WA Legislature - Update
(February 12, 2025)

WA Legislature - Update (February 12, 2025) - Takeaways

The lab certification bill was advanced, new introductions were drying up before the first cutoff, two bills were positioned for execs on Wednesday, and the data dashboard bill could be passed by the House.

Here are some observations of the Washington State Legislature (WA Legislature) for Wednesday February 12th, the 31st day of the 2025 regular session.

My top 3 takeaways:

  • New co-sponsors joined legislation introduced on Tuesday but no cannabis-related bills were staged for introduction Wednesday as the overall quantity of new legislation continued to decline in the lead up to the first cutoff.
    • HB 1940 - "Concerning the cannabis industry."
      • Out of State Ownership plus Social Equity Tax Preference
      • On Tuesday, Morgan introduced a new bill seeking to allow out of state ownership while also creating a five year business and occupation (B&O) tax break for operational social equity licensees.
        • Section 4 of the bill text would exempt social equity producers, processors, or retailers from the entire chapter on the B&O tax (RCW 82.04) “for the five years beginning after the licensee exceeds $5,000 in sales revenues.”
      • On Tuesday, four co-sponsors signed up through the course of the day: Representatives Sharon Wylie, Julia Reed, Lisa Parshley, and Natasha Hill - all Democrats.
      • The bill was referred to the WA House CPB as planned.  At publication time, a hearing on the legislation had not been announced.
    • HB 1941 - "Authorizing agricultural cooperatives for cannabis producers."
      • Cannabis Agricultural Cooperatives
      • Morgan also introduced legislation which would enable cannabis producers to form agricultural processing and marketing associations as defined in RCW 24.34, often structured as cooperatives.
        • The bill text would creatively inject “licensed cannabis producers” into the list of entities allowed to organize associations by noting, “For purposes of this section only and only with respect to licensed cannabis producers, cannabis is considered an agricultural product like other covered agricultural products.”
      • On Tuesday, five co-sponsors signed up through the course of the day: Representatives Wylie, Reed, Parshley, Beth Doglio, and Hill.
      • The legislation was referred to the Washington State House Agriculture and Natural Resources Committee (WA House AGNR) where Morgan was positioned as Vice Chair supporting Chair Kristine Reeves.  It was the first cannabis-related bill referred to that committee this biennium.
    • The draft introduction reports in the House and the Senate for Wednesday February 12th did not appear to include additional cannabis-related legislation, reflecting an overall continued decrease in introductions.
      • The house of origin policy committee cutoff on Friday February 21st is the “Last day to read in committee reports in house of origin, except House fiscal committees and Senate Ways & Means and Transportation committees.”  Legislation must be scheduled in committee, heard, possibly amended, recommended, and the committee report read in the chamber to navigate the first gateway.
      • As the preliminary committee schedule for the following week is developed and published mid-week, Wednesday would be the last day to introduce legislation intended to follow normal scheduling practices.
      • There are always exceptions.  Legislation can be introduced at any time during the legislative session and advanced if majority leaders deem it necessary.  One mechanism often used is designation of legislation as “necessary to implement budgets” (NTIB), an informal and undefined criterion which is loosely interpreted to mean a bill has been projected to have a fiscal impact of at least $50K, about the same amount used to determine if a bill should be considered by a fiscal committee.
  • On Wednesday, two cannabis-related bills on employee stock ownership plans and the social equity program were positioned for recommendation out of committee, and the House could pass the WSLCB data dashboard bill.
    • 1:30pm: WA House CPB - Committee Meeting [ Event Details ]
      • Executive Session
        • HB 1348 - Cannabis ESOPs
          • Representative David Hackney had planned to carry legislation regarding employee stock ownership plans (ESOPs) specific to the cannabis sector, clarifying legislation sought by the Washington CannaBusiness Association (WACA) after WSLCB staff withdrew the ESOPs rulemaking project in December.  But due to an extended absence, Hackney’s roles in the legislature were reassigned on February 3rd.
          • During the public hearing on February 4th, WACA representatives and members testified in support of the legislation which was framed as a more equitable business structure actively encouraged by the State within other sectors.  Black Excellence in Cannabis (BEC) and Washington Cannabis Licensee Association (WCLA) representatives and members spoke out against ESOPs, which were anticipated to only be affordable business structures for the largest entities in the cannabis sector as well as a means of skirting true party of interest vetting and residency requirements for out of state “trustees” of the ESOP.
          • On Tuesday, amendment CLOD 309 was published by WA House CPB Chair Amy Walen which would address the concern about ways around the residency requirement.
            • “EFFECT:  Requires an employee of a licensed cannabis business with an employee stock ownership plan (ESOP) to be a Washington resident prior to participating in the ESOP. Requires the trustee of the ESOP, except for the trustee who performs the initial valuation and negotiation of the ESOP transaction, to be a Washington resident.”
        • HB 1551 - Social Equity Program Evaluation
          • Reeves put forward legislation requiring the WSLCB and the Washington State Department of Commerce (WA Commerce) to create a report to the legislature on the first round of the social equity program for publication by December 2025, while also deferring a second round until at least July 2026.
            • See the bill analysis for more details.  At publication time, a fiscal note was not available.
          • During the public hearing on February 4th, Other than the bill sponsor, the only testimony in support was provided by FMS Global Strategies President + CEO Paula Sardinas representing certain initial social equity program applicants.  BEC and social equity retail applicant Dondo Enterprises testified against the legislation, especially highlighting concerns about pausing in-process first round applicants.  Representatives from the Cannabis Alliance, Canna Luz, Raven, and Green Roads Cannabis (a social equity retailer in Moses Lake) provided suggestions to improve the bill.
          • During the WSLCB Board Caucus on Tuesday February 11th, Director of Legislative Relations Marc Webster mentioned HB 1551, echoing the concern that the legislation as written would “pause” further progress by remaining first round applicants and confirmed “we’ll definitely want amendments there” (audio < 1m, video - TVW).  Board Member Ollie Garrett asked if an overall pause had been Reeves’ intent, and Webster seemed to indicate Reeves had not been responsive to his inquiries (audio - 1m, video - TVW).
            • When asked directly during the hearing, Reeves stated a pause on first round applicants had not been her intent but did not at that time offer to modify the bill.
          • At publication time, no amendments on the legislation had been published.
        • HB 1346 - Out of State Ownership
        • HB 1410 - Suspending Inactive Producer Licenses
          • Plans to consider HB 1346 and HB 1410 were reconsidered on Friday February 7th.
    • Also on Wednesday, the House planned to convene a floor session at 10:30am [ TVW ] and the Senate planned to convene a floor session at 12:30pm [ TVW ].
      • In the House, HB 1066 (WSLCB Data Dashboard) was positioned on the second reading calendar for further action by the chamber.  The legislation, which was revised by its policy committee to substantially limit scope, was granted a $0 fiscal note on Monday.