WA Legislature – Conference Committee Meeting – SB 6168
(March 11, 2020)

Here are some observations from the Wednesday March 11th Washington Legislature conference committee meeting for SB 6168, the supplemental operating budget bill. This meeting signified the achievement of a budget compromise between the three senators and three representatives appointed to broker an agreement between chambers, if not parties. Within the expansive 571 page operating budget, revenues from the taxation of cannabis sales were utilized for a multitude of purposes and cannabis-related policymaking was funded. We’ve gathered all of that information here to answer a frequently asked question: where does all the cannabis money go?

My top 3 takeaways:

  • Drafting Washington state’s supplemental operating budget was a complicated process which necessitated amendment by a conference committee. SB 6168 – “Making 2019-2021 fiscal biennium supplemental operating appropriations,” as passed by the Legislature featured many provisions regarding the disposition of legal cannabis revenue.
    • The State’s biennial budget goes through supplemental changes during short legislative sessions. The Legislature’s Guide to Lawmaking (p. 27-28) described the operating budget this way:
      • The Operating Budget is a two-year plan for funding all ongoing state activities except for construction and transportation. The Operating Budget is in effect from July 1 through June 30, two years later. The Ways & Means committee works on the operating budget in the Senate, while the Appropriations committee works on it in the House.
      • Unlike other bills, the Governor is permitted to veto specific budgetary items without vetoing the entire budget. These are known as line-item vetoes. A two-thirds majority is required for the Legislature to override these vetoes.
    • Senators passed an engrossed Senate bill describing the supplemental operating budget which representatives overwrote into a House version. Senators declined to accept the changes and the chambers appointed a conference committee. The Guide to Lawmaking (p. 25) described the committee’s purpose as “meeting in attempt to seek a resolution. This committee consists of three members from each chamber, two members of the majority party and one from the minority party…If an agreement has been reached, a conference committee report is released, but must be adopted by both bodies for the bill to pass. The procedure is to first adopt [a] conference committee report, then vote up or down on final passage of the bill.”
    • Conference committees for budget bills are typically the leadership of each chamber’s standing budget committee, Senate Ways and Means (WA Senate WM), and House Appropriations (WA House APP). For SB 6168, the committee conferees were:
      • Representative Timm Ormsby, House Democratic Majority, Chair of WA House APP, Chair of conference committee.
      • Representative June Robinson House Democratic Majority, 1st Vice Chair of WA House APP.
      • Representative Drew Stokesbary, House Republican Minority, Ranking Member of WA House APP.
      • Senator Christine Rolfes, Senate Democratic Majority, Chair of WA Senate WM.
      • Senator David Frockt, Senate Democratic Majority, Vice Chair of WA Senate WM.
      • Senator John Braun, Senate Republican Minority, Ranking Member of WA Senate WM.
    • Staff Report
      • James Kettel, WA Senate WM Operating Budget Coordinator and Charlie Gavigan, WA House APP Fiscal Coordinator gave a staff report on the conferee’s amendment (audio – 10m).
        • Highlighting a variety of trends in the operating budget, Gavigan said “there’s funding for foundational public health, that is, primarily backfills less than expected vape revenue” resulting from the State Board of Health (SBOH)’s emergency ban on flavored vapor products last fall.
        • Kettel noted that the budget included “savings from utilizing marijuana revenue for low-income healthcare under I-502.” The supplemental budget summary explains that I-502 “directed a portion of the tax revenue to fund primary, dental, migrant, and maternity health care services through contracts with community health centers. It also directed a portion of revenue to the Basic Health Plan Trust Account. The Basic Health Plan was eliminated on January 1, 2014, and replaced by the Medicaid expansion and subsidized coverage sold through the Health Benefit Exchange.”
    • Members of the majority were complimentary of SB 6168’s final result while the two lawmakers from the minority spoke well of the process but were not ultimately supportive of the supplemental budget. No one mentioned cannabis-related policies in their remarks on the bill.
    • The committee voted along party lines to adopt the report (audio – 1m).
    • Both chambers subsequently voted to approve the conference committee’s report and pass SB 6168. The bill was delivered to the Governor on March 12th and, at publication time, was poised to be signed into law subject to veto in whole or in part.
  • Legal cannabis sales had generated hundreds of millions of dollars in revenue for the State since sales began in 2014, and those funds were appropriated to help meet statutory obligations, agency budget requests, and the fiscal requirements of legislation through the operating budget.
