WSLCB - Focus Group - SB 5080 Implementation
(May 15, 2024) - Summary

Staff heard comments on draft changes to the social equity program scoring rubric, including calls to prioritize cannabis market “pioneers” over those with no history in the cannabis sector.

Here are some observations from the Wednesday May 15th Washington State Liquor and Cannabis Board (WSLCB) focus group on the SB 5080 Implementation rulemaking project.

My top 4 takeaways:

• Agency leaders had opened a rulemaking project to implement SB 5080, a 2023 law which changed the social equity in cannabis program at the WSLCB.
  • A law from 2020 established the social equity program, defined applicant criteria, and limited the program to available retail licenses. The program was also expanded through HB 1443 in 2021, which modified definitions, criteria, and funds.
    • Some people that received license approval from the agency but were not allowed to open due to local laws preventing cannabis businesses were given retail title certificates. Certificate holders had been permitted to activate their licenses under the program if they're otherwise eligible equity applicants.
  • SB 5080 was signed into law in May 2023 and WSLCB approved the rulemaking project in November 2023. However, the effort was one of many rulemaking projects to be delayed by Policy and Rules staff. Along with changes to definitions and applicant criteria, the bill also allowed for more retail licenses and “up to 100 cannabis processor licenses immediately,” as well as “up to ten cannabis producer licenses, which must be issued in conjunction with a cannabis processor license” starting in 2025.
  • Agency representatives provided an update on the equity program on April 24th.

• Director of Policy and External Affairs Justin Nordhorn introduced the draft revised social equity applicant scoring rubric and set expectations that agency officials were there to hear impressions of and suggestions for, the rubric (audio - 7m).
  • Although Policy and Rules staff had most frequently led WSLCB rulemaking engagements, Nordhorn moderated the discussion of the rubric. He established that the draft rubric language wasn’t “anywhere near finalized”, and he would go over each rubric criteria in turn, as agency leaders wanted as much feedback on them as possible. Nordhorn indicated that staff might respond to questions, but the “predominant thing that we want to do today is get feedback. And we want to hear from a variety of people.” He welcomed comments via chat, “as long as the chat’s not being used to attack people or their position on an issue.” He requested that participants avoid repeating points others had made besides to state their agreement, and “if you are not going to be talking about these particular points you may be cut off,” Nordhorn warned.
  • Referring to the survey mentioned by Licensing staff on April 24th, Nordhorn said that feedback, as well as public comments about the rubric had also been included by staff, and the board was “getting a vast variety of perspectives.” He was doubtful every suggestion could be included in the final language, but urged participants to speak up, or sent written comments to rules@lcb.wa.gov.
  • Nordhorn reviewed several changes brought about through SB 5080, specifically how “those interested in applying with us through the social equity license program, you're going to have to meet two of the four social equity qualifications that are in statute” (audio - 4m):
    • “We're talking about those who lived in a disproportionately impacted area in Washington state for a minimum of five years between 1980 and 2010…if you only lived in a disproportionately impacted area for less than five years, that may not contribute [towards] the qualification of one or two of the four of these.”
    • “The person has been arrested or convicted of a cannabis offense, or as a family member who's been arrested or convicted of a cannabis offense.”
    • “The third criteria is that you've had…less than the median household income within the state of Washington…with some of the statutory provisions here, there are some challenges around that.”
    • “The fourth criteria is both a socially and economically disadvantaged individual as defined by the Office of Minority and Women [Business Enterprise], under Chapter 39.19 RCW.”
  • Nordhorn explained that “we had nine points of consideration previously with 310 points…this draft is eight points of consideration with a maximum total of 285 points.” He said staff were looking for “what worked well, what didn't work well in the past, and trying to figure out the most effective way…for the evaluation, so we can have that consistency moving forward.”

• Nordhorn introduced sections of the draft rubric before hearing largely critical comments from the public, especially regarding disproportionately impacted areas (DIA), cannabis license ownership, previous applications, and arrests and convictions.
