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The First Decade of Washington's Adult-Use Cannabis Experiment

Legislative Staff Academy

Thursday, September 29, 2022

Peter Clodfelter, House Office of Program Research

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Timeline

  • 1998 – Initiative 692 passes (medical cannabis)
  • 2007, 2010, 2011 – Legislature amends medical cannabis laws
  • 2012 – Initiative 502 passes
  • 2013 – “Cole Memorandum” issued; LCB rules issued; First licenses issued
  • 2014 – Retail sales begin in July

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Key Components of I-502

  • Legalized 21+ purchase and possession of limited quantities of cannabis products
  • Created legal framework for commercial cannabis market to be developed by LCB
  • State licensing of producers, processors, and retailers
  • Residency requirement
  • Distance restrictions
  • Local notice
  • Restrictions on advertising
  • Restrictions on numbers of retail outlets
  • DUI blood threshold
  • Taxation
  • Dedication of funding for healthcare, prevention, research, general fund
  • WSIPP Reports
  • “Seed to sale” traceability

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Agencies in Cannabis Space

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Notable Legislative Changes

  1. HB 2136 (Carlyle) (2015)
    • Comprehensive reforms including establishing 37% excise tax
  2. SB 5052 (Rivers) (2015)
    • Cannabis Patient Protection Act
  3. HB 2000 (Hurst) (2015)
    • Cannabis agreements with tribes
  4. SB 5131 (Rivers) (2017)
    • Omnibus cannabis bill

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  1. SB 5318 (Rivers) (2019)
    • Licensee education, compliance, enforcement reform
  2. HB 2870 (Pettigrew) (2020)
    • Social equity in cannabis
  3. HB 1443 (Morgan) (2021)
    • Social equity in cannabis
  4. HB 1210 (Morgan) (2022)
    • “Marijuana” to “Cannabis”

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Changes Proposed But Not Enacted

  1. 6-plant home grows
  2. Out-of-state ownership
  3. Home delivery
  4. Consumption lounges
  5. Merchandise sales by retailers
  6. Vote of public for local jurisdiction to ban
  7. No state cannabis license issuance unless local jurisdiction approves
  8. Repeal I-502
  1. Billboard bans
  2. Create Cannabis Commission as agricultural commodity commission
  3. Limit THC concentration of products
  4. Producer retail sales
  5. Expand agency regulatory authority over new cannabinoid products
  6. Create new licenses dedicated to social equity

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Findings in WSU Impact Center Report, 2020 Contributions of the Washington Cannabis Sector

  • “In 2020 the Washington cannabis sector contributed $1.85 billion to gross state product”
  • “The sector directly and indirectly supported nearly 18,700 full time equivalent jobs”
  • “Retail cannabis sales grew 21% between 2019 and 2020 and grew 605% between 2015 and 2020”
  • “Marijuana Excise taxes are the fastest growing component of the state’s General & Selective Sales Taxes revenues”
  • “State tax revenues from direct cannabis retail sales were 468.81 million in 2020, while excise revenues from liquor and alcohol sales only totaled $415.28 million and cigarette, tobacco, vapor product excise revenues totaled $383.55 million”
  • “2020 per capita sales were highest in Asotin County at $564.52 and lowest in Franklin and Garfield Counties where no cannabis retail licenses have been issued”
  • “Washington has had the lower growth rates in retail cannabis sales than both Colorado and Oregon, since 2017”

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Dedicated Cannabis Account Receipts

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Cannabis Revenue Distributions FY 2021

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Agency or Account Receiving Funds

Dollar Amount

Percent of Funds

Basic Health Plan Trust Account

$272,000,000

49%

State General Fund

$191,295,655

34%

Health Care Authority

$54,216,935

10%

Local Governments

$15,000,000

3%

Liquor and Cannabis Board

$10,415,839

<2%

Department of Health

$9,778,229

<2%

Washington State Patrol

$2,313,189

<1%

Department of Agriculture

$635,000

<1%

Office of Superintendent of Public Instruction

$529,920

<1%

Department of Ecology

$416,875

<1%

University of Washington

$265,982

<1%

Washington State University

$138,000

<1%

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SB 5796 (Saldaña) (2022) – Cannabis Revenue

  • Enacted during 2022 Session
  • Modified distribution of funds in the Dedicated Cannabis Account
  • Generally, dollar amounts or percentages that recipients previously received remain the same or increase. However, there is about a 2% reduction of remaining funds allocated to the General Fund

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  • Annual inflation adjustment
  • JLARC review and report on the appropriation and expenditure of cannabis revenues, with a report due December 2023

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Recent, Current, and Emerging Policy Issues

  1. Federal hemp legalization in 2018 and impacts
  2. Cannabinoid bills from 2022 session
    • HB 1668 (Kloba)
    • SB 5547 (Keiser)
    • SB 5767 (Stanford)
  3. Social equity bill from 2022 session
    • HB 2022 (Wicks)

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  1. Cannabis producer challenges
  2. Dormant Commerce Clause questions over out-of-state restrictions
    • U.S. First Circuit Court of Appeals’ decision in 2022 re medical cannabis
    • U.S. Supreme Court’s decision in 2019 re liquor licensing
  3. Impacts of possible federal legalization of cannabis?

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Examples of Delta-8 THC Products

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More Examples of Delta-8 THC Products

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Cannabis in Congress

  1. SAFE Banking Act (2021-2022)
  2. MORE Act (2021-2022)
  3. Cannabis Administration and Opportunity Act (CAOA) (2022)
  4. STATES Act (2019-2020)
  5. State Cannabis Commerce Act (2019-2020)

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Questions?

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