WA Governor - Bill Action
(May 9, 2023) - SB 5367

A bill regulating products containing THC was signed, granting new authority and rulemaking mandates for WSLCB - though fewer hemp licensees may be another result of the law.

Here are some observations from the Tuesday May 9th Washington State Office of the Governor (WA Governor) Bill Action.

My top 3 takeaways:

• SB 5367, "Concerning the regulation of products containing [tetrahydrocannabinol] THC," represented a new stage of oversight of hemp consumables along with prohibiting synthesized cannabinoids from the legal market.
  • In 2022, Washington State Liquor and Cannabis Board (WSLCB) leaders requested legislation expanding their grant of authority to control cannabinoid products that “may be impairing” outside of the licensed cannabis system, primarily hemp and chemically synthesized cannabinoids. However, the move divided some stakeholders and was unsuccessful.
    • WSLCB opened a cannabinoid rulemaking project in May 2022, but by September that effort was withdrawn as officials began preparing a revised request bill which would become SB 5367.
  • The measure was first heard in the Washington State Senate Labor and Commerce Committee (WA Senate LC) on January 30th, with a proposed substitute recommended for passage on February 13th. On February 18th, members of the Washington State Senate Ways and Means Committee (WA Senate WM) held a fiscal hearing on the bill, subsequently recommending passage on February 23rd. The Washington State Senate Rules Committee (WA Senate RULE) put SB 5367 on the chamber’s calendar on March 1st, and the Senate passed the bill unanimously the following day after amending it so that “any amount” of THC in a product restricted sales to licensed cannabis retailers.
  • In the other chamber, SB 5367 was given a policy hearing by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on March 13th before members recommended another proposed substitute for the bill limiting products with “any detectable amount” of THC to cannabis retailers on March 20th. The Washington State House Appropriations Committee (WA House APP) reviewed the revised fiscal note on the measure on March 31st, and recommended the bill as amended by WA House RSG on April 3rd. The full house amended the bill to exempt tribal cannabis compacts from the “prohibition on a person manufacturing, selling, or distributing cannabis or cannabis products,” before voting to approve the measure on April 7th.
    • In an uncommon move, the House reconsidered its vote on SB 5367 with three votes moving from approval to opposing the bill, though the second vote remained overwhelmingly supportive at 90-6.
    • Since being set up in 2015, the compacts were negotiated by WSLCB leaders on behalf of the State.
  • On April 17th, senators voted to concur with House changes to the bill. A final bill report indicated the legislation’s effects:
    • Definitions. New Definitions. Hemp consumable means a product that is sold or provided to another person, that is: made of hemp; not a cannabis product; and intended to be consumed or absorbed inside the body by any means, including inhalation, ingestion, or insertion. Package means a container that has a single unit or group of units. Unit means an individual consumable item within a package of one or more consumable items in solid, liquid, gas, or any form intended for human consumption. 
    • Amended Definitions. Cannabis is amended to mean all parts of the plant Cannabis, whether growing or not, with a THC concentration greater than 0.3 percent on a dry weight basis during the growing cycle through harvest and usable cannabis, but does not include hemp, industrial hemp, or seeds used for licensed hemp production. Cannabis products is amended to include any product intended to be consumed or absorbed inside the body by any means including inhalation, ingestion, or insertion, with any amount of THC. Cannabis products also includes any product with only THC content but does not include cannabis health and beauty aids or products approved by the U.S. Food and Drug Administration (FDA). Postharvest test and THC concentration are no longer limited to delta-9 THC. 
      • Although the bill summary does describe ‘cannabis products’ as being defined as “any amount,” the bill language in the enrolled bill text defines them as having “any detectable amount of THC.”
    • Product Additives. Licensed cannabis producers and licensed cannabis processors may use a [cannabidiol] CBD product obtained from a source outside of the regulated system if the CBD product:
      • is not cannabis or a cannabis product;
      • is not a synthetic cannabinoid; and 
      • has been tested for contaminants and toxins by an accredited testing lab in accordance with applicable testing standards. 
    • Product Labels. The product labeling requirements are amended to reference a cannabis product package instead of a cannabis product container. 
    • Violations of Law. Except as permitted under a cannabis agreement between the state and a federally-recognized Indian tribe, no person may manufacture, sell, or distribute cannabis, cannabis concentrates, usable cannabis, or cannabis-infused products, or any cannabis products without a valid license issued by LCB or the Pharmacy Quality Assurance Commission. Any person performing any act requiring a license, and without having such a license, is in violation of state law. The producing, processing, manufacturing, or sale of any synthetically derived, or completely synthetic, cannabinoid is prohibited, except for products approved by the FDA. 
    • Other. Nothing in the act must be construed to require any agency to purchase a liquid chromatography-mass spectrometry instrument. The act contains a state severability clause.
      • The revised fiscal note featured analysis from Washington State Patrol (WSP) claiming there was no clarity on “how this may impact evidentiary standards” for their Crime Laboratory Division (CLD), but should “evidentiary standards require the identification of THC concentrations consistent with new and current definitions…we will need to expand our concentration testing protocols.” WSP staff insisted that “each of our three Controlled Substance Laboratories would need to acquire a Liquid Chromatography-Mass Spectrometry (LC/MS) instrument…at an estimated cost of $600[,000],” but as this was prohibited by the law, WSP staff “will be unable to fully meet the new evidentiary standards created.”
      • At the April 20th Washington Traffic Safety Commission (WTSC) meeting, staff indicated their impaired driving program received $6,800,000 in federal funding, some of which may help fund a new WSP toxicology lab in Federal Way planned to open by 2024. 
      • WSLCB business opportunities also showed agency leaders were entering into a “Contract with Orange Photonics, Inc. to provide Light Lab 3 Cannabis Analyzers,” in addition to a previous purchase of equipment from the company in November 2022.

