘cannabis’; and amending Chapter 6.500 of the Seattle Municipal Code.”
  • The summary and fiscal note described the measure as potentially altering city codes “with respect to licensing cannabis businesses in several ways.
    • 1. The legislation would create a new ‘social equity applicant’ definition for those applying for a Seattle cannabis license. The Seattle license annual fee for those who meet the social equity applicant definition would be zero.
    • 2. The legislation would expand the purposes for which a Seattle cannabis license may be issued in the future, anticipating future actions by the State to expand the types of State-licensed cannabis businesses.
    • 3. The legislation updates references in the code from ‘marijuana’ to ‘cannabis.’”
      • This change was likely reflective of the passage of HB 1210 on March 11th by the Washington State Legislature. That law switched mentions of ‘marijuana’ in state statute to ‘cannabis’ due to the racially-charged history around the term in the U.S.
  • As to revenue impacts, the fiscal note stated, “If this legislation is implemented, annual fees could decrease by a nominal amount depending on the number of social equity applicants for Seattle cannabis licenses.”
  • The memorandum explained that the bill would create “two new types of licenses for ‘social equity applicants’ (one for businesses located in Seattle and one for those located outside of Seattle), with eligibility defined as follows:
    • 1. An applicant who has at least fifty-one percent ownership and control by one or more individuals who have resided in a disproportionately impacted area for a period of time defined in rule by the [Department of Finance and Administrative Services] Director after consideration of the time period established by the Washington State Liquor and Cannabis Board [WSLCB]; or
      • Disproportionately impacted areas (DIAs) in the proposal would utilize “the State’s definition in RCW 69.50.335.”
      • On August 3rd, delays in producing the DIA data, formula, and maps were referenced by the WSLCB board. The maps would be utilized by prospective equity applicants to see if they qualify, and by officials when prioritizing equity licensing.
      • The City of Seattle cannabis business equity screen features an interactive data chart showing “marijuana violations on record with the Seattle Municipal Court by year, residential zip code, race, and gender from January 1996 to August of 2019.”
    • 2. An applicant who has at least fifty-one percent ownership and control by at least one individual who has been convicted of a cannabis offense, a drug offense, or is a family member of such an individual; or
    • 3. An applicant who meets criteria defined in rule by the Director after consideration of the criteria established by” WSLCB.
  • Besides exempting equity licensees from the annual cannabis license fees, the ordinance “would also delete the $250 fees for premises reinspection and license reinstatement” as well as “expand the purposes for which a cannabis license may be used in the event that the legislature issues or authorizes local jurisdictions to issue on-premises consumption licenses, delivery licenses, and/or special event consumption licenses. It also expands eligibility for a City cannabis license to match any cannabis business practice licensed by the LCB license.”
  • Additionally, “two potential amendments have been identified for the Committee’s consideration and possible vote on August 17.
    • Amendment 1, sponsored by [City Councilmember Lisa Herbold], would reduce license fees from $3,500 to $2,000 for small cannabis producers and transporters in the City of Seattle. This is based on a draft [Department of Finance and Administrative Services] FAS proposal from 2020, which estimated the fiscal impact at $4,500 per year.
    • Amendment 2, sponsored by [Councilmember Sara Nelson], would prioritize social equity license applications from former owners of medical marijuana dispensaries who applied for but were not awarded state licenses after the state legalized cannabis possession and sale in 2012.”
  • Find out more about the legislation from the bill text and legislation details.

