There are 21 agricultural commodity commissions related to specific commodities in Washington. Commissions are funded by assessments on producers of the commodities within Washington. Several of the commodity commissions are established in law, including the Washington Apple Commission, the Washington Dairy Products Commission, the Washington Wine Commission, the Washington Beer Commission, the Washington Grain Commission, and others. The Washington State Department of Agriculture (WSDA) established additional agricultural commodity commissions through a process in the Washington Agricultural Enabling Act. The Director of the WSDA, or the Director's authorized representative, is a member of each commodity commission.
Referendum of Active Cannabis Producers and Producer/Processors to Establish the Washington State Cannabis Commission.
Upon receipt of a petition containing the signatures of five active cannabis producers or active cannabis producer/processors, to implement the bill and to determine participation in the Washington State Cannabis Commission (Commission) and assessment, the Director of the Washington State Department of Agriculture (WSDA) (Director) must conduct a referendum of active cannabis producers and active cannabis producer/processors.
However, no referendum may be conducted until July 1, 2025, unless the Director receives written notice from the Liquor and Cannabis Board (LCB) that, pursuant to separate legislation enacted after January 1, 2023, the LCB has issued or reissued the maximum number of cannabis producer and processor licenses made available for issuance or reissuance to applicants meeting social equity criteria under the terms of the separately enacted legislation.
When that condition is no longer in effect, a referendum must be conducted within 60 days of receipt of the petition. The WSDA must establish a list of active cannabis producers and active cannabis producer/processors eligible to vote in the referendum in collaboration with the LCB and the Department of Revenue. Inadvertent failure to notify an active cannabis producer or active cannabis producer/processor does not invalidate a proceeding. A cannabis producer or producer/processor is considered active if the business reported gross income subject to the Business and Occupation Tax in the calendar year before the date of a referendum.
The requirements of assent or approval of a referendum are met if at least 51 percent by numbers of the participants in the referendum vote affirmatively, and at least 40 percent of the active cannabis producers and 40 percent of the active cannabis producer/processors have been represented in the referendum to determine assent or approval of participation and assessment.
If the Director determines that the requisite assent has not been given in the referendum, the Director must take no further action to implement or enforce the bill. Upon completion of the referendum, the WSDA must tally the results of the vote and provide the results to participants. The WSDA must create rules for an active cannabis producer or an active cannabis producer/processor to dispute the results of a vote within 60 days from the announced results. The Director is not required to hold a referendum more than once in any 12-month period. The Director may conduct voting on a referendum by electronic means, paper ballots, or both.
Within 60 days of the Director determining that requisite assent has been given in a referendum, the Director must establish the Commission to:
The Commission is required to:
The Commission is authorized to:
Membership of the Commission.
The Commission is composed of the following 13 voting members:
The four districts are defined as geographical areas that each include specific counties. Each member of the Commission other than the Director must be 21 years of age or older, be a citizen and resident of Washington, directly hold or be named an owner in whole or majority part of an entity holding the relevant business license issued by the LCB. The license must not be suspended at the time of nomination, election, or appointment and must not be suspended at any time during the member's term.
Each member of the Commission, other than the Director, must also be an officer or employee of a corporation, firm, partnership, association, or cooperative that has been engaged in the active production of cannabis within Washington for a period of three years and have, during that period, derived a substantial portion of their income from cannabis production. However, the member of the Commission who is a statewide at-large cannabis producer or cannabis producer/processor member who is licensed by the LCB pursuant to social equity criteria is not subject to the requirements that the member be engaged in the active production of cannabis within Washington for a period of three years and have, during that period, derived a substantial portion of their income from cannabis production.
Members must continue to meet membership qualifications throughout their term. Commission members must complete training on unconscious bias.
Seven voting members constitute a quorum of the Commission. The Commission members may be reimbursed for expenses incurred in the performance of their duties in accordance with laws governing mileage, subsistence, lodging and refreshment, and per diem allowances for members of commissions.
The Director must select initial members to appoint to the Commission from a pool of self-nominated cannabis producers or cannabis producer/processors from District 1, District 2, District 3, and District 4. The Director has discretion in determining which members are appointed to the term limits but, within 90 days after the effective date of the bill, must appoint the initial Commission members in accordance with the following:
The Commission must establish by rule the process by which the Commission members are elected and any vacancy appointments are made. When making initial and replacement appointments, the Director must give priority to persons representing the diverse communities of the state to maintain a balanced representation of members where practicable.
Oversight by the Director of the Washington State Department of Agriculture.
The WSDA serves as the Commission's rules coordinator and rules adopted by the Commission must be approved by the Director. Additionally, on a fiscal year basis and before each fiscal year begins, the Commission must develop and submit to the Director a budget, any plans concerning, without limitation the establishment, issuance, effectuation, or administration of internal governance issues and the initiation or establishment of any rule making. The Director must provide a timely review and approve or deny each submission. Additionally, the Director must review the Commission's education program to ensure its consistency with applicable state and federal laws.
Deposits and Expenditures.
