The Washington state legislature is currently in session, and legislators have introduced numerous bills relating to the cannabis industry. While it is too early to know which bills will advance and which will not, below is a summary of two noteworthy bills generating buzz that was discussed last month in the Washington State House Commerce & Gaming Committee. We will discuss more bills in the near future.
HB 2361 – Concerning cannabis industry workplace standards
HB 2361 would implement a point system when cannabis licensees are up for their annual renewal. It would require the licensee to accrue at least 100 points, as determined by the Washington State Liquor and Cannabis Board (“WSLCB”), to qualify for license renewal. There are nine different categories in which licensees may accrue points, and all relate to worker standards. For example, having a labor peace agreement in effect would be worth 40 points, while a collective bargaining agreement covering the licensee’s employees would be worth 60 points. Failure to reach 100 points allows the WSLCB to put the licensee on a 6-month remedial period, and licensees will face non-renewal if the threshold is not met.
This bill is rather controversial. The bill has many licensees concerned over the economic impact of what could prove to be a de facto requirement to unionize. There may be some negotiation over exempting businesses small enough (based on the number of employees).
HB 2263 – Expanding opportunities for marijuana businesses by removing residency barriers and providing access to capital for minority and women-owned businesses through a fee on certain investments.
Another controversial bill, HB 2263, concerns additional opportunities for minority and women-owned marijuana businesses by providing access to capital and low- or no-interest loans. The bill would direct the Department of Commerce to establish a marijuana equity loan program that would be administered by a marijuana equity advisory board. The program would be funded by administering a transaction fee of 1% “from any investor or financier on any financial contribution made by the investor or financier to a licensed marijuana business[.]” It appears that these sections of the bill are an attempt to provide entrepreneurs with access to small business loans. Such access is lacking in the private sector, where banks and credit unions still largely do not engage with the cannabis industry.
Furthermore, the bill would completely remove the requirement that owners be a Washington resident, and it would not require owners with less than 10% of a license to be listed as a named party on the license. Simply put, this section would transform the Washington cannabis industry, so the bill has generated significant discussion within the industry.
The bill does not seem to adequately account for ways in which licensees would attempt to circumvent the transaction fee, which can be difficult to predict. Additionally, “minority” is not a defined term within the bill, though the Department of Commerce (named within the bill) could elect to follow the definition used by the Washington State Office of Minority & Women’s Business Enterprises.
The Bottom Line:
Aside from generating buzz, there’s a common theme with both of these bills: many within the industry support the goals in spirit but take issue with the implementation of the goals. Based on conversations from within the industry, it is unlikely that HB 2263 will advance, though the fate of HB 2361 is unclear. I have spoken with numerous smaller licensees who state that they broadly support unionizing labor, but forcing it on them would incur significant additional expense and ultimately put them out of business. The devil is in the details.