WA Governor - Bill Action
(March 24, 2022) - SB 5796

The Governor signed a bill which changed non-binding cannabis revenue appropriations and mandated a study of those expenditures by the Joint Legislative Audit and Review Committee.

Here are some observations from the Thursday March 24th Washington State Office of the Governor (WA Governor) Bill Action.

My top 3 takeaways:

• Governor Jay Inslee added his signature to ​​SB 5796, "Restructuring cannabis revenue appropriations," commenting on benefits the changes would bring over existing law (audio - <1m, video).
  • He promised the legislation passed by lawmakers provided “consumers greater transparency about how the state distributes cannabis revenues.” Additionally, “the state will distribute more funding to counties and cities as the revenue grows,” said Inslee.
  • Thanking the bill sponsor, Senator Rebecca Saldaña, Inslee affixed his signature to SB 5796.

• The legislation followed a bumpy course to the Governor’s desk and was briefly changed into a legislative study before the Washington State House of Representatives (WA House) voted to include more limited revisions to existing law.
  • The original bill proposed a variety of changes to a statute suggesting non-binding appropriations from the dedicated marijuana account (DMA). The standing appropriations were initially based on proposed spending from cannabis revenue approved by voters in Initiative 502, covering areas like health care and prevention programs; research; enforcement; and disbursements to local governments. Though the exact language and amounts were non-binding—and had been modified nearly every year by lawmakers since enactment—much of the original subject matter remained.
    • The statute had been cited as justification for spending from the DMA for specific agencies and purposes in the biennium operating budget and supplemental budgets.
  • SB 5796 received a policy hearing in the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA) on January 19th, and members recommended a proposed substitute on January 26th.
    • See the first bill analysis and fiscal note.
  • Ahead of a fiscal hearing in the Washington State Senate Ways and Means Committee (WA Senate WM) on February 5th, a comparison chart for Cannabis Revenue Appropriations was produced, as well as two revised fiscal notes. That committee recommended another proposed substitute that restructured some suggested distributions on February 7th.
  • The WA Senate WM proposed substitute was debated and amended before being passed as an engrossed second substitute by senators 41-7 on February 14th.
  • In the WA House, the Washington State House Appropriations Committee (WA House APP) was the only committee to host a public hearing on SB 5796 on February 22nd. All testimony was supportive, although a significant number signed in as opposed. On February 28th, members considered several changes, but adopted a striking amendment to strip out changes to proposed appropriations in favor of a Joint Legislative Audit and Review Committee (JLARC) review “of the appropriation and expenditure of cannabis revenues and report to the appropriate legislative committees by July 1, 2023.”
    • Read a revised comparison of cannabis revenue appropriations, and the written comments submitted for the WA House APP hearing.
  • On March 4th, representatives restored many of the bill’s revisions to the suggested spending. The members made a terminology change reflecting HB 1210 before adopting a striking amendment debated at length and passing the measure 78-18.
    • In addition to more limited appropriation reforms, the revised language incorporated a JLARC “examination on the appropriation and expenditure of these funds to evaluate: How these funds have been appropriated and expended; whether the appropriations and expenditures are consistent with the provisions of RCW 69.50.540; and whether information related to the appropriations and expenditures is readily available to the general public. The report shall include options for increasing the transparency and accountability related to the appropriation and expenditure of cannabis-related revenues.”
    • HB 1210 also renamed the DMA the “Dedicated Cannabis Account.”
  • Days later, on March 7th, senators voted in concurrence with the reorganization and changes in SB 5796 by a vote of 37 to 12. According to the final bill report, the following programs and amounts were impacted:
    • WSLCB had received $1.25 million “for administration of the state Uniform Controlled Substances Act (UCSA)” under existing law, but would now be allotted $12.5 million.