  • DIAs - Nordhorn commented that DIA eligibility was determined by having lived in a designated DIA for at least five years, but the draft “separate[d] some of the criteria” so that people living in DIAs for less than five years could receive a portion of the points which had been awarded in the previous application window in 2023. They would also have to meet two other criteria in order to be eligible for the program, he noted. The intention of officials, Nordhorn stated, was “providing points to those who lived in these disproportionately impacted areas, even though that may not have been for the full five years.” He added, “people had a difficult time distinguishing living in a DIA for anytime and time spent living in those areas.” The rubric scoring for DIAs was proposed to be modified “going from just the five, to 10 and 10-plus years to a proposed rubric of one to five years, six to 10, and 11 plus.” This would mostly help applicants who met two other criteria for eligibility, but resided in a DIA for less than five years, he told the group before opening the chat and conversation for feedback (audio - 4m).
    • Peter Manning, Black Excellence in Cannabis (BEC) President, was troubled by rubric changes he considered to be moving away from the “target” communities he felt the program should be helping. He argued the drug war “took place” in communities of color around Seattle, and “because of gentrification, a lot of those people have moved.” Manning considered the change in DIA scoring to allow for “people that weren't affected by the war on drugs to, to participate in this program. And that's getting away from the target audience that it was intended for.” Nordhorn reiterated the lower DIA scoring was only for individuals who’d already met at least two of the other criteria for eligibility, but Manning felt the drug war “shifted, now there's more Whites doing drugs in Seattle” and “more Whites now that have drug convictions.” He suggested this wasn’t a benefit to the equity program since “Whites already dominated the landscape and cannabis in Washington” (audio - 5m).
    • Mike Asai, Emerald City Collective Gardens Founder and BEC VP, also felt if the DIA criteria applied after 2010, it would move away from helping groups most targeted under drug prohibition. The program “should be racial equity, but it's social equity,” he claimed, and it shouldn’t help “increase the White dominant cannabis market here in Washington.” He didn’t want the rubric to award points for living in a DIA for less than five years (audio - 3m).
    • Paul Brice, Happy Trees Owner and former Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) advisory member, sided with Manning: “to reduce the time is just allowing so many other people to filter in” (audio - 2m).
    • A participant listed only as David also agreed with others who didn’t want points to go to those living in a DIA for less than five years. He felt, “if the bill was, was made to keep it for Black and Brown,” a change would enable “more people to come in” (audio - 1m).
    • Amirah Ziada, UFCW Local 3000 Cannabis Division Coordinator, asked via chat whether "this change to the rubric mean[t] that someone who lived in a DIA for 1 year in 2019 would get points?" Nordhorn emphasized that DIA residence alone couldn’t make anyone eligible for the program “if that was their only—or that was one of two pieces of eligibility for under statute—it would not qualify them” (audio - 1m).
    • Carol Ehrhart, 4:20 Friendly Co-Owner, wanted to know “the thought process from changing the points from 40 points for DIA area and additional points for length of time?" Nordhorn answered that the intention of staff had been to make DIA criteria “based on the longevity” of residence. However, he now recognized most were “not in favor of providing consideration for the limited time in the DIA” (audio - 1m).
    • Someone in chat asked if there would be subsequent definition changes after people submitted applications. Nordhorn responded that applicants would be evaluated based on the criteria as they appeared in rule when they applied (audio - <1m).
    • Manning regarded the change as "eerily familiar” to what Uncle Ike’s Owner Ian Eisenberg had suggested years earlier to WA SECTF. He didn’t like WSLCB leaders "trying to push this,” but Nordhorn felt it was premature to interpret WSLCB intent (audio - 3m).
  • Arrests and Convictions - Nordhorn explained that while the equity program had initially focused on cannabis-related arrests, some jurisdictions didn’t “earmark” what substances were involved in an arrest. Changing the rubric to more broadly consider drug arrests would account for “limitations of the courts," he stated (audio - 3m).