  • Many budget items had appropriated amounts from the Dedicated Marijuana Account change, most significantly transfers to the State’s general fund and basic health plan trust account. Cannabis-related items were added, some removed, and other spending changes declared in SB 6168.
    • Washington State Treasurer, Sections 801 and 804: $760 million. Increased revenue distributions to the basic health plan trust account and the State’s general fund were the largest direct appropriations by the Legislature from cannabis revenue.
      • Basic Health Plan Trust Account, Section 804: $426 million. Appropriations for FY 2020 and FY 2021 would be increased from a total of $394 million. Funds in the account were “used exclusively for the purposes of this chapter, including payments to participating managed health care systems on behalf of enrollees in the plan and payment of costs of administering the plan.”
      • General Fund, Section 804: $304 million. Increased from $274 million.
      • “General Fund Appropriation for Marijuana Excise Tax distributions,” Section 801: $30 million. Distributions to cities and counties were unchanged from the 2019 budget baseline (p. 376) although the House attempted to increase funding.
        • In the engrossed House version of the supplemental budget bill, section 916 detailed revisions to standing appropriations from the DMA statute, RCW 69.50.540. A change to subsection (2)(g)(iv) detailing the amount of the “total share of marijuana excise tax revenues distributed to counties and cities” would have raised the $15 million FY 2021 distribution to $18.5 million.
    • Washington State Health Care Authority (HCA), Sections 211 and 215: $98,806,000 from the DMA. Specific appropriations of DMA funds in SB 6168 total $67,579,000. The arcane calculations for the HCA’s DMA allocation and the conditions for its use are defined in RCW 69.50.540(2)(a)(i). See the agency’s requested budget on OFM’s agency budget detail page.
      • Community Health Centers, Section 211(26): $41,823,000. HCA “shall use revenue appropriated from the dedicated marijuana fund for contracts with community health centers under RCW 69.50.540 in lieu of general fund—state payments to community health centers for services provided to medical assistance clients…” The legislation would allocate $20,870,000 for FY 2020 and $20,953,000 for FY 2021.
      • Department of Children, Youth, and Families (DCYF) substance abuse prevention programs, section 215(27)(a): $6,556,000. The amount and language of this appropriation to fund a memorandum of understanding (MOU) between the entities was unchanged since 2019.
      • “residential treatment services for children and youth,” section 215(27)(a)(vii): $5,368,000.
      • “expenditures into the home visiting services account,” section 215(27)(a)(ix): $4,868,000.
      • Healthy Youth Survey (HYS), section 215(27)(a)(iii): $1,000,000. The HYS was the State’s collaborative endeavor to poll 8th, 10th, and 12th grade students on behaviors including alcohol, tobacco, and substance use. The HYS was administered by HCA through a committee co-chaired by WSLCB’s Public Health Education Liaison, Sara Cooley Broshcart.
      • Parent Child Assistance Program (PCAP), section 215(27)(a)(iv): $792,000.
      • “maintaining increased prevention and treatment service” to Tribal children and youth, section 215(27)(a)(vi): $772,000.
      • Office of the Superintendent for Public Instruction (OSPI) “life skills training to children and youth,” section 215(27)(a)(v): $500,000.
      • training and technical assistance for the implementation of evidence-based, research based, and promising programs which prevent or reduce substance use disorder,” section 215(27)(a)(viii): $500,000.
      • “grants to community-based programs that provide prevention services or activities to youth,” section 215(27)(a)(x): $500,000.
      • Washington State Institute for Public Policy (WSIPP), section 215(27)(a)(ii): $400,000. Funds the on-going benefit-cost analysis of Initiative 502.
        • For a fuller description of the appropriation in statute, see RCW 69.50.540(1)(b).
    • WSLCB, Section 140: $23,797,000. Specific appropriations of DMA funds in SB 6168 total $12,644,000. The budget had several new sections and funding changes for the primary adult use regulatory authority in the State. See the agency’s requested budget on OFM’s agency budget detail page. WSLCB’s 2020 supplemental ABR was submitted by Deputy Director Megan Duffy on October 2nd, 2019 and called for “Performance Level enhancements totaling $912,359.”
      • Administration, accounted for in section 140 but defined in RCW 69.50.540(1)(d)(i): $10,000,000. This standing statutory appropriation was “for administration of this chapter as appropriated in the omnibus appropriations act.”
      • SB 5318 – “Reforming the compliance and enforcement provisions for marijuana licensees,” section 140(5): $1,313,000. There were no changes to allotments for the 2019 legislation.