• Council Bill 120393 (CB 120393) - “relating to employment in Seattle; adding a new Chapter 8.38 to the Seattle Municipal Code; and amending Sections 3.02.125 and 14.20.025 of the Seattle Municipal Code.”
  • The summary and fiscal note stated that the proposal “requires cannabis business employers to take certain actions to reduce job insecurity caused by changes in ownership. Covered employers are those who own, operate and/or control a cannabis business. Covered employees include those who work at a covered cannabis business for at least 30 days prior to a change in ownership.” The proposed changes sought to “improve job quality, training, and career pipelines for communities of color harmed by the War on Drugs while ensuring that workers do not lose those higher quality jobs in the instance of a change in ownership.”
  • Specifically, the ordinance would establish:
    • 1. “Outgoing employer obligations
      • a. Outgoing employers that undergo a change in ownership must provide a preferential hiring list to the incoming employer.
      • b. Outgoing employers must post notice of the change in ownership at the jobsite.
    • 2. Incoming employer obligations
      • a. Incoming employers must hire from the preferential hiring list for 180 days. If an employee accepts a job offer, the employer must retain the employee for no less than 90 days and can only discharge the employee for just cause during this time period.
      • b. Incoming employers must continue to post notice of the change in ownership for 180 days.
    • 3. Notice and Posting. Employers must provide a notice of rights afforded under the ordinance. Employers must also provide a written notice to employees of the names used by any associated integrated enterprises.
    • 4. Recordkeeping. Employers must maintain records that document compliance for a period of three years.
    • 5. OLS Enforcement and Outreach. The legislation provides authority to the Office of Labor Standards (OLS) to provide rulemaking, outreach and enforcement related to the new labor standard.”
  • Fiscal implications from the bill derive from “an implementation and enforcement role for OLS. Additional resources to support outreach and education as well as for required notices and rulemaking activities should be considered in the Mayor’s proposed budget and future budget deliberations.
    • It is estimated that OLS will incur approximately $21,000 in one-time implementation costs to support initial implementation activities, including translation and interpretation services and other rulemaking costs and activities, and outreach, communication, and educational activities for the initial outreach to those impacted by the ordinance. In addition, OLS will have ongoing annual costs of approximately $4,900.”
  • The long term goal of the language was to “be similar to other labor standards that OLS provides education and outreach on and enforces...Education, outreach and enforcement will be key to the effectiveness of providing employers with information on their responsibilities, employees information on their rights, and promoting compliance with required protections and benefits.”
  • A memorandum on the council bill offered a background explanation that “in one instance discussed in committee, all employees in a cannabis business were laid off when that business was sold to a new owner. Currently there are no protections in place for cannabis workers to retain their jobs in the event of a change in business ownership.
    • Job insecurity and transparency are of particular concern for employees in the cannabis industry, in part because of the way that employment is structured in the industry...The legislation is therefore intended to give workers transparency about entities that are associated with the cannabis business.”
    • The concept was “largely modeled after the Hotel Employees Job Retention Ordinance (HEJR), passed by Council in 2019,” though it “creates an obligation on employers in the cannabis industry that is not present in HEJR. To provide more transparency about the entities associated with a cannabis business, cannabis employers are required to update their Notice of Employment Information (NOEI) – a notice required under the Wage Theft Ordinance – with the names used by any associated integrated enterprises of the employer. While the bill as drafted recognizes the unique challenges present in the cannabis industry, the Committee may want to more closely align with legislative precedent from the hotel industry to maintain consistency across industries.”
  • Find out more about the proposal from the bill text and legislation details.

• The council voted to adopt the Introduction and Referral Calendar (IRC) including the three ordinances which were scheduled for discussion during a special meeting of the Finance and Housing Committee on Thursday August 11th.
  • During the August 9th meeting, Council President Debora Juarez moved to approve the IRC (audio - <1m, video). Following discussion of an amendment adding an unrelated resolution to the calendar, the council approved the amended IRC (audio - 1m, video).
  • All three ordinances were referred to the Finance and Housing Committee, which scheduled a special meeting to talk about various bills. Memoranda for all three feature a request that “Councilmembers who would like to prepare amendments should contact Central Staff no later than noon on August 12. The Committee will discuss and potentially vote on amendments and the bills during the regularly scheduled meeting on August 17.”
  • Later that day, the Mayor’s office published a press release on the introduction of the “suite of bills” which included quotes from Mosqueda, Craft Cannabis Coalition Executive Director Adán Espino, and UFCW 3000 Secretary-Treasurer Joe Mizrahi.

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