WA House RSG - Committee Meeting
(March 20, 2023) - SB 5080 - Executive Session

Members modified the process for local authorities to object to license applications and made technical corrections before approving a bill to expand the social equity in cannabis program.

Here are some observations from the Monday March 20th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 3 takeaways:

• A briefing on SB 5080, "Expanding and improving the social equity in cannabis program," covered two amendments on local government objections and “technical or clarifying” modifications (audio - 4m, video).
  • Passed following amendment by the Washington State Senate (WA Senate) on February 28th, the request legislation from the Washington State Liquor and Cannabis Board (WSLCB) included some recommendations from the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF). The committee heard the bill on March 14th.
    • At time of publication, the WSLCB social equity program was accepting applications for equity retail licenses until March 30th.
  • Committee Counsel Peter Clodfelter told members the proposed substitute bill had one amendment offered by Representative Kristine Reeves, a striking amendment, H1688.2:
    • (1) Requires the legislative authority of an incorporated city or town, or county legislative authority, to send any written objection relating to the physical location of a proposed new retail cannabis outlet seeking to be licensed, instead of allowing for an official representative or representatives of an incorporated city or town, or county legislative authority, to send the written objection. 
    • (2) Specifies that for purposes of the proposed authorization for local governments to submit written objections against, and prevent the issuance of, new cannabis retail licenses based on a preexisting local ordinance limiting outlet density, a preexisting local ordinance is an ordinance enacted and in effect before the date the applicant submits an application for a cannabis retail license to the Liquor and Cannabis Board (LCB) identifying the premises proposed to be licensed. Prohibits objections related to the physical location of a proposed premises by a local government based on a local ordinance limiting outlet density that is enacted after the date the applicant submits an application for a cannabis retail license to the LCB identifying the premises proposed to be licensed. 
    • (3) Restructures the proposed provision that says nothing in the uniform controlled substances act limits an incorporated city or town, or county legislative authority, from enacting an ordinance prescribing outlet density limitations, to instead authorize an incorporated city or town, or county legislative authority, to enact an ordinance prescribing outlet density limitations. Provides that an ordinance may not affect licenses issued before the effective date of the ordinance prescribing outlet density limitations.
    • However, Reeves also offered amendment - H1692.2 incorporating “technical and clarifying changes” to the striking amendment:
    • (1) Corrects a reference to a date range in the context of which cannabis licensees who meet social equity applicant criteria may be eligible for technical assistance grants, so that both date range references in the technical assistance grant program would be to cannabis licensees holding a license issued after April 1, 2023, and before July 1, 2024.
    • (2) Adds a reference to "cannabis production" to a provision where only cannabis retail and processing business activity are referenced, to specify that licenses issued through the social equity program may generally be located in any city, town, or county that allows cannabis retail, cannabis production, or cannabis processing business activities, as applicable, at the proposed location.
    • (3) Amends the definition of "social equity goals" to also reference goals of increasing the number of cannabis producer and processor licenses (not only cannabis retailer licenses) held by social equity applicants from disproportionately impacted areas.
    • (4) Moves the amended definition of "social equity plan" to the definition section of the Uniform Controlled Substances Act and corrects related references.
  • Ranking Minority MemberKelly Chambers delved into whether technical assistance provided through the Washington State Department of Commerce (WA Commerce) had to come from businesses that would “meet social equity criteria.” Clodfelter said they didn’t, and Chambers clarified that applicants were free to “choose whichever professionals to help them with” technical assistance needs (audio - 2m, video).
    • Clodfelter noted that WA Commerce officials were also in charge of a roster of mentorship businesses, which had to be “at least 51% minority or women owned,” and wasn’t changed by the bill.
      • Find more mentor information by signing up through the SocialEquityWA portal.
    • Chambers represented the Washington State House Republican Caucus on WA SECTF.

