WA Senate WM - Committee Meeting
(February 18, 2023) - SB 5367 - Public Hearing

Within its fiscal committee, testimony on a cannabinoid regulation bill championed by WSLCB was divided, there were THC threshold concerns, but also claims the bill helped cannabis tax revenue.

Here are some observations from the Saturday February 18th Washington State Senate Ways and Means Committee (WA Senate WM) Committee Meeting.

My top 4 takeaways:

• Staff took committee members through the impacts and costs related to Washington State Liquor and Cannabis Board (WSLCB) request legislation, SB 5367, “Concerning the regulation of products containing THC.”
  • The bill was heard, and amended by the Washington State Senate Labor and Commerce Committee (WA Senate LC) on January 30th and February 13th, respectively. WA Senate LC Counsel Matt Shepard-Koningsor briefed from the bill analysis, where the statutory changes relayed the measure (audio - 2m, video):
    • Differentiates between certain hemp and cannabis products intended to be consumed or absorbed inside the body based on tetrahydrocannabinol [THC] concentration.
    • Creates a new definition of "hemp consumable" in the hemp statutes, "tetrahydrocannabinol" or "THC" in the Uniform Controlled Substances Act (UCSA), and amends the definitions of "cannabis," "cannabis products," "isomer," and "THC concentration" in the UCSA.
    • Modifies the permitted activities of licensed cannabis producers and processors regarding the enhancement of cannabidiol (CBD) concentration in certain cannabis products.
    • Requires certain cannabis products to include a label indicating the amount of any synthetically-derived CBD in the product, and products containing hemp consumables to conform to applicable federal and state labeling laws and be labeled to disclose that hemp consumables are included.
    • Prohibits any person from manufacturing, selling, or distributing cannabis products without a valid state-issued license.
  • WA Senate WM Outlook Coordinator Corban Nemeth spoke to the revised fiscal note, which indicated “general fund state costs of $391,000 in the 23-25 biennium and $524,000 over the four-year outlook period…for the state patrol to develop new testing standards, and the ongoing workload associated with testing in the Crime Lab Division.” WSLCB costs would come from the dedicated cannabis account, he added, amount to “$440,000 in the 2325 biennium and $758,000 over the four-year outlook period…for one and a half FTEs [full time employee]  for educational efforts related to the new standards in the bill, and workload associated with projected additional complaint investigations” (audio - 1m, video).
    • The initial fiscal note by Washington State Patrol staff had been a source of contention by WSLCB leaders, and the purchase of additional equipment for testing was revised in substitute bill language recommended by WA Senate LC.
    • Contract information for the Washington State Department of Agriculture states they have entered into $800,000 contracts with two companies for “Gas Chromatograph with triple Quad Mass Spectrometer detector” as well as a “Liquid Chromatograph System with Triple Quad Mass Spectrometry detector” in order to “ to assist [WSLCB] in testing cannabis products for pesticide residues.”

• The bill sponsor and five public commenters encouraged passage to take action on unregulated hemp consumable items sold in stores and online in the state.
  • Senator June Robinson articulated the problem addressed by the legislation as the "public policy issue" of having “products containing THC that are derived from hemp” sold and “not controlled” in the “regulated cannabis market." She pointed to potential for minors to get possession of readily available hemp edibles as “very alarming to me,” and a good reason to advance the legislation. Robinson also mentioned her proposed amendment to lower the THC threshold for hemp items further, expecting committee members to hear testimony where “people want higher, people went lower. I feel like 0.5 and 1.5 [milligrams] per package is low enough to not be impairing” (audio - 3m, video).
  • WSLCB staff and two public health and prevention organization leaders testified SB 5367 was less “costly” than a previous legislative attempt in 2022, and that selling cannabinoid items without collecting cannabis excise taxes “could really harm prevention efforts."
    • Megan Moore, Washington State Public Health Association (WSPHA) Co-Chair of the Policy Committee (audio - 2m, video)
    • Justin Nordhorn, WSLCB Director of Policy and External Affairs (audio - 2m, video)
    • Scott Waller, Washington Association on Substance Abuse and Violence Prevention (WASAVP) Vice President (audio - 2m, video)
  • Two cannabis sector representatives also backed the bill and the amendment to lower the THC threshold further, predicting implementation would help tax revenue while also keeping “any intoxicating product” in the adult-use cannabis market.
    • Ezra Eickmeyer, Producers Northwest Founder (audio - 2m, video)
    • Lukas Hunter, Harmony Farms Director of Compliance (audio - 2m, video)
    • Both Moore and Eickmeyer testified as ‘other’ during the January 31st policy committee hearing.

• Three people objected to the limits, definitions, and potential negative impacts the bill might have on businesses and hemp consumers.
  • Two hemp industry members raised issues around the effectiveness of definitions in the bill, whether it would adequatelyaddress "synthetic products that are in the market,” and warned that "thousands of your residents will lose access" to full spectrum CBD products. They called for amended language and to look at findings of a Colorado hemp task force.
    • Industrial Hemp Association of Washington (IHEMPAWA) Executive Director Bonny Jo Peterson (audio - 3m, video)
    • Jared Stanley, Charlotte's Web Co-Founder and Chief Cultivation Officer (audio - 2m, video)
    • Chair Christine Rolfes asked Stanley about selling hemp items in the adult-use cannabis market. He responded that their hemp production model wouldn’t work in Washington, and the likeliest outcome for his company was to “cease shipping into the state of Washington” (audio - 2m, video).
  • Jim MacRae, challenged the definition of THC in SB 5367 as "horrific" and unworkable (audio - 2m, video, written testimony).

• Two cannabis industry representatives explained their critiques of the bill allowing people to buy “six to seven packages…to get up to the maximum serving amount” of THC and that “we're going to continue to advocate that it be lowered to zero.”
  • Washington CannaBusiness Association (WACA) Deputy Director Brooke Davies stated they backed the spirit of the legislation but conveyed her group’s stance of ‘other’ as a matter of concern over where THC could be sold. She remarked that the THC limit in the proposed amendment was “headed in the right direction," but WACA members only wanted THC available in cannabis products. Davies argued the “largest consistent decreases in sales for a period of several months” was “partly due to the prevalence of unregulated hemp-derived THC products available outside of the regulated market where they're not subject to the 37% excise tax” (audio - 2m, video).
  • Adán Espino, Craft Cannabis Coalition (CCC) Executive Director, was against the bill and offered similar concerns that allowing any THC content outside the adult-only system left room for people to overconsume. “I think really our issue at this point is that delta-9 THC…is the main regulated substance in the regulated market” and the compound should be prohibited outside of that (audio - 1m, video).

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