WA Senate LBRC - Committee Meeting - Morning
(March 19, 2019) - HB 1794

The Senate Labor and Commerce Committee hosted a public hearing on HB 1794 – “Concerning agreements between licensed marijuana businesses and other people and businesses, including royalty and licensing agreements relating to the use of intellectual property.” 

  • Details on HB 1794's House policy committee public hearing and executive session. Engrossed Substitute HB 1794 (ESHB 1794) was passed by the full House on March 7th with one amendment.
  • Richard Rogers, Senior Counsel to the Committee, briefed senators on ESHB 1794’s effects (audio – 1mvideo). From the Senate Bill Report:
    • Updates terminology regarding authorized agreements that licensed marijuana businesses may enter with other parties related to goods or services with trademark or other intellectual property protections.
    • Specifies the authorization encompasses, among other agreements, agreements related to goods or services registered as a trademark under another state’s law or international trademark law.
    • Lists specific types of contract provisions that may be included in an agreement, such as (1) royalty fees subject to certain limits; (2) terms giving either party exclusivity to the use of intellectual property; and (3) quality control standards to protect the integrity of the intellectual property.
    • Exempts non-licensed parties to authorized intellectual property agreements from qualifying for a marijuana license for purposes of the agreement.
    • Provides that authorized intellectual property agreements are subject to recordkeeping requirements established under the Liquor and Cannabis Board’s rules.
  • Rogers cited WSLCB’s fiscal impact as $46,000 and noted the bill would take effect within 90 days of being passed into law.
  • Chris Marr, representing producer/processor Grow Op Farms (Phat Panda), said the legislature passed legislation in 2017 on the issue, but years later the state had “no promulgated rules in place.” He argued there was a constructive dialogue occurring but draft proposals so far were inadequate. He summarized, “Basically, HB 1794 aligns [intellectual property (IP)] laws effecting cannabis licensees with those in other industries and also other states that license cannabis intellectual property” (audio – 2mvideo).
  • Chris Masse, a Partner with the firm Miller Nash Graham & Dunn, supported the bill on behalf of clients and told members “being a little bit more prescriptive in the bill is both necessary and kind of helpful to the LCB” by outlining limits and expectations. She compared it to Coca-Cola not being able to monitor its recipe or build a brand and concluded “this is a way, especially for small business, to do that” (audio – 2mvideo).
  • Andy Brassington, CFO of Evergreen Herbal, testified that he had a lot of business expertise giving him experience “with the challenges of owning and operating, leading and growing small businesses.” He said ESHB 1794 was a “sensible” small-business bill allowing the industry access to knowledge and processes needed to “compete, both in the state, and in the nation” (audio – 2mvideo).
  • Tammi Hill, Counsel with Cannex Capital Holdings, explained she had previous IP expertise. She said the legislation was important to pass because of IP’s overall importance as an “intangible asset” to the U.S. economy and the value IP had in “how companies share technology and reputation with each other” (audio – 2mvideo).
  • Vicki Christophersen, representing the Washington CannaBusiness Association (WACA), began by apologizing for being “back before you with this issue.” She said the testimony they were hearing was “exactly the same testimony we were hearing in 2017. So we’re really not asking you to do anything broader” than previous efforts (audio – 1mvideo).
  • Chris Thompson, Director of Legislative Relations for WSLCB, supported the bill and mentioned the agency’s gratitude that industry stakeholders had worked with them and addressed concerns with the original version of the bill (audio – 1mvideo).
  • Committee Chair Karen Keiser closed the hearing noting six people signed in but did not wish to testify: five in support, one opposing.