WA Senate - Session
(February 28, 2023) - SB 5080 - Second and Third Reading

Two amendments added “sideboards” and data analysis to legislation to modify and expand social equity licensing; Senators gave favorable remarks before passing the bill.

Here are some observations from the Tuesday February 28th Washington State Senate (WA Senate) Session.

My top 2 takeaways:

• Senators considered two amendments to SB 5080, "Expanding and improving the social equity in cannabis program."
  • An agency request bill from the Washington State Liquor and Cannabis Board (WSLCB) that included some recommendations from the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF), the measure received a January 10th public hearing by the Washington State Senate Labor and Commerce Committee (WA Senate LC).
    • The legislation was substituted, amended, and recommended for passage on January 31st before being heard by the Washington State Senate Ways and Means Committee (WA Senate WM) on February 13th, where it was further modified by lawmakers during their February 20th executive session.
    • The second substitute bill was scheduled for floor consideration by the Washington State Senate Rules Committee (WA Senate RULE) on February 27th.
  • Saldaña moved for the bill to proceed to second reading, where two amendments were up for consideration (audio - 1m, video). The first, amendment S-1919.2, she authored and would alter SB 5080 in the following ways (audio - 1m, video):
    • (1) Prohibits the Liquor and Cannabis Board (LCB) from issuing a cannabis retail license for any premises not currently licensed if the LCB receives a written objection from specified local authorities within 20 days of providing notice and the objection is based on a preexisting local ordinance limiting outlet density in a specific geographic area.
    • (2) Permits LCB to issue up to 10 cannabis producer licenses under the Social Equity in Cannabis Program (Program) beginning January 1, 2025, which must be issued in conjunction with a cannabis processor license.
    • (3) Allows the LCB to increase the number of cannabis producer licenses for the Program in the same manner as increases in the number of cannabis retailer licenses.
    • (4) Requires the Joint Legislative Audit and Review Committee, by June 30, 2025, to review and report to the Governor and appropriate committees of the Legislature regarding whether current levels of cannabis production align with market demand and capacity, including the impact of any additional cannabis producer licenses granted under the act.”
    • Saldaña framed her amendment as helping to ensure as “we are trying to right some historic wrongs and create pathways for opportunity, that we do it with some sideboards to make sure that it is actually creating equity.” She said her amendment would keep WSLCB officials from issuing equity licenses if the local government where the business was to be sited objected "to make sure that we don't have oversaturation" of the retail market, or “density in places where it is not going to be good for the business or for the communities.” Saldaña then explained the amendment also “narrows how many producer licenses we have for this program down to ten and delays that by a year…to give time for preparation,” as well as including a JLARC “study to make sure that we're understanding…how saturation is working, how density is working, and be able to come back and learn from that for any future action.” Adding that the language was “well worked and negotiated with both sides of the chamber and communities that want this,” she urged passage of the amendment (audio - 2m, video).
      • Previously, the board had been required to receive but only consider written objections from local governments, including rules on objecting to licenses and license renewals requiring WSLCB staff to deny issuance of an equity license based on written objection would create a new barrier to market entry. However, the required denial would only be for written objections from jurisdictions already prohibiting cannabis businesses and, under revised rules, equity businesses were permitted one-time portability of their license to a receptive jurisdiction.
      • A prior version of the amendment, S-1919.1, had identical effects for (1) and (3), while effect (2) “Stagger[ed] the issuance of cannabis producer licenses under the Social Equity Program (Program) by permitting the LCB to issue 25 producer licenses beginning January 1, 2024, and 25 producer licenses beginning January 1, 2025, which must be issued in conjunction with a processor license.” There was no study under this draft.
    • Senator Ann Rivers spoke of her appreciation for Saldaña working with Senator Curtis King and herself “ to come up with something that can truly be equitable for those who are entering…the legalized cannabis market.” Following a “cooling off in our sales, probably because people are actually leaving their homes now because [the coronavirus pandemic was] over,” she also blamed a “significant canopy issue” producing “a lot of flower in the state.” Reasoning that licensed producers “aren't making as much money because there's a glut,” Rivers commented that the amendment would keep someone from entering “into a market where they're doomed to fail; where they can never make enough money.” She further observed lawmakers were going to be “turning a lot of dials, and so it will be important for us to monitor what we're doing to make sure that the folks who are getting these licenses can actually be successful” (audio - 2m, video).
    • The amendment was adopted into the bill by voice vote (audio - <1m, video).
  • Then, Senator Mark Mullet moved for his amendment S-1926.1 to be incorporated into the bill (audio - <1m, video).
    • It required WSLCB “adopt rules establishing a threshold of the number of licenses created in the Social Equity in Cannabis Program that can be located in each county.”
    • Mullet claimed this additional restriction would make sure “that we're not going to end up with all 50 some licenses ending up in the same place” (audio - <1m, video).
      • At time of publication, WSLCB had identified 45 retail allotments available for equity licensees.
      • Mullet also had an earlier draft, amendment - S-1925.1, that instead conditioned WSLCB “ability to issue certain inactive cannabis producer licenses on specified federal actions relating to the interstate transfer of cannabis occurring.”
    • Rivers agreed and encouraged passage (audio - <1m, video). A voice vote then affirmed a majority supported the amendment (audio - <1m, video).