    • The Washington State Department of Health was budgeted “up to 10 percent, but not less than $9,750,000…for administration of a marijuana education and public health program and the Washington Poison Control Center,” but under SB 5796 would receive $11 million to administer “a commercial tobacco, vapor product, and marijuana education and public health program and the Washington Poison Control Center.” The department had been allotted $808,000 annually “for administration of the marijuana authorization database” as well, with the law lowering that marginally to $800,000.
    • The Washington State Department of Commerce received $1.65 million annually “to fund the cannabis social equity technical assistance grant program,” but that amount was raised to $3 million. The department was also getting $163,000 in fiscal year (FY) 2022 and $159,000 in FY 2023 to “establish the cannabis social equity roster of mentors,” and this amount was increased to $200,000.
    • The University of Washington (UW) Alcohol and Drug Abuse Institute had been getting $20,000 for “education materials regarding health and safety risks posed by marijuana use,” and would receive a 25% increase to $25,000.
      • The law was not changed to reflect the revised name of the UW Addictions, Drug, and Alcohol Institute (UW ADAI).
    • UW and Washington State University (WSU) researchers were budgeted a minimum amount of $1,021,000 and $681,000, respectively, for cannabis research. Under the revised language, research dollars were decreased to $300,000 and $175,000.
    • The Washington Office of the Superintendent of Public Instruction was receiving “up to 0.3 percent, but not less than $511,000…to fund grants to building bridges programs,” but would now get $550,000 instead.
    • The Washington State Department of Ecology was allotted $276,000 in FY 2023 “for accreditation of marijuana product testing laboratories,” but would instead be given $290,000 for the year.
    • The Washington State Department of Agriculture was budgeted $627,000 in FY 2023 “for marijuana pesticide testing.” Under SB 5796, the department gets $635,000 instead.
    • Appropriated amounts to the Washington State Patrol Drug Enforcement Task Force and the Washington State Institute for Public Policy to make “cost-benefit evaluations and produce reports regarding the legalization of marijuana” were unchanged. 
    • Distributions to the state Basic Health Plan Trust Account, administered through the Washington State Health Care Authority, had been based on cannabis revenue remaining after the previously identified appropriations, and would increase from 50% to 52%.
    • Changes in DMA distributions to local governments was a bit more complex.
      • Under existing law, “if marijuana excise tax collections from the previous FY exceed $25,000,000, then the Legislature must appropriate an amount equal to 30 percent, but not more than $15,000,000 in FYs 18-21 or $20,000,000 in succeeding FYs, of all marijuana excise taxes” for distribution to local governments. This was further qualified with a requirement that 30% go to areas “where licensed marijuana retailers are physically located—each jurisdiction must receive a proportional share based on total revenues generated and taxes collected in such jurisdiction” and 70% go to areas “on a per capita basis provided the jurisdiction does not prohibit marijuana siting—counties must receive 60 percent based on each county's total proportional population.”
      • This arrangement was simplified by SB 5796. Of the cannabis revenue remaining, 1.5% goes “to local governments where retailers are physically located and each jurisdiction” and another 3.5% is allotted “to local governments on a per capita basis provided the jurisdiction does not prohibit marijuana siting—counties must receive 60 percent based on each county's total proportional population.”
    • Rather than monies remaining after other appropriations going into the state general fund, a set 32% would be deposited there annually.

• Inslee’s signature ratified the bill as session law for the Washington Secretary of State to formalize in statute, and changes would take effect 90 days after the conclusion of the 2022 session on June 9th.
  • The supplemental operating budget, SB 5693, which formally allocated DMA money for the entities recommended in RCW 69.50.540, was signed by Inslee on March 31st.
    • Find out more about the budget:
      • Conference Report 
      • Summary
      • Statewide Summary Comparing As Passed Senate, As Passed House, and Conference Proposal
      • Agency Detail Comparing As Passed Senate, As Passed House, and Conference Proposal
      • Budget Outlook
  • JLARC officials were required to submit their review to the legislature by December 2023, and were expected to add materials to their planned reports webpage.

Information Set