    • Asai offered that the "legislative intent [was] cannabis,” and while cannabis was legal in Washington, “crack and cocaine is not legal.” He wanted the priority for the equity program criterion to continue to focus on cannabis. Nordhorn understood, but had found some people couldn’t get corroborating documentation specifically for that. “People have to stop being lazy and get off their ass,” replied Asai, “go to that court, you go get the probable cause, you go get all the documentation to show why you were arrested and why you were convicted for that controlled substance” (audio - 4m).
    • Brice agreed with Asai, further feeling the first equity application window “missed any pioneers [who] helped push cannabis to the forefront” of legalization (audio - 2m).
    • Ehrhart chimed in to say she was helping her brother with an application—whom she said was convicted as a minor—and that some things weren’t in his court record. She further asked for “definitions being placed into [this for] what constitutes probation, what constitutes confinement, because that was our contingency. We, they took his arrest, but they wouldn't take his probation because he was a minor” (audio - 1m).
    • Brionne Corbray, a former license applicant, agreed that his federal conviction for cannabis didn’t directly mention the plant on his documentation as “feds don't really put that kinda stuff on the paperwork." He alleged his arrest record "evidently wasn't good enough" to help his application be advanced (audio - 3m).
    • A participant listed only as Justin shared his view that people with felony convictions for cannabis, or for multiple low-level offenses, were the most impacted by cannabis prohibition. Nordhorn asked if this meant there should be points for each different offense, and Justin agreed a person facing numerous different charges was “more affected by the war on drugs than anybody else. You should get more points” (audio - 2m).
    • Manning said he’d been one of the activists meeting with lawmakers in 2019 before HB 2870 was introduced and had seen data suggesting African Americans were “arrested in the state of Washington four times that of White” citizens. He felt there was no need to change “if something works.” When Nordhorn repeated that some applicants didn’t regard the documentation process for arrest eligibility to be working, Manning suggested someone had gotten ”bots” to “generate a whole bunch of responses” to the WSLCB survey (audio - 3m).
  • Type of Sentence - Turning to the “type of sentence received for the drug offense,” Nordhorn acknowledged that many attendees were telling officials to “keep it cannabis related." Considering the specific points to be awarded for offenses, he indicated the “standard dispositions” for cannabis offenses didn’t normally include home confinement, as that was more a condition for "bail, probation, or parole,” wondering if there was a reason to keep points for that punishment (audio - 2m).
    • “I hear what the board is saying about, nobody was awarded points for home confinement,” even if they were eligible, said Asai, but felt WSLCB staff should "leave the door open" if that type of punishment had been levied, as maybe the “jail could have been filled up." Nordhorn asked if an applicant was given points for parole or probation that involved home confinement would they get points for both. Asai advised awarding based on whichever category had the highest scoring points (audio - 3m).
    • Brice agreed with Asai (audio - 1m).
    • Justin considered those who served the longest sentences to have been the most effected, as some had years of “opportunities gone…all because of the war on drugs." He specified he had “almost a total of one year on home confinement for cannabis charges. So there are people out there that have been affected” (audio - 1m).
  • Housing - The “loss of home or ability to purchase a home or rent a home due to a conviction or arrest” was the next change brought up by Nordhorn. The draft proposed removing the criterion entirely as it added relatively few points, and in their survey “70% found it difficult or impossible to obtain those loss records,” he said. Nordhorn added that these records had also proven to be a “difficult document to be able to, to validate” (audio - 1m).
    • Asai suggested people had recognized the difficulty in producing these records when WA SECTF was meeting before the program was in place. He indicated that BEC members didn’t have a "too much of a problem" removing it, as a simplified rubric was preferable (audio - 1m).
    • Brice responded that he’d gotten points for this, but it had been challenging to organize the materials to prove it (audio - 1m).