• At the signing by Governor Jay Inslee, he remarked that SB 5367 “makes important changes” to laws on cannabis and hemp while enhancing consumer safety (audio - 1m, video).
  • The new law “makes important changes to the definition of cannabis products, and [took] steps to protect consumers from any products that have not been properly tested and approved” by WSLCB, said Inslee. He credited Senator June Robinson, the bill sponsor, and Representative Shelley Kloba for their leadership on the issue, and signed the bill as four attendees looked on, including:
    • Marc Webster, WSLCB Director of Legislative Relations 
    • Kate Armstrong, Robinson’s Legislative Assistant
    • Megan Moore, Washington State Public Health Association (WSPHA) Board Member and Co-Chair of the Policy Committee

• Mandated rulemaking in the law would add to the work remaining in 2023 for Policy and Rules staff at the Washington State Liquor and Cannabis Board (WSLCB), and appears to have impacted participation in the state hemp program.
  • With Inslee’s signature, the legislative overview notes that “bills go to the Secretary of State who assigns a session law chapter number.” With no explicit effective date, the law takes effect 90 days after the conclusion of the legislative session in which it was passed, or July 23rd.
  • Section 3(3) of the law outlined rulemaking required by WSLCB:
    • “Subject to the requirements of this subsection (3), the board may enact rules necessary to implement the requirements of this section. Such rule making is limited to regulations pertaining to laboratory testing and product safety standards for those cannabidiol products used by licensed producers and processors in the manufacture of cannabis products marketed by licensed retailers under this chapter. The purpose of such rule making must be to ensure the safety and purity of cannabidiol products used by cannabis producers and processors licensed under this chapter and incorporated into products sold by licensed recreational cannabis retailers. This rule-making authority does not include the authority to enact rules regarding either the production or processing practices of the industrial hemp industry or any cannabidiol products that are sold or marketed outside of the regulatory framework established under this chapter.”
      • Webster testified to WA House APP that "WSLCB can write rule around” the definition of ‘detectable’ in partnership with Washington State Department of Agriculture (WSDA) officials, “whose cannabis testing lab standards work is ongoing” through the Cannabis Lab Accreditation Standard Program (CLASP). WSLCB had also established a Cannabinoid Science Work Group to better understand  the "genera Cannabis, as well as synthetic equivalents of the substances contained in the plant.”
      • The prior definition for CBD imported stated extracted material had to have “a THC level of 0.3 percent or less,” as hemp would possess some THC in an assortment of plant cannabinoids. By requiring imported CBD to have no ‘detectable’ THC, the law will bar full-spectrum hemp extracts as a cannabis additive.
  • On May 2nd, Kathy Hoffman, the Policy and Rules Manager transitioning to head up the new research unit, shared a rulemaking update that called attention to the significant workload staff were facing. She reported that two planned projects, Advertising and Minors on Wholesale Licensed Premises, would be paused so that other rulemaking efforts, including legislative mandates, could be moved forward. Hoffman further mentioned that the implementation of SB 5367 would be overseen by Policy and Rules Coordinator Cassidy West beginning on June 7th, and expected to be completed by January 31st, 2024.
  • When testifying to WA House RSG on the legislation, WSDA Policy Advisor to the Director and Legislative Liaison Kelly McLain underscored analysis by staff in the revised fiscal note that the bill would lead to a 75% reduction in license renewals and diminished funding that would “render our program insolvent.”
    • Released on May 8th, a WSDA spreadsheet showed 29 of 61 hemp producer licenses were renewed for the next year.

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