Bill Summary – FastDemocracy

SECOND ENGROSSED SUBSTITUTE SENATE BILL 5546
     State of Washington         68th Legislature     2023 Regular Session
     By Senate Labor & Commerce (originally sponsored by Senators
     Shewmake, Lovick, Keiser, King, Stanford, Conway, and C. Wilson)
     READ FIRST TIME 02/15/23.
      AN ACT Relating to establishing a Washington state cannabis
  commission; amending RCW 41.06.070; adding a new section to chapter
  69.50 RCW; and adding a new chapter to Title 15 RCW.
  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     NEW SECTION.    Sec. 1.     (1) The legislature finds that the
 Washington state liquor and cannabis board exists to promote safe
 communities and public safety, and that there is no state entity to
 oversee research and education of the state's cannabis industry.
     (2) The legislature therefore declares:
     (a) The Washington state cannabis commission is established to
 benefit the people of the state of Washington and its economy;
     (b) The general welfare of the people of the state will be served
 by the research and development of best practices surrounding safe
 cultivation and processing activities of cannabis so the industry is
 therefore affected with the public interest; and
     (c) Creating a Washington state cannabis commission for the
 public purpose of administering the revenue of the commission serves
 the public interest by materially advancing the producing and
 processing of cannabis and improving environmental sustainability in
 the cannabis producing and processing sectors.
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     (3) To complement the development of a comprehensive regulatory
 scheme for the production and processing of cannabis and cannabis
 products, the legislature further declares that:
     (a) It is in the overriding public interest that the state
 support responsible agricultural production of cannabis in order to:
     (i) Protect the public by providing research and education in
 reference to the quality, care, and methods used in the production of
 cannabis and cannabis products; and
     (ii) Support and engage in programs or activities that benefit
 the safe production, handling, processing, and uses of cannabis and
 cannabis products; and
     (b) Cannabis production and processing is a highly regulated
 industry and that this chapter and the rules adopted under it are
 only one aspect of the regulated industry. Other applicable laws
 include:
     (i) Chapter 15.130 RCW, the food safety and security act;
     (ii) Chapter 15.125 RCW, cannabis and cannabis products;
     (iii) Title 69 RCW, food, drugs, cosmetics, and poisons; and
     (iv) Chapter 82.08 RCW, retail sales tax.
     (4) This chapter and any rules adopted under this chapter are for
 the purpose of fostering responsible and orderly agricultural
 production of cannabis. Nothing in this chapter should be interpreted
 to conflict with or supersede the overriding regulatory authority the
 legislature has already granted to other state agencies.
     NEW SECTION.    Sec. 2.    The definitions in this section apply
 throughout   this  chapter   unless  the   context  clearly   requires
 otherwise.
     (1) "Active cannabis producer" means a cannabis producer who
 reported gross income that is subject to tax under chapter 82.04 RCW
 in the calendar year before the date of a referendum under section 3
 of this act.
     (2) "Active cannabis producer/processor" means a cannabis
 producer/processor who reported gross income that is subject to tax
 under chapter 82.04 RCW in the calendar year before the date of a
 referendum under section 3 of this act.
     (3) "Board" means the Washington state liquor and cannabis board.
     (4) "Cannabis" has the meaning provided in RCW 69.50.101.
     (5) "Cannabis producer" has the meaning provided in RCW
 69.50.101.
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     (6) "Cannabis products" has the meaning provided in RCW
 69.50.101.
     (7) "Cannabis processor" has the meaning provided in RCW
 69.50.101.
     (8) "Cannabis producer/processor" means any person or legal
 entity holding both a cannabis producer license and a cannabis
 processor license as defined in RCW 69.50.101.
     (9) "Cannabis researcher" has the same meaning provided in RCW
 69.50.101.
     (10) "Cannabis retailer" has the same meaning provided in RCW
 69.50.101.
     (11) "Commission" means the Washington state cannabis commission
 established in this chapter.
     (12) "Cooperative" means a cannabis cooperative formed by
 qualifying patients, designated providers, or both, which meets the
 requirements of RCW 69.51A.250 and rules adopted under that section.
     (13) "District" means each of the geographical areas of the state
 of Washington defined in subsections (14) through (17) of this
 section.
     (14) "District 1" means the geographical area including the
 counties of Clallum, Island, Jefferson, King, San Juan, Skagit,
 Snohomish, and Whatcom.
     (15) "District 2" means the geographical area including the
 counties of Chelan, Douglas, Ferry, Grant, Kittitas, Okanogan, Pend
 Oreille, and Stevens.