  • Household Income - Similar to housing, Nordhorn suggested this criteria had proved difficult to assess given that multiple people could reside in the same house. However it was an eligibility mandate in law, so rather than remove it, the draft rubric would lower the awarded points from 40 to 15 (audio - 2m).
    • Asai regarded this change as “going against legislative intent" and would open the “door for more White applicants.” He wanted the points to stay at 40, though he suggested BEC members would be open to it going higher (audio - 4m).
    • Justin was in favor of assessing applicant eligibility on this point by looking to their past. He remarked that he had no household income for 15 years as he was “going to jail and prison every other year” (audio - 1m).
    • Manning was also critical of this change, finding it was “moving away from the target" of the law. He called for increasing those points, and hoped WSLCB staff would reveal “where are you guys getting information or the motivation to want to make these changes?” Manning said he’d only heard two people speaking “contrary to what we were speaking to as a group” (audio - 1m).
    • Brice disagreed with the others, and felt the points awarded for this should be further lowered to five points. He didn’t see the reason “if you married to a successful wife or something that made more money, well, that just negates anything you've been through” (audio - 1m).
    • Ehrhart suggested 40 was too many points, but 15 was too few. She explained there were federal tax definitions for individuals, married couples, and family households that regulators should apply. Ehrhart believed there’d been "a load of exploitation in this last round” of equity licensing, and some people had advanced in the application process without a way to be challenged. She encouraged the process to take into account how people get funding for their business, who their potential investors are, and what their role would be in the business (audio - 2m).
    • Justin clarified if a person “hit the lotto” as they applied that it wouldn’t reduce rubric points around their past economic hardships (audio - 1m).
  • Loss of Employment - Nordhorn relayed that 72% of applicants had reported difficulty obtaining records to verify they’d lost out on an employment opportunity due to a cannabis arrest or conviction. He told the group that under the draft rubric, this criterion would be lowered by five points (audio - 1m).
    • Brice brought up removing the criteria entirely, comparing it to “awarding the guy who sits on the license last” and a way to make “those BS points work for you” (audio - 1m).
    • Asai said he’d received those points when applying to the program and that they’d been part of the recommendations from WA SECTF, but BEC members were “fine with that.”(audio - 1m).
  • Cannabis License Ownership - “This one has the criteria: have never held or do not currently hold 51% majority of controlling ownership or controlling interest…in a state cannabis retailer,” established Nordhorn. The draft proposed an increase by five points as a way to “get a broader array of folks who haven't had the opportunity to get into,” he said (audio - 1m).
    • Brice considered this revision to be “trying to remove the pioneers, from our industry, not recognize one Black pioneer.” He was very concerned that someone like him would be impacted, “one of the things I've said early on four years ago, when we were doing the whole social equity was reparations.” Brice suggested he wanted “to see reparations through this time. Why do I have to get back in line? No pioneers or nothing recognized…this is crap” (audio - 4m).
    • Asai understood this had been done to keep existing retailers from being able to “hijack and get a social equity license using a Black face or Brown face.” He agreed that consideration hadn’t been shown to pioneers like Brice, who shouldn’t be “penalized to obtain another license.” Asai suggested maybe it could be about owning multiple licenses instead, and Nordhorn noted a possibility that “if you only have one or two, you would still be in the same criteria as never holding or not currently holding 51%” of a license. Asai also argued that equity in the cannabis market hadn’t come about “because the LCB decided one day ‘Oh, we lacked inclusion.’ It took a whole lot to get where we are….because if the LCB truly had a kind heart in 2017 they would not have done what they did with Senate Bill 5131” (audio - 4m).
    • Christopher King called the injustices “so myriad in nature" and felt an applicant should be penalized for owning three or more cannabis licenses when applying to the equity program. He also felt there was a “strict scrutiny analysis in terms of using…race based criteria in these situations” while avoiding litigation due a “compelling government interest” (audio - 4m).