• Committee members contemplated a striking amendment "reducing barriers to access,” but first discussed an amendment to that striker, approving both without objection.
  • Vice Chair Chris Stearns moved amendment H-1688.2 (audio - 1m, video), but members first had to choose whether to include Amendment H-1692.2 (audio - 1m, video).
    • Reeves described the alterations to her striking amendment as coming from the “great work of our staff in being able to catch some inconsistencies between the House version and the Senate version” and “provide[d] for some technical cleanup” (audio - <1m, video).
    • Chambers conveyed that her caucus “agree[d] and recommend a ‘yes’” (audio - <1m, video).
    • The amendment was added to H-1688.2 by unanimous voice vote (audio - <1m, video).
  • Looking at the amended striking amendment, Reeves talked about the need to address “two specific pieces.” First “making sure that as we onboard these new social equity licenses that we're doing so with transparency, and with collaboration at our city, town, and county level” authorities, she said. Additionally, the striker “focuses on making sure that we're reducing barriers to access for folks” while also “limiting folks’ opportunity to create barriers” for applicants (audio - 1m, video)
    • Chambers thanked Reeves for the "improvements to the bill," viewing the alterations as providing “these new licenses…some certainty about where they can open…and they're not just derailed by a councilmanic action that they weren't anticipating” (audio - <1m, video)
    • Amendment H-1688.2 overwrote SB 5080 following a unanimous voice vote (audio - <1m, video).

• Final remarks revealed that concerns remained over the anticipated speed of licensing, however most members offered comments on potential positive impacts of increasing equity in the cannabis sector and promised continued engagement from legislators related to the program.
  • Reeves’ perspective was that SB 5080 was “facilitating the undoing of historic marginalization and exclusion of communities who have been engaged and involved in this industry for decades” while also "right-sizing the industry.” The bill would also help in “starting to rebuild trust” in government and regulators, because “there's always opportunity to correct our historic wrongs,” she argued. Reeves wanted to ensure ”when we talk about equity and inclusion, we mean equity and inclusion for everyone.” She thanked those who had been involved in the effort, highlighting the WA SECTF appointees from her caucus, Representative Melanie Morgan and Representative Debra Entenman, “because this bill doesn't come before us without the long hours, and the commitment to doing this work with intentionality, and so really want to commend this bill” for passage (audio - 2m, video).
    • Morgan served as WA SECTF Co-Chair prior to resigning in July 2022, with Senator Rebecca Saldaña—SB 5080 sponsor—elected to succeed her as Co-Chair that August, at which point Entenmen had been appointed to represent WA House Democrats on the task force.
  • RepresentativeJim Walsh made clear “I like this bill, but I'm going to vote ‘no,’ and let me tell you why.” He appreciated the amendments, but “I'm still not confident that this program is going to move forward fast enough,” and remained especially concerned “about the bureaucratic nature of some of the Department of Commerce activities intended to support the applicants, and I'm worried…that could turn into a delay game.” Walsh wanted “improvement to how some capital is made available to these applicants up front to better increase, not only the speed with which they'll open their doors, but…their ability to absorb the usual expenses” of retail operation (audio - 2m, video)
    • Walsh also spoke in support of having “some of the definitions and who qualifies to be modified slightly…to make it crystal clear that the people first in line ought to be those who are running dispensaries/medical shops, and were forced to close…that's within the scope of the bill as drafted,” but he believed it could be more “plainly stated.”
  • Co-Chair Shelley Kloba backed the legislation, but saw "a little bit more work to do" since “I'm a little concerned about…just having been on a city council, the public process and the timelines that are…written into our Open Public Meetings Act.” She alleged there was some debate over ensuring “they do have the time to do their work, but not excessive time” (audio - 1m, video).
    • Paul Jewell, Washington State Association of Counties (WSAC) Policy Director, offered favorable testimony on the proposal but worried about the time frame for county governments to lodge an objection to an equity business.
  • Co-Chair Sharon Wylie respected that “bureaucracies come from civil service, which come from laws that were invented to create slowness in change in government to keep the Boss [William M.] Tweeds from hiring their cousins as the cops and firing everybody else.” She felt the government should “move slower than any of us would like,” but she’d “learned an enormous amount from my colleagues and their lived experience, from the stakeholders who spent time speaking with me” and she was prepared for a longer commitment to cannabis equity (audio - 1m, video).
  • SB 5080 was approved by the majority of WA House RSG members, however Chambers, Walsh, and Assistant Ranking Minority Member Eric Robertson voted without recommendation against the measure (audio - 2m, video).
    • With millions of dollars in spending outpacing expected revenue identified in the fiscal note, a next step for the bill would likely be fiscal committee consideration by the Washington State House Appropriations Committee.

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