     (16) "District 3" means the geographical area including the
 counties of Adams, Asotin, Benton, Columbia, Franklin, Garfield,
 Lincoln, Spokane, Walla Walla, Whitman, and Yakima.
     (17) "District 4" means the geographical area including the
 counties of Clark, Cowlitz, Grays Harbor, Kitsap, Klickitat, Lewis,
 Mason, Pacific, Pierce, Skamania, Thurston, and Wahkiakum.
     (18) "Fiscal year" means the 12-month period beginning July 1st
 of any year and ending June 30th.
     (19)   "Interested   parties"  means   governmental   departments,
 agencies, and bodies at the federal, state, or local levels.
 "Interested parties" includes tribal governments, universities,
 national and international associations, and other public or private
 sector organizations with an interest in cannabis-related matters.
     (20) "Tier" means any of the production licensing categories
 established by rule of the board.
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     NEW SECTION. Sec. 3. (1) Upon receipt of a petition containing
 the signatures of five active cannabis producers or active cannabis
 producer/processors, to implement this chapter and to determine
 participation in the commission and assessment under this chapter,
 the director must conduct a referendum of active cannabis producers
 and active cannabis producer/processors.
     (a) The referendum must be conducted within 60 days of receipt of
 the petition.
     (b) The department must establish a list of active cannabis
 producers and active cannabis producer/processors eligible to vote in
 the referendum in collaboration with the board and the department of
 revenue. Inadvertent failure to notify an active cannabis producer or
 active cannabis producer/processor does not invalidate a proceeding
 conducted under this chapter.
     (2) The requirements of assent or approval of a referendum under
 subsection (1) of this section are met if:
     (a) At least 51 percent by numbers of the participants in the
 referendum vote affirmatively; and
     (b) 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.
     (3) If the director determines that the requisite assent has not
 been given in the referendum conducted under subsection (1) of this
 section, the director must take no further action to implement or
 enforce this chapter.
     (4) Upon completion of the referendum conducted under subsection
 (1) of this section, the department must tally the results of the
 vote and provide the results to participants. If an active cannabis
 producer or an active cannabis producer/processor disputes the
 results of a vote within 60 days from the announced results, that
 cannabis producer or cannabis producer/processor must provide in
 writing a statement of why the vote is disputed and request a
 recount.
     (5) The director is not required to hold a referendum under
 subsection (1) of this section more than once in any 12-month period.
     (6) The director may conduct voting on a referendum under this
 chapter by electronic means, paper ballots, or both.
     (7) Before conducting the referendum provided for in this
 section, the director may require the petitioners to deposit an
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 amount of money as the director deems necessary to defray the
 expenses of conducting the referendum. The director shall provide the
 petitioners an estimate of expenses that may be incurred to conduct a
 referendum before any service takes place. Petitioners shall deposit
 funds with the director to pay for expenses incurred by the
 department. The commission shall reimburse petitioners the amount
 paid to the department when funds become available. However, if for
 any reason the referendum process is discontinued, the petitioners
 shall reimburse the department for expenses incurred by the
 department up until the time the process is discontinued.
     NEW SECTION. Sec. 4. Within 60 days of the director determining
 that requisite assent has been given in a referendum conducted under
 section 3 of this act, the director must establish the Washington
 state cannabis commission to:
     (1) Plan and conduct programs for cannabis-related matters;
     (2) Provide funding for conducting research in accordance with
 commission rules;
     (3) Coordinate with and advise interested parties regarding
 cannabis-related matters within the scope of the powers and purposes
 of the commission in accordance with commission rules;
     (4) Coordinate with interested parties to standardize methods by
 which to identify and determine the genetics, strains, cultivars,
 phenotypes, standards, and grades of cannabis, and advise on cannabis
 packaging and labeling requirements;
     (5) Conduct reviews, surveys, and inquiries regarding market
 metrics and analytics, including trends, revenues, profitability,
 projections, production, business practices, and other economic
 drivers of the cannabis industry;
     (6) Inform and advise cannabis producers and cannabis producer/
 processors   on    cannabis-related   matters,   including,    without
 limitation, educational information on cannabis cultivation, usage,
 risks, and related technical and scientific developments;
     (7) Provide cannabis-related education and training to cannabis
 producers, cannabis producer/processors, cannabis researchers, and
 their employees, which may include education and training on cannabis
 health and safety information;
     (8) Provide information and services for meeting resource
 conservation objectives of cannabis producers and cannabis producer/
 processors;
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     (9) Assist and cooperate with federal, state, and local
 government agencies in the investigation and control of pests,
 diseases, and other factors that could adversely affect the
 cultivation, quality, and safety of cannabis produced in this state;
     (10) Advance the knowledge and practices of cannabis production
 in this state through research and testing methods to improve pest
 management, worker protection, safety training, energy efficiency,
 and environmental protection;
     (11) Foster conditions favorable to investment in cannabis
 produced in this state in accordance with state and federal laws;
     (12) Limit youth access and youth exposure to cannabis;
     (13) Enable cannabis producers and cannabis producer/processors,
 in cooperation with the commission, to:
     (a)   Develop  and   engage   in  research,   including,   without
 limitation, discovering better and more efficient production,
 irrigation, odor mitigation, processing, transportation, handling,
 packaging, and use of cannabis and cannabis products; and
     (b) Discover and develop new and improved cultivars to ensure
 reliable and economical cannabis production in this state;
     (14) Establish uniform grading and proper preparation of cannabis
 products for market;
     (15) Protect the interest of consumers and the state by advising
 on the overall production of cannabis to ensure a balanced and
 sufficient supply of cannabis and cannabis products of good quality
 during all seasons and at all times; and
     (16) Advance the knowledge and practices of processing cannabis
 in this state.