    • Ehrhart asked for clarification about what the draft change was versus the suggestion from attendees about limiting points based on the number of stores owned. Speaking as a current retail license owner, she felt the social equity program hadn’t been intended to benefit existing licensees (audio - 2m).
    • Brice suggested his store’s revenue was lower than before the adult-use market, and there were “plenty of retailers that own over five stores already and their own. And there's retailers that already got their hands on these social equity licenses” (audio - 2m).
    • King acknowledged anyone with five licenses shouldn’t be eligible, “but one should be okay” (audio - 1m).
  • Previous Applicant - Nordhorn next turned to raising the points awarded to anyone who previously applied for a cannabis equity license but wasn’t approved (audio - 1m).
    • Asai stated on behalf of himself, his business, and BEC, he “completely disagree[d] with this" as many of those who passed the initial equity licensing window were still trying to open their store. Moreover, when the unlicensed dispensary and adult-use market were merged through SB 5052 in 2015, he relayed there had been misinformation from agency officials about the urgency and limits of licensing which impacted himself and others. “I think we should just do away with this,” Asai remarked, or “give credit and points for those who did not get across the finish line—as a social equity applicant now—in 2015-2016” (audio - 2m).
    • Brice indicated he’d applied under SB 5052 and also felt that implementation had been mishandled. Even as the equity process moved ahead, he believed large cannabis operators were gaining control over even more stores. Brice asked that officials think about "who is the most deserving?" (audio - 2m).
    • Justin seconded others’ comments, stating a prior felony conviction had halted a license application with WSLCB. “You guys said you'd put me on a waiting list and let me know when, when a license became available. And I was never informed of anything. And here I am again” (audio - 1m).
    • Manning said he was "not really feeling this,” and echoed others complaints about the medical licensing window under SB 5052 (audio - 2m).
    • Equity applicant Sami Saad didn’t see a need to change the language on this point, and he felt “the pioneer, the Black people, they start the medical first” and had been pushed out of the medical dispensary market should receive points. He further suggested Nordhorn and WSLCB representatives hadn’t listened to community members when setting up past licensing windows, and as a result people had “lost millions, millions of dollars” (audio - 5m).
    • Justin didn’t think people should be penalized for not applying during previous licensing windows (audio - 1m).
    • Asai wanted to know whether the rubric changes would incorporate points for people who had been dispensary owners. Nordhorn replied that he knew some people were interested in that, but this criterion was focused on those who’d applied for WSLCB cannabis licensing in the past (audio - 1m).
    • Justin mentioned he’d filed a public records request on the top rubric scores and suggested few successful applicants were receiving points for this (audio - 1m).
  • Saad offered additional comments on people he knew who had been denied a cannabis license and subsequently faced hardships (audio - 1m).
  • Asai concluded that officials were talking about a social equity program “because pioneers were cut out." He saw little use for DIAs, and fully supported awarding rubric points for those former dispensary owners who qualified for social equity, as they were a “threat” to existing cannabis business interests (audio - 2m).

• Nordhorn looked ahead to another engagement session on SB 5080 rulemaking, and future steps in the rulemaking process (audio - 5m).
  • Nordhorn emphasized that additional comments were due by May 24th and could be sent to rules@lcb.wa.gov. He highlighted another focus group that would be both in person and online on Wednesday May 22nd at Highline College and cover draft rules which he suggested would be released ahead of the event.
    • At publication time, draft rules had not been published.
  • Feedback would be incorporated into the proposed rule changes in a CR-102 to be presented for board approval on June 18th. There would be a new comment period which Nordhorn said would feature a public hearing on July 31st. Without changes, the proposed rules would be on track for board adoption on August 14th and take effect on September 15th.
  • Nordhorn expressed his gratitude for the time attendees had taken to give their input to staff, plus “a special thank you to those who provided us comments in the chat.” He promised all the responses would be considered as WSLCB leaders looked at changes to the scoring rubric (audio - 1m).

Information Set