Washington State House Commerce and Gaming Committee – Public Hearing
(February 4, 2019)

Here are some observations from the February 4th Washington State House Commerce and Gaming Committee (COG) afternoon meeting.

My top 3 takeaways:

  • The Committee hosted a public hearing for HB 1238, “Authorizing marijuana retailers to sell certain products and merchandise.”
    • HB 1238 is the companion bill to SB 5201; the first public hearing for that bill was hosted by the Senate Labor and Commerce Committee on January 31st.
    • Committee Research Analyst Kyle Raymond briefed members on the legislation’s effects (audio – 2m, video). From the House Bill Analysis:
      • Authorizes licensed marijuana retail outlets to sell marijuana merchandise, Cannabidiol products, and other products not intended for consumption.
      • Requires the Liquor and Cannabis Board to establish marketing standards to ensure products sold by licensed marijuana retailers are not intended to appeal to minors or otherwise encourage marijuana use by minors.
    • Representative Shelley Kloba confirmed this bill would enable retailers to sell cannabidiol (CBD) products from outside the I-502 system which would not have to meet the testing requirements for I-502 products (audio – 1m, video).
    • Vice Chair Kristine Reeves, the bill’s primary sponsor, said the bill “represents an opportunity for a licensed industry in which a product is sold to be able to expand the market into non-edibles and that would best help market and represent their particular outlet…” She noted how common this branding was in other sectors, saying the proposed merchandise could help retailers “balance their books” (audio – 2m, video).
    • Brooke Davies, representing the Washington CannaBusiness Association (WACA), told committee members the organization supported the bill, calling it “fair middle ground” between quality control and building relationships with customers. She testified that because retailers can only sell cannabis products with more than 0.3% THC, they were prohibited from offering CBD-only products commonly sold elsewhere leading to customer confusion. She closed by noting that merchandise sales would allow branding “without obtrusive outdoor advertisements” in reference to HB 1466, a measure to ban marijuana billboards (audio – 2m, video).
    • Seth Dawson, lobbyist for the Washington Association of Substance Abuse and Violence Prevention (WASAVP), testified in opposition. He began by conceding appreciation for the bill’s language barring merchandise targeted to youth. But his testimony emphasized the findings of a RAND study on medical cannabis advertising and reflected a belief that “all advertising has a negative effect on kids.” Dawson explained WASAVP’s participation in the RAND study confirmed the organization’s assumptions about the threat cannabis advertising poses. Warning of health and behavioral risks from teen cannabis use, Dawson said he was bothered by a popular attitude among youth that alcohol was a more dangerous drug. Dawson claimed policymakers couldn’t fairly weigh the bill without a more holistic view of all cannabis advertising changes the state is considering (audio – 3m, video).
    • Chris Thompson, Director of Legislative Relations for the Washington State Liquor and Cannabis Board (WSLCB), signed in as “other” on behalf of the agency and described agency concerns. ESSB 2334, passed in 2018, required testing of all CBD added to 502 products. Thompson expressed a concern that HB 1238 permits the sale by I-502 retailers of CBD products which have not undergone I-502 testing. The agency was also concerned about the potential sale of synthetic cannabis (“Spice”) by retailers and cost implications of investigating complaints (audio – 2m, video).
    • Lawmakers sought more input on the bill’s impacts (audio – 3m, video).
      • Assistant Ranking Minority Member Kelly Chambers asked Davies how the industry would avoid branding that appeals to children. Davies pointed to existing industry restrictions on advertising (RCW 69.50.369) and WSLCB rules as a guide.
      • Kloba said the consumer’s ability to know what’s in a product and its origin is “really important for your industry.” She asked what retailers would do to help consumers understand not just differing products, but differing testing standards: “How would you help your consumers?” Davies replied the bill wasn’t drafted with the intent of selling unregulated products, but “price difference” between 502 products subject to the excise tax and items sold elsewhere was stark. She promised to “engage in conversations about how we can actually ensure the quality of the products” but emphasized retailers couldn’t sell CBD products from licensed producers if they were below 0.3% THC regardless of testing.
  • The committee welcomed a new Republican member (audio – 1m, video).
    • Representative Jeremie Dufault replaces Representative Bill Jenkin in the committee’s minority caucus. Jenkin had served on the committee since 2017.
  • The committee took no action on HB 1370, Creating additional training requirements for licensed marijuana retailers and their employees.”

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