WA Senate WM - Committee Meeting
(January 18, 2021) - Summary

WA Senate WM - Committee Meeting (January 18, 2021)

SB 5004, legislation providing an excise tax exemption for patients registered with the state, drew largely supportive testimony which contested the accuracy of the fiscal note.

Here are some observations from the Monday January 18th Washington State Senate Ways and Means Committee (WA Senate WM) meeting.

My top 3 takeaways:

  • Almost all testimony urged passage of the measure as a way to help patients and push the industry to expand and innovate production of compliant products.
    • Lara Kaminsky, The Cannabis Alliance Government Affairs Liaison (audio - 2m, video). Kaminsky backed the bill as her organization had conducted surveys of patients showing “49% of them are staying out of the regulated market entirely because it does not service their needs.”
      • Kaminsky said the top reasons patients claimed for shopping outside the 502 system included:
        • “Cost”
        • “Fear of inadequate testing”
        • “Lack of appropriate products in the store”
      • Kaminsky noted that DOH compliant products were “the only highly-tested products that meet the concern patients have regarding quality” however there was “a lack of these products in the market.” She indicated that WSLCB was “delayed in their effort to mandate pesticide and heavy metal testing, leaving patients wondering how they can access safe medicine.”
      • The cost of compliant products with the excise tax put them “far outside the range of chronically ill patients who are disproportionately poor,” Kaminsky said. Removal of the excise tax would “go a long way to address the top reason patients are staying out of the market.”
      • Kaminsky said the fiscal note attached to the bill just after midnight that morning was “incorrect.” She asserted WSLCB staff made the same “incorrect” judgement on prior legislation, SB 5234: “LCB is interpreting the tax break as being applicable to all cannabis products in the store.” Instead, Kaminsky said “the fiscal note needs to reflect that the language of the bill specifically says the excise tax waiver is only DOH compliant product as defined” in statute. In 2019, Kaminsky said “there was $127,000 worth of DOH compliant product in the system” and potential revenue to the State from excise tax collected on “only the product correctly identified” would have amounted to $47,000.
        • Keiser asked Kaminsky whether excise tax was collected on CBD items sold outside the 502 market. Kaminsky confirmed there was not (audio - <1m, video).
    • Lukas Barfield, Patient representative on the WSLCB Cannabis Advisory Council (CAC) and member of the Tacoma Area Commission on Disabilities  (audio - 2m, video, written comments). Barfield, who had previously shared concerns about the patient market with both lawmakers and the CAC, talked first about “who medical cannabis patients are” who suffer a “formidable list of conditions.”
      • Barfield identified the chief beneficiaries of SB 5004 as persons with disabilities who had not registered with WA DOH “because it’s actually really hard to get a registration” as many healthcare providers were wary of providing authorizations needed to register. Barfield understood “there’s only one in the area of Tacoma that will give them.”
      • Turning to “pocketbook” concerns, Barfield explained that he cultivated his own cannabis as well as buying from retail stores even though he was “excluded from buying high-quality cannabis because I can’t afford it.” Due to excise taxation, his medical purchases were “in the low range of cannabis and it's not always the kind of cannabis that I need.”
      • A disabled friend of Barfield’s had been procuring cannabis “on the underground market for many years” under the impression it was “safer and better” than what was available in stores - “and lower cost.” He summarized the bill as being an “equitable access issue": patients capable of employment could secure “high quality, high grade cannabis” from retailers, and disabled or low-income patients “should be able to afford it too.”
    • Danielle Rosellison, Trail Blazin’ Productions Co-Founder/CEO (audio - 3m, video). Rosellison said she was owner of a tier 2 “women-owned” cannabis farm where “100% of our upper management employees are minorities.” She reported that all of her company’s products had “been DOH certified as medical marijuana since the beginning of 2017.” Rosellison said only one other company, Fairwinds, registered “the majority or all of their product.”
      • Rosellison commented that “it’s expensive to grow medical cannabis and it’s expensive to test medical products...up to $200,000 annually for the increased testing costs.”
      • As there had been “no education behind the Department of Health program...we’re not seeing the demand for” compliant products, she told the committee. Some retailers “will just give anyone who says they’re a patient that 10% [sales tax] off” which meant patients often bought “whatever’s suggested.” There was “confusion” around what was compliant, so growers and processors “cannot get a higher price point” when supplying medical cannabis to endorsed retailers. Rosellison explained this led to a poor “return on investment” which did not motivate other licensees to serve the patient market.
      • Rosellison believed the legislation could promote greater understanding by retailers of “what DOH products are and that more patients and veterans in need will ask for DOH products.” She hoped more licensees would start “certifying their products as medical.”
    • Ezra Eickmeyer, Producers Northwest (audio - 2m, video). Eickmeyer said the excise tax “never should have been” enacted for patients and that it was “urgent” the legislature approve the bill.
      • Eickmeyer had been approached by ill family and friends seeking medical cannabis outside the 502 market, and acknowledged that producing medical quality products was “an expensive venture” even before the excise tax was levied. He added that he’d opposed the imposition of the tax when the medical and recreational systems were merged in 2015.
      • In consulting with businesses, Eickmeyer was convinced that they would “not invest in developing next generation medical cannabis products” as there simply was no “market for it with this tax attached.” He viewed the potential economic development resulting from adoption of SB 5004 as substantial enough to lead to medical products becoming “potentially bigger than the current recreational market.”
      • WA Senate WM Chair Christine Rolfes asked about the “potential for revenue to the state to be switching from recreational to medical” once patients see “a clear benefit” to registering and foregoing the unlicensed medical market (audio - 1m, video).
    • Jeffrey Wilhoit (audio - 3m, video). Wilhoit was in favor of the bill and offered a “little change” to the language that he said would “support patients.”
      • Noting medical items “that require a doctor’s prescription or order” were “exempt from excise and sales tax” in the state - medical cannabis was an exception. Wilhoit said the bill would bring “parity” with other medical items and assist patients who “are already struggling to pay their bills.”
      • He testified that the exempt products described in section (1)(2)(a) of the bill weren’t expansive enough as most cannabis products would remain “not eligible for the exemption.” Wilhoit explained many cannabis items which succeed at “relieving” patient symptoms “would not qualify” for a discount under the bill. He urged the tax break be expanded to encompass all legal cannabis products.
  • A single voice noted their youth access concerns would be raised if cannabis was made more affordable for anyone, and several people signed in on the bill but did not testify.

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