WA Legislature - Update
(April 1, 2023)

WA Legislature - Update (April 1, 2023) - Takeaways

Legislators hosted a lopsided hearing on the WSLCB THC bill on Friday and planned to host an executive session on legislation to expand the social equity licensing program on Saturday.

Here are some observations of the Washington State Legislature (WA Legislature) for Saturday April 1st, the 83rd day of the 2023 Regular Session.

My top 2 takeaways:

  • On Friday March 31st, the Washington State House Appropriations Committee (WA House APP) hosted a public hearing on SB 5367, the Washington State Liquor and Cannabis Board (WSLCB) THC bill, hours after announcing an executive session on the legislation had already been planned for the following week.
    • Positions (testifying + not testifying - duplicates = total)
      • PRO: 5 + 8 - 0 = 13
      • CON: 7 + 19 - 1 = 25
      • OTHER: 0 + 1 - 0 = 1
    • A fiscal note on the amended version of SB 5367 as recommended by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) was published in the late morning on Friday.
      • Fiscal analysts at the Washington State Department of Agriculture (WSDA) did not modify their position that the bill threatened the viability of the State hemp program:
        • The previous iteration of the bill had a "zero" THC limit – but as zero is not a number in chemistry, the limit has been changed to "detectable" as defined by laboratory standards. These newly defined cannabis products would go under the regulatory authority of the LCB. Products sold in I502 licensed retail stores must be grown and processed by I-502 producers and processors – so by saying that cannabis products with any amount of detectable THC (including products previously defined as hemp) must be sold through the I-502 regulatory channel.
        • About 75% of hemp licensees are selling into markets to make ingestible hemp products, meaning smokable hemp, and other CBD products, and so if they lose their ability to sell into those marketplaces, they are unlikely to relicense. WSDA assumes up to a 75% reduction in our current 72 hemp licensees at $1,200 per license. Estimated reduction of 54 hemp licensees and $64,800 loss in revenue.
      • Analysts at the Washington State Patrol (WSP) anticipated that agency staff would be unable to comply with the proposed laws:
        • The changes in the proposed legislation result in definitions with varying levels of THC. It is not clear how this may impact evidentiary standards, but if they only require determining the presence of THC to identify a substance as cannabis, there will be no impact to the current testing procedures of the WSP’s Crime Laboratory Division (CLD). If however, the evidentiary standards require the identification of THC concentrations consistent with new and current definitions, including the new definition of THC Concentration in Section 2(uu), we will need to expand our concentration testing protocols to cover delta-9, delta-8, delta-10, and any other THC isomers and their acid versions. Our fiscal impact for this is detailed below.
        • We assume that our CLD will need to provide evidence testing that meets the new definitions of the proposed legislation to the extent scientifically possible. In order to accomplish this, each of our three Controlled Substance Laboratories would need to acquire a Liquid Chromatography-Mass Spectrometry (LC/MS) instrument capable of conducting the more detailed analysis required, at an estimated cost of $600K per instrument. We assume that the intent of New Section 6 of the proposed legislation is that we not do so, therefore these costs are not included in the expenditure table. This means that we will be unable to fully meet the new evidentiary standards created.
      • Neither agency opted to formally register their position on the bill, nor were these concerns publicly presented in the staff briefing by fiscal analyst Matt Mazur-Hart (audio - 3m, video).
    • During the public hearing, WSLCB staff, some cannabis industry representatives, public health, and prevention advocates lined up in support of the legislation emphasizing concerns about youth access and the potential for increased State revenues were all cannabis products required to be grown, manufactured, and distributed through the 502 marketplace where an additional 37.5% excise tax would be collected from consumers for any cannabis product not meeting the definition of Cannabis Health And Beauty Aids (CHABA) or approved by the FDA.
      • While the import of extracts and distillate for the purpose of enhancing the cannabidiol (CBD) content of 502 products would remain authorized, that statute would also be modified to require imported products not meet the revised definition of “cannabis products” - effectively banning that pathway for hemp products also, as all cannabis extracts and distillate have “detectable” amounts of THC.
      • Regarding the ambiguity around the term “detectable,” WSLCB Director of Legislative Relations Marc Webster claimed agency staff would be prepared to define the term in rule in coordination with the WSDA Cannabis Lab Accreditations Standard Program (CLASP, audio - 1m, video).
      • It’s Cannabis Observer’s understanding that WSLCB Chemist Nicholas Poolman left the agency to join the WSDA CLASP team, leaving one part-time chemist to advise the board.
    • Hemp farmers and industry advocates were in disarray against the legislation, with some still advocating for substantial funding to create a pilot program authorizing the inclusion of THC in foods, beverages, and dietary supplements as recommended by the Washington State Hemp in Food Task Force (WA Hemp in Food Task Force). Several claimed they had suspended operations to plant hemp in 2023 pending the outcome of the legislation and would not renew their WSDA production license absent accessible markets in Washington state if legislators passed the bill as written.
    • Earlier in the day, legislative staff announced committee members planned to host an executive session on the legislation on Monday April 3rd.