• The amended substitute bill was then debated, where positive remarks from members of both caucuses preceded successful passage of the proposal, sending it to the Washington State House of Representatives (WA House).
  • After moving for passage of the bill, Saldaña talked about the “momentous" nature of SB 5080, as it helped maintain the state’s position as a “leader in saying that cannabis should be regulated and legalized.” She noted the industry had become “one of the largest contributors back and to [the State] general fund and [was] able to provide prevention, and treatment, and healthcare to Washingtonians” (audio - 5m, video).
    • Saldaña felt that when enacting cannabis legalization, lawmakers “were trying to be very careful and we put many stipulations…around the regulation of who could be an owner…and whether that was intentional or not, what we did by not looking at the historic harms of the War on Drugs” was design a system “where very few people of color” were “in this business right now.”
    • Noting the years of WA SECTF meetings, Saldaña described how “people across our state volunteered hours and hours of time sitting before their screen to be able to help shape what the task force recommendations would be.” Though previously passedcannabis equity legislation had centered on additional retail licenses, as WA SECTF appointee and Co-Chair, she’d heard calls for producer and processor licenses, and SB 5080 added that as a “pathway” for equity businesses. “This bill is not exactly what either the task force or Community asked for, but we do think it is a strong piece of legislation that creates real opportunity for new businesses to open up,” she said, before addressing other specific effects of the measure:
      • Extending the “social equity and cannabis program for a full ten years”
      • Providing “one time annual fee reimbursement to licensees that provide and submit social equity plans…to make sure they are participating in creating opportunities for co-ownership [and] for career opportunities within the current retail licenses”
      • Requiring WSLCB “work with a third party to review and score program applications”
      • Several “other little things more technical”
    • Saldaña stated SB 5080 represented elected officials “doubling down on equity and looking not only at intention, but outcomes so that over time we see that this industry is one that is open to everyone.” She mentioned the bill required WSLCB leaders to return and inform lawmakers about the status of the program as well as offer “recommendations to us to consider new licenses or other changes to this policy.” Attempting to address “disparate impacts on members of our communities and across the state” related to the history of cannabis policing, Saldana argued the legislation “begins to both address that harm and create a new pathway for opportunity and inclusion.” 
  • Rivers acknowledged “all the hours" Saldaña had spent working on the legislation and broader issue of social equity in cannabis, “and indeed continues her work here.” She indicated that while SB 5080 had many components, the “overarching goal [was] to assist those who have been marginalized to develop generational wealth, something that can be ongoing” (audio - 2m, video).
    • “I don't think this bill is perfect,” said Rivers, or “not any less perfect than any of the other bills we've seen.” She expected officials would be involved in social equity for “some time to come as we get the results of the studies, and as we hear from JLARC about the canopy…and all of the intricacies of this bill.” Rivers felt the policy was “worth doing well, and it's worth doing based in data, and really that's what this bill seeks to do.”
    • “I really must applaud Senator Saldaña’s efforts here. This has been Herculean, extraordinarily difficult, and I'll be voting yes, though I anticipate there will be a mixed vote on my side,” added Rivers.
  • WA Senate President Pro Tempore Karen Keiser agreed that many people had “worked incredibly hard" to get SB 5080 to the floor, candidly stating, “I would have never predicted that we would have the kind of agreement that we've been able to get to just a week ago.” Also WA Senate LC Chair, she felt it was “such a wonderful day to see us coming together finally, after all of these difficulties” and lauded the bill as “an agreement that will last because we came together in good faith to work together, and we will continue to do that” (audio - 1m, video).
  • Mullet also offered his support of the bill, even after he’d previously opposed the measure in WA Senate WM, crediting Saldaña for finding a way “we can accomplish the goals of this bill, but still respect some of the concerns the people currently in industry have about what happens when you add more licenses to the state of Washington” (audio - 1m, video).
  • King, also a WA SECTF appointee, was similarly complimentary of Saldaña’s work, feeling as though “two and a half years [of WA SECTF meetings] seems more like four or five.” He agreed with the notion that this wasn’t a perfect bill, but called for passage, confident that “we have given those people that are going to get a license under the social equity program the best chance to be successful, and that's been one of our concerns as we've gone through this whole process” (audio - 1m, video).
  • A roll call vote resulted in all Democratic Senators present voting in favor of the legislation, along with four Republicans: King, Rivers, Senator Jeff Holy and Senator Ron Muzzall. All other Republican members opposed the bill. Two members, Senator Matt Boehnke and Senator Patty Kuderer, were excused from the vote (audio - 4m, video).
  • After passage, the legislation would be transmitted to the WA House where the bill was expected to be introduced on March 2nd and sent to the Washington State House Regulated Substances and Gaming Committee (WA House RSG).
    • The committee heard another social equity bill on February 16th, but did not advance it before a legislative cutoff date.
  • The WSLCB application window for social equity retail licensees was opened on March 1st, and would conclude on March 30th. The agency social equity page indicated people can “Apply for the Social Equity Program through Business Licensing Services through the Department of Revenue here. You will need to use your SecureAccess Washington login. See the applicant checklist for more info.”
    • Agency leaders discussed subsequent stages of the application process on February 28th.

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