Washington State Legislature - Bills
(February 18, 2019) - HB 1995 - “Concerning direct sales from certain marijuana producers and processors.” - Summary

HB 1995 would enable limited vertical integration for smaller scale producers and processors, opening up direct sales and tourism modeled on craft distilleries, breweries, and wineries.

Here are some observations about HB 1995, a new bill in the Washington State legislature “Concerning direct sales from certain marijuana producers and processors.”  The bill was drafted by Raven Grass Co-Founder Micah Sherman in collaboration with The Cannabis Alliance and in consultation with licensees and industry representatives.

My top three takeaways:

  • Legislation to enable direct sales by some producers and processors was introduced in the House as HB 1995 by Representative Laurie Dolan and three co-sponsors on Monday February 11th.
    • The bill would create a direct to consumer retail sale license endorsement administered by the Washington State Liquor and Cannabis Board (WSLCB).
    • The endorsement would cost $75 and require annual renewal.
    • Producers or processors would sell their own products as defined in section (1)(4)(a): “Sales are limited to the marijuana producer’s marijuana crop and marijuana products created from their crop, or marijuana products produced by the marijuana processor.”
    • The bill would establish a sales floor of 3.5 grams for useable marijuana, but no minimum sales level for concentrates or infused products. Maximum sales would be identical to the retail limits defined in RCW 69.50.360.
    • Only certain producers and processors could seek an endorsement as defined in section (1)(5): “A marijuana producer or marijuana processor applying for a direct to consumer retail sale license endorsement may have only one marijuana producer license and/or one marijuana processor license associated with the applicant’s uniform business identifier and issued in the name of the applicant. Applicants with multiple marijuana producer or processor licenses may not be issued a license endorsement.”
    • Direct to consumer retail sale license endorsements would not count against the jurisdictional caps on the regulated number of retail outlets.
    • Collection of local, state, and excise taxes would be required.
  • HB 1995 is similar to the direct sales language of HB 1945 but differs in important ways.
    • Both bills adopt a system of license endorsements to effect marketplace change and the annual cost of those endorsements is identical ($75).
    • Both bills impose a sales floor of 3.5 grams for usable marijuana, and no minimum sales quantity for concentrates or infused products.
    • HB 1995 does not include language defining the physical space where direct sales can occur, only restricting sales to the “licensed location.” HB 1945 states “Marijuana may be sold from a temporary stand erected within an outdoor controlled access area, or a dedicated retail space” and adds a requirement to “comply with local land use requirements for agricultural direct marketing activities.” HB 1945 aims to enable direct sales patterned after farmers markets: “Marijuana may be sold from a tested lot stored in a bulk container and weighed out, packaged, and labeled to order for the customer.”
    • The primary differences between HB 1995 and the direct sales language of HB 1945 are in terms of which producers or processors are eligible to apply for a direct sales endorsement.
      • HB 1995 takes the approach of limiting direct sales to producers or processors with a single producer and/or processor license associated with the applicant’s uniform business identifier (UBI). The bill limits direct sales to licensees based on this measure of the scale of their operations but does not implement constraints based on license tier or licensed/measured canopy; nor does the bill establish other eligibility restrictions.
      • HB 1945 takes a more prescriptive approach to limit direct sales to licensees that meet the definition of small business under RCW 39.26.010, are located at least ten miles from the nearest marijuana retailer, and have a plant canopy of fifteen thousand feet or less on property that is zoned to permit retail sales as defined in RCW 82.04.050. Unless these requirements are amended, it would appear that most producers and processors in the state would not be eligible to apply for a direct sales endorsement under HB 1945.
  • HB 1995 has been read on the House floor and referred to the Commerce and Gaming Committee.
    • This Friday, February 22nd, is the last day for bills to be passed out of committee and read into the record on the floor in the house of origin.
    • HB 1995 must be granted a public hearing this week by the House Commerce and Gaming Committee in order to proceed.
    • You can view HB 1995’s history and sign up for updates on the legislature’s website. Comments sent through the bill screen on the legislature website go to the lawmakers who represent the district you live in, but not to the committees where the bill may be heard.
    • You can share testimony by directly contacting Commerce and Gaming Committee members and staff.
    • If you believe HB 1995 deserves a public hearing, now is the time to contact legislators and their staff.