The Commission must deposit moneys collected in a separate account in the name of the Commission in any bank that is a state depository. All expenditures and disbursements made from the account may be made without the necessity of a specific legislative appropriation.
Use of Financial and Commercial Information.
Financial and commercial information and records submitted to the LCB or the Commission to administer the bill may be shared between the LCB and the Commission. The information or records may also be used, if required, in any action or administrative hearing relative to the Commission. The issuance of general statements based upon the reports of a cannabis producer or cannabis producer/processor is permissible if the statements do not identify a specific licensee. The publication by the Director or the Commission of the name of a cannabis producer or cannabis producer/processor violating a law related to the Commission and a statement of the violation is also permissible.
Liability.
Obligations incurred by the Commission and any other liabilities or claims against the Commission must be enforced only against the assets of the Commission and, except to the extent of such assets, no liability for the debts or actions of the Commission exists against either the State of Washington or any subdivision or instrumentality or against any member, employee, or agent of the Commission or the State of Washington in their individual capacity. Except as otherwise provided in law, neither the Commission members, nor Commission employees, may be held individually responsible for errors in judgment, mistakes, or other acts, either of commission or omission, as principal, agent, person, or employee, except for their own individual acts of dishonesty or crime.
Reimbursement of Agency Costs.
All costs incurred by the LCB and the WSDA, including staff support and the adoption of rules or other necessary actions must be reimbursed by the Commission. The costs incurred must include initial estimates of work and line-item accounting of the costs incurred.
Agricultural Commodity Assessments to Fund the Commission.
Pursuant to referendum conducted under the bill, to provide for permanent funding of the Commission, the LCB must impose and collect an assessment from all cannabis producers and cannabis producer/processors. The initial rate of assessment is:
After the initial assessment is approved, the Commission may modify the assessment if submitted for approval by referendum. The requirements of assent or approval of a referendum are met if:
Assessments collected must be disbursed at least quarterly to the Commission for use in carrying out the law. Until October 31, 2028, the assessments do not apply to a cannabis producer or cannabis producer/processor licensed under Cannabis Social Equity Program.
State Civil Service Law Exemption.
The State Civil Service Law does not apply to officers and employees of the Commission.
The amended bill makes the following changes to the substitute bill:
(In support) Agricultural research and development has led to major improvements in agricultural practices and efficiencies. The federal status of cannabis is a barrier to the cannabis industry benefiting from these types of programs for other agricultural products. It is challenging to find answers to basic questions such as related to nitrogen application, pest management, and pesticide use. Agricultural commodity commissions exist for a variety of agricultural products where producers pay an assessment that funds public good for their industry. Multiple farmers can pool resources to conduct research that may be beyond the scope of what any individual farmer could accomplish alone. A report on agricultural commissions in Washington found that the majority of producers are happy with the work of their commission. The referendum in the bill will allow the cannabis industry to vote on whether it would like the Washington State Cannabis Commission (Commission) created. Marketing activities are intentionally omitted from the work of this Commission. Research and development activities are the focus. Workers safety, product safety, and environmental stewardship practices will all benefit. With the possibility of federal legalization of cannabis, this bill will help Washington be at the forefront. The largest, most well-funded companies are against this bill. The bill is egalitarian. Agricultural commodity commissions provide knowledge and best practices to all individual members. The bill will not interfere with improving social equity within the cannabis industry. Significant work has gone into this bill for seven years. Concerns that have previously been raised in opposition are accounted for in this bill. The assessment amount is designed be affordable and a low amount. A business selling $1 million of product per year would pay $100 per month in assessments. This could fund a lot of research. The Director of the Washington State Department of Agriculture has oversight over all research and other activities of the Commission. Farmers should get a vote on this policy.
(Opposed) A commission for the cannabis industry is unnecessary at this time. Wait until interstate cannabis is legal. Marketing to other states is one of the big roles of commodity commissions, and that role is specifically excluded in this bill. A commission focused only on research is uncommon. The costs of the assessments are problematic. The charge may be called an assessment, but it is the same as a tax for the industry. There is double taxation involved in this bill. If a business is licensed only as a producer, that business would be taxed when selling to a processor, who would then be taxed again when the processor sells the product. A business group estimates it will be subject to a $50,000 assessment. Regarding the vote to authorize the Commission, only 40 percent or producers and producer/processors would have to participate in the referendum, which means that 21 percent of the industry could vote to create the Commission and authorize the assessment. A greater percent of the industry should have to participate in the referendum. There are other problems with the bill and it should be worked on in future years. Cannabis producers are already facing financial pressure and the last thing needed is another unnecessary expense. Wait to see what impact the separate social equity legislation may have on the industry and market before establishing this Commission. There has not been a sufficient opportunity for industry input in developing this bill. The provision on uniform grading could allow for price fixing and violate the federal Sherman Act, which prohibits agreements among competitors to fix prices or engage in anti-competitive activity. The provision for the Commission to advise on the overall production of cannabis leads to a cartel, which is when two or more firms agree to restrict supply or fix the price of a good in an industry.