     NEW SECTION. Sec. 5. (1) The commission must:
     (a) Elect a chair and other officers by a majority vote of the
 commission or in accordance with bylaws adopted by the commission;
     (b) Adopt, rescind, and amend bylaws and other internal rules
 necessary for the administration and operation of the commission and
 for carrying out its duties in this chapter;
     (c) Administer and enforce the provisions of this chapter;
     (d) Designate a public records officer, rules coordinator, and
 other representatives required under laws governing state agencies
 and commissions;
     (e) Comply with all other laws applicable to state agencies and
 commissions;
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     (f) Institute and maintain in its own name any legal actions,
 including   actions   by   injunction,   mandatory   injunction,   civil
 recovery, or proceedings before administrative tribunals or other
 governmental authorities necessary to carry out this chapter, and to
 sue and be sued as a commission, without individual liability for
 acts of the commission within the scope of the powers conferred by
 this chapter; and
     (g) Keep accurate records of all receipts and disbursements,
 which must be open to inspection and audit by the state auditor or
 its designee at least every five years and at any time by a duly
 appointed internal auditor by majority vote of the commission.
     (2) The commission may:
     (a)   Employ   and   discharge,   in   its   discretion,   managers,
 secretaries, agents, attorneys, and employees, and engage the
 services of independent contractors as the commission deems necessary
 to fulfill duties, and to fix compensation. However, until assessment
 collections in section 15 of this act equal at least $1,000,000, the
 commission must contract for staff support;
     (b) Acquire and transfer personal and real property, establish
 offices, incur expenses, enter into contracts and cooperative
 agreements, and create such debt and other liabilities as may be
 reasonable to fulfill its duties under this chapter;
     (c) Make necessary disbursements for routine operating expenses;
     (d) Expend funds for all activities permitted under this chapter;
     (e) Cooperate with interested parties to fulfill its duties under
 this chapter;
     (f) Serve as a liaison on behalf of the general cannabis
 producing and processing industries to the board and other interested
 parties, and not on behalf of any individual cannabis producer or
 cannabis producer/processor;
     (g) Solicit, accept, retain, and expend any gifts, bequests,
 contributions, or grants from private persons or public agencies to
 carry out this chapter;
     (h) Retain the services of private legal counsel, which is
 subject to the appointment and approval by the office of the state
 attorney general;
     (i) Engage in appropriate activities and events to support
 commission activities authorized by this chapter;
     (j) Participate in meetings, hearings, and other proceedings
 regarding cannabis, including, without limitation, the production,
                                      p. 7                        2ESSB 5546
 irrigation, manufacture, regulation, transportation, distribution,
 sale, or use of cannabis, including activities authorized under RCW
 42.17A.635 and the reporting of such activities to the public
 disclosure commission;
     (k) Obtain from the board, a list of the names and addresses of
 cannabis   producers,   cannabis   processors,   cannabis   producer/
 processors, and cannabis retailers, and other available data from the
 state as requested by the commission relative to its duties under
 this chapter;
     (l) Acquire, create, develop, and own intellectual property
 rights, licenses, and patents, and to collect royalties resulting
 from the sale or licensing of commission-funded research. However,
 results and recommendations from research conducted or funded by the
 commission must be available to all cannabis producers and cannabis
 producer/processors without charge, except for reasonable costs as
 the commission may determine;
     (m) Speak on behalf of the Washington state government regarding
 agricultural production of cannabis in this state, subject to
 oversight of both the director and the director of the board;
     (n) Possess cannabis products for the limited purposes of t