      • Licensing and enforcement staffing, section 140(6): $700,000. There were no changes to allotments made in 2019.
      • HB 2870“Allowing additional marijuana retail licenses for social equity purposes,” Section 140(13): $348,000.
      • Cannabis Potency Tax Work Group, section 140(7): $100,000. There were no changes to the 2019 allotment which produced a study at the request of the legislature last year which found it was not feasible to implement a potency-based tax system for legal cannabis in Washington state at that time.
      • HB 2826 – “Clarifying the authority of the liquor and cannabis board to regulate marijuana vapor products,” Section 140(12): $65,000.
        • The WSLCB agency request legislation remained wholly unmodified in its passage through the Legislature. WA Senate WM moved the bill on March 2nd, the entire Senate passed the bill on March 6th, and it was delivered to the Governor on March 11th.
        • Learn more from the legislation’s fiscal note which advised appropriating the amount budgeted.
        • The measure was added to the House version of SB 6168 but was not in the Senate version.
      • HB 1794 – “Concerning agreements between licensed marijuana businesses and other people and businesses, including royalty and licensing agreements relating to the use of intellectual property,” section 140(4): $46,000. There were no changes to the allotment for the 2019 bill.
        • This bill had been repeatedly referenced in relation to WSLCB rulemaking on true parties of interest.
      • SB 6206 – “Creating a certificate of compliance for marijuana business premises that meet the statutory qualifications at the time of application,” section 140(11): $42,000.
      • Marijuana Odor Task Force, section 140(15): $30,000.
        • The proposed new interim task force was based on legislation which wasn’t advanced beyond its introduction whose shortcomings were first discussed at the WSLCB on March 3rd. WSLCB Director of Legislative Relations Chris Thompson lobbied unsuccessfully against the measure becoming a responsibility of the agency.
        • The task force would be made up of state agencies and “A representative from the recreational marijuana community or a marijuana producer, processor, or retailer.” No representation was offered to the regional clean air agencies.
        • The group would review “The available and most appropriate ways or methods to mitigate, mask, conceal, or otherwise address marijuana odors and emissions and the potentially harmful impact of marijuana odors and emissions on people who live, work, or are located in close proximity to a marijuana production or processing facility, including but not limited to: (a) Filtering systems; (b) natural odor masking mechanisms or odor concealing mechanisms; (c) zoning and land use controls and regulations; and (d) changes to state laws and regulations including, but not limited to, laws and regulations related to nuisance and public health.”
      • SB 6254 – “Protecting public health and safety by enhancing the regulation of vapor products,” section 140(14): $172,000 from the general fund.
        • The non-cannabis vapor product legislation filed on behalf of the Governor’s office in collaboration with the Department of Health (DOH) followed last year’s vaping associated lung injury (VALI) health scare. Whereas HB 2826 was the post-VALI bill to more permanently encode WSLCB and DOH cannabis vapor product authorities, SB 6254 was the State’s effort to formalize emergency bans on non-THC vapor products. The “zombie bill” with positive revenue possibilities was allowed to shamble past the legislature’s cutoff procedures leading to passionate discussion and amendment by senators during the bill’s WA Senate WM executive session on March 2nd. The bill sat idle before being taken up, amended anew, and passed on the Senate floor on March 13th – the last day of the regular legislative session. But the House did not take up the bill that afternoon before sine die was declared concluding the legislative session and biennium. SB 6254 could finally be said to be dead.
        • The appropriation in SB 6168 included a common stipulation that in the event SB 6254 was “not enacted by 25 June 30, 2020, the amount provided in this subsection shall lapse” back to the general fund.
        • See the legislation’s preliminary and final fiscal notes.
      • HB 2871“Establishing a retail privilege endorsement to a marijuana producer license.” Here are the ABR documents for the agency’s other request bill which was not advanced past its initial public hearing.
      • Washington State Economic and Revenue Forecast Council (ERFC) cannabis revenue data. Section 140(12) of the engrossed Senate version of the supplemental operating budget required WSLCB to provide information on cannabis sales to the ERFC. Thompson protested the provision during the WSLCB’s March 3rd Board Caucus and said he would continue to lobby against its inclusion. The conference committee did not include the proviso in the supplemental budget.
    • DOH, Section 221: $21,402,000. Specific appropriations of DMA funds in SB 6168 total $1,805,000. The calculations for the DOH’s DMA allocation and the conditions for its use are defined in RCW 69.50.540(2)(b)(i). See the agency’s requested budget on OFM’s agency budget detail page.
