WA Governor - Bill Action
(May 4, 2023) - SB 5069

The Governor approved a bill to allow interstate cannabis agreements if the practice became permitted by federal government action - and legislation had been introduced in Congress to do just that.

Here are some observations from the Thursday May 4th Washington State Office of the Governor (WA Governor) Bill Action.

My top 3 takeaways:

• SB 5069, "Allowing interstate cannabis agreements,” positioned Washington as the third state to allow planning for the agreements in the event they were allowed by federal officials.
  • Previously, legislatures in Oregon and California adopted bills that would allow for the execution of interstate cannabis trading compacts should such commerce be authorized by changes to federal law, or by the U.S. Department of Justice.
    • While separate policies, cannabis compacts between the Washington State government and sovereign tribal governments have been used since 2015 to allow for mutual trade and harmonized regulation of cannabis commerce; and could be considered a precursor to agreements between state governments.
  • First heard in the Washington State Senate Labor and Commerce Committee (WA Senate LC) on January 10th, the bill was recommended for passage without changes on January 17th. The Washington State Senate Rules Committee (WA Senate RULE) put the measure on the chamber’s calendar on January 25th, which led to the full senate voting to pass the bill as drafted on March 1st.
  • In the Washington State House of Representatives (WA House), SB 5069 was given a policy hearing by Washington State House Regulated Substances and Gaming Committee (WA House RSG) members that began on March 20th and concluded on March 21st. The committee passed the bill without changes on March 23rd, and it was approved by the chamber on April 6th.
    • Though unchanged up to this point, representatives adopted an amendment described as “Correct[ing] a scrivener's error so that statutes are correctly identified when referencing rules of the Department of Agriculture and the Department of Health.” Because of this revision, Senators had to vote again to concur with the amendment, which they did on April 14th.
    • The modest cost projected for SB 5069 meant it didn’t receive hearings by fiscal committees in the legislature.
  • The final bill report published on March 28th summarized the proposal’s effects:
    • Subject to a contingent effective date, the Governor is authorized to enter into an agreement with another state or states for the purposes of: (1) cross-jurisdictional coordination and enforcement of cannabis-related businesses authorized to conduct business in Washington, the other state, or both; and (2) cross-jurisdictional delivery of cannabis between Washington and the other state. 
    • An agreement must ensure that enforceable public health and safety standards are met, and include a system to regulate and track the interstate delivery of cannabis. Any cannabis delivered into Washington, prior to sale to a consumer, must be tested in accordance with rules adopted by the Washington State Department of Health and the Washington State Liquor and Cannabis Board (LCB). The cannabis must also be packaged and labeled in accordance with Washington law and the LCB's rules. An agreement must ensure that applicable taxes on the sale, delivery, and receipt of cannabis are collected.
    • In accordance with an agreement entered by the Governor, a cannabis producer, processor, researcher, or retailer licensed in Washington by the LCB may deliver cannabis to a person located in and authorized to receive cannabis by the other state, and may also receive cannabis from a person located in and authorized to export cannabis by the other state. 
    • If either of the two conditions arise causing the bill to take effect, then the LCB must provide written notice of the effective date of the bill to affected parties, the Chief Clerk of the House of Representatives, the Secretary of the Senate, the Office of the Code Reviser, and others deemed appropriate by the LCB. The LCB must also provide written notice of statutory changes necessary to authorize the sale, delivery, and receipt of cannabis in accordance with an interstate cannabis agreement to the Governor and the appropriate committees of the Legislature. Last, the LCB must adopt rules as necessary to authorize the sale, delivery, and receipt of cannabis in accordance with an interstate cannabis agreement.

• Governor Jay Inslee signed the measure alongside supporters and spoke to the impact the bill would have on preparing the state for national cannabis reforms (audio - 2m, video).
  • Presented with the bill as passed by the legislature, Inslee said it would allow the governor to “enter into interstate cannabis agreements if the federal government legalizes” the plant or on issuance of a DOJ “opinion or memorandum that allows or tolerates cannabis to go across state lines.” Should this happen, he indicated the bill would help Washington’s “well regulated cannabis industry remain competitive” while maintaining product standards. Thanking bill sponsor Senator Ann Rivers, who wasn’t in attendance, Inslee joked about needing “a Pony Express to go east to get the message to Washington, D.C." Joining him were:
    • Bill co-sponsor Senator Karen Keiser
    • The Cannabis Alliance Executive Director Burl Bryson, Board President Caitlein Ryan, and Lobbyist Alan Ralston.
    • Washington CannaBusiness Association (WACA) Deputy Director Brooke Davies
      • Joseph DuPuis, WACA Trustee and Doc and Yeti Urban Farms Owner, entered immediately after the signing.

• Having been made session law, the measure wasn’t anticipated to have an immediate effect, though federal reforms which could allow interstate trade had been introduced in the U.S. Congress.
  • A legislative overview explains that after Inslee’s signature “bills go to the Secretary of State who assigns a session law chapter number.” Once a session law has been incorporated into statute, it takes full effect 90 days after final adjournment of the session in which it is enacted, meaning the bill would take effect on July 23rd. However, as rulemaking by WSLCB “necessary to authorize the sale, delivery, and receipt of cannabis” was mandated for the compacts, that process may take additional time to finish.
    • According to April 12th comments by Director of Policy and External Affairs Justin Nordhorn, the agreements were gaining attention from the Cannabis Regulators Association (CANNRA). He’d noted there was some interest from CANNRA members in using tax stamps, a policy Washington applied to imported cigarettes, as a mechanism to normalize cannabis trade between states.
    • WSLCB staff were clear on May 2nd that their rulemaking schedule was filling up, with opened projects put on hold; it was uncertain how high rulemaking for not-yet-authorized interstate agreements would be prioritized. 
  • At time of publication, federal leaders weren’t close to passing any cannabis legislation that would trigger the law’s effects. However, bipartisan legislation was introduced in April known as the Preparing Regulators Effectively for a Post-Prohibition Adult Use Regulated Environment (PREPARE) Act to establish “a fair, honest and publicly transparent process for the federal government to establish effective regulations to be enacted upon the termination of its 86-year prohibition of cannabis.” 
    • Another bill, the ​​“Small and Homestead Independent Producers (SHIP) Act,” was championed by the National Craft Cannabis Coalition and introduced in September 2022 to allow some producers and processors to “ship and sell marijuana or a marijuana product to an individual” in another state if possession was federally legalized “using the Postal Service or any private or commercial interstate carrier.” At time of publication, the SHIP Act hadn’t been re-introduced in the 118th Congress.
    • Members of Congress had also re-introduced the SAFE Banking Act in both chambers, although as drafted it wouldn’t allow for interstate trade agreements.

Information Set