      • Administration of Marijuana Authorization Database, accounted for in section 221 but defined in RCW 69.50.540(1)(g): $1,616,000.
      • HB 1094 – “Establishing compassionate care renewals for medical marijuana qualifying patients,” section 221(45): $189,000. There were no changes to the allotment for the 2019 bill.
      • Marijuana Education and Public Health Program. Defined in RCW 69.50.540(2)(b)(i)(A), an unclear amount of the remaining $19,597,000 from the DMA appropriation could be spent on:
        • (I) A marijuana use public health hotline that provides referrals to substance abuse treatment providers, utilizes evidence-based or research-based public health approaches to minimizing the harms associated with marijuana use, and does not solely advocate an abstinence-only approach;
        • (II) A grants program for local health departments or other local community agencies that supports development and implementation of coordinated intervention strategies for the prevention and reduction of marijuana use by youth; and
        • (III) Media-based education campaigns across television, internet, radio, print, and out-of-home advertising, separately targeting youth and adults, that provide medically and scientifically accurate information about the health and safety risks posed by marijuana use;
      • Washington Poison Center (WAPC). Defined in RCW 69.50.540(2)(b)(i)(B), an unclear amount of the remaining $19,597,000 from the DMA appropriation could be granted to the 501(c)3 non-profit. WAPC’s funding screen states: “Our operational funding comes from a variety of supporters, including the Washington State Department of Health, public and private grants, corporate sponsorships and individual donations.”
    • Washington State Patrol (WSP), Section 402: $5,446,000. See WSP’s requested budget on OFM’s agency budget detail page.
      • Drug Enforcement Task Force, section 402(3): $5,246,000. Funding would be decreased in FY 2020 from $2,723,000 to $2,453,000 and increased in FY 2021 from $2,523,000 to $2,793,000. This was due to changes in requested amounts in subsection (3)(b) covering funds “provided solely for a case management system to serve as a repository for all information regarding criminal cases.” Subsection (3)(a) states that the vast majority of the money was “provided solely for the Washington state patrol to partner with multi-jurisdictional drug and gang task forces to detect, deter, and dismantle criminal organizations involved in criminal activity including diversion of marijuana from the legalized market and the illicit production and distribution of marijuana and marijuana related products in Washington state.”
      • SB 5605 – “Concerning misdemeanor marijuana offense convictions,” Section 402(6): $200,000. There were no changes to the allotment from the general fund for the conviction vacation bill enacted in 2019.
    • Washington State Department of Agriculture (WSDA), Section 309: $1,569,000. See the department’s requested budget on OFM’s agency budget detail page.
      • “compliance-based laboratory analysis of pesticides in marijuana,” accounted for in section 309 but defined in RCW 69.50.540(1)(h): $1,270,000. WSDA would receive $635,000 in both FY 2020 and FY 2021 for staffing and processing cannabis testing requests at the Department’s Chemical and Hop Laboratory in Yakima. The amount and language of the allotment was unchanged since 2019.
        • WSLCB Enforcement Commander Jennifer Dzubay reviewed the interagency agreement for cannabis testing between the agency and WSDA on February 4th. Earlier funding had come through WSLCB rather than a direct appropriation to WSDA’s budget.
      • SB 5276“Authorizing hemp production in conformance with the agriculture improvement act of 2018,” section 309(11): $212,000. There were no changes to the general fund allotment for the 2019 bill.
      • Pesticide Investigations Work Group and Aerial Application of Herbicides Interim Charge, section 309(17): $87,000. WSDA received FY 2021 funding from the Model Toxics Control Operating Account for two new cannabis-related interim charges.
        • (a) The department must work with the departments of natural resources, labor and industries, health, and ecology, as well as local health jurisdictions and the state poison center, and consult with nongovernmental stakeholders including, but not limited to, tribal and environmental representatives, to evaluate pesticide investigation rules and processes. By June 30, 2021, the work group must report back to the legislature with any recommended changes, including how complaints should be reported and ensuring that complaints are properly referred.
        • (b) The department in coordination with the department of natural resources, in consultation with stakeholders, shall review how the state environmental policy act is used for aerial application of herbicides and provide recommendations to the forest practices board and the appropriate committees of the senate and house of representatives, including any recommendations for revisions to statute, rule, or guidance by October 31, 2020.
    • OFM, Section 708: $1,323,000. Funding “provided solely for expenditure into the health professions account to reimburse the account for costs incurred by the department of health for the development and administration of the marijuana authorization database” would be increased for FY 2020. Both the House and Senate engrossed versions raised funding for the account but by differing amounts. The increase from $701,000 to more than $1.3M reflected the House’s vision for the appropriation, whereas the Senate penned $1.415M. See OFM’s requested budget on their budget detail page.
    • Department of Commerce, Section 127: $1,100,000. Section 127(113) would allocate money to the Department for the implementation of HB 2870, more specifically detailed in section 916(1)(i) “to fund the marijuana social equity technical assistance competitive grant program.” See the agency’s requested budget on OFM’s agency budget detail page.
    • OSPI, Section 501: $1,052,000. Section 501(4)(h)(i) would appropriate $522,000 for FY 2020 and $530,000 for FY 2021 “solely for the building bridges statewide program,” a school dropout prevention program. The amount and language of this appropriation was unchanged since 2019. See OSPI’s requested budget on OFM’s agency budget detail page.
    • Department of Ecology (DOE), Section 302: $929,000. Section 302(27) regarding HB 2052’s migration of cannabis laboratory accreditation to the DOE and creation of the Cannabis Science Task Force (CSTF) was unchanged, allocating $465K in FY20 and $464K in FY21. See DOE’s requested budget on OFM’s agency budget detail page.
      • Cannabis Observer’s most recent coverage of the CSTF Steering Committee was in September 2019 and documents associated with each of its meetings are accessible here.
    • University of Washington (UW), Section 603: $628,000. SB 6168 would maintain the FY 2020 allocation from the DMA of $256,000 and increase the FY 2021 appropriation from $263,000 to $272,000. See the University’s requested budget on OFM’s budget detail page.
      • Intoxication and Impairment Research, accounted for in section 603 but defined in RCW 69.50.540(2)(c)(i): $488,000. UW research would “include but not be limited to formal and informal methods for estimating and measuring intoxication and impairment, and for the dissemination of such research.”
      • Web-Based Public Education Materials, accounted for in section 603 but defined in RCW 69.50.540(1)(c): $40,000. Provided “to the University of Washington alcohol and drug abuse institute for the creation, maintenance, and timely updating of web-based public education materials providing medically and scientifically accurate information about the health and safety risks posed by marijuana use.
      • Impairment and “Cannabis Induced Psychosis” Research, section 603(1)(46)(a): $100,000. A new appropriation from the general fund would be intended “solely for the center for cannabis research at the university to collaborate with the Washington State University collaboration on cannabis policy, research, and outreach to create frameworks for future studies. Each framework will include the length of time to complete, research licenses necessary, cost, literature review of national and international research, and a scope of work to be completed. The following frameworks shall be compiled in a report: (A) Measuring and assessing impairment due to marijuana use; and (B) Correlation between age of use, dosage of use, and appearance of occurrence of cannabis induced psychosis.” The report would be due to “the appropriate committees of the legislature” by December 1st, 2020.
        • In Cannabis Observer’s March 9th Week Ahead we noted: Representative Lauren Davis introduced a controversial bill, HB 2546 – “Concerning the potency of marijuana products”, which was granted a hearing by the House Commerce and Gaming Committee (WA House COG) on January 30th. At the conclusion of that hearing—which saw six people in favor and 48 opposed to the legislation—Chair Strom Peterson stated, “this bill is not going to be moving out of this committee but the conversation certainly is.”
      • Section 603(2) rescinded a $9,000 allotment from the DMA to UW’s Conditional General Wage Increases fund included in the 2019 budget.
    • Washington State University (WSU), Section 604: $276,000. See the university’s requested budget on OFM’s budget detail page.
      • Short and Long Term Effects of Marijuana Use, accounted for in RCW 69.50.540(2)(c)(i) but defined in section 604(10): $276,000. The bill would appropriate $138,000 in both FY 2020 and FY 2021 to “Review the scholarly literature on the short-term and long term effects of marijuana use to assess if other states or private entities are conducting marijuana research in areas that may be useful to the state” and to pursue partnerships with other research bodies for “purposes related to researching short-term and long-term effects of marijuana use.” The amount and language of this allotment was unchanged since 2019.
    • Office of the Attorney General (OAG), Section 125: $79,000. Money was appropriated from the Legal Services Revolving Account in 2019 to provide legal services associated with HB 2052 during FY 2020. See OAG’s budget request on OFM’s agency budget detail page.
Here are shared documents for your review: