Washington lawmakers were busy this last legislative session. Democrats controlled both houses of Congress and the Governor’s Office. This means some minor and major changes to Washington marijuana laws. Below is a list of marijuana bills that made it through the legislative session, and some commentary.
Senate Bill 5298 “Regarding labeling of marijuana products.” This bill allows marijuana products, that are compliant with the Washington Department of Health’s (“DOH”) regulations, to include claims that describe the product’s intended role in maintaining a structure or function of the body. If such a claim is made, SB 5298 also requires the following disclaimer: “This statement has not been evaluated by the State of Washington. This product is not intended to diagnose, treat, cure, or prevent any disease.” Washington lawmakers appear to have borrowed the phrase about “structure or function of the body” from the Food and Drug Administration. In fact, the FDA provides a helpful summary of what exactly that phrase means: Structure/function claims may describe the role of a nutrient or dietary ingredient intended to affect the normal structure or function of the human body, for example, “calcium builds strong bones.” In addition, they may characterize the means by which a nutrient or dietary ingredient acts to maintain such structure or function, for example, “fiber maintains bowel regularity,” or “antioxidants maintain cell integrity.”
SB 5318 “Reforming the compliance and enforcement provisions for marijuana licensees.” I previously wrote about SB 5318 when it was making its way through the state legislature. This bill is fairly comprehensive but in a nutshell, SB 5318 forces the Washington State Liquor and Cannabis Board (“LCB”) to shift its focus from adversarial enforcement to compliance. In addition, SB 5318 limits the types of license violations that can lead to license cancellation.
SB 5605 “Concerning misdemeanor marijuana offense convictions.” In the years since Washington voters approved recreational marijuana, the state has collected hundreds of millions of dollars. However, some individuals in Washington have continued to suffer as a result of lingering criminal convictions. SB 5605 addresses this with regards to misdemeanors. SB 5605 allows individuals with prior convictions of misdemeanor marijuana possession to apply to vacate their convictions. Applicants must have been at least twenty-one years old at the time of the offense.
House Bill 1792 “Concerning criminal penalties applicable to licensed marijuana retailers and employees of marijuana retail outlets.” Despite legalization, marijuana remains listed as a controlled substance in Washington’s Controlled Substances Act (“CSA”). Marijuana is only legal to sell or distribute if done pursuant to a retail license and LCB regulation. Other than selling to qualified medical marijuana patients, no one, including marijuana retailers may sell marijuana to a minor. The default penalty for selling or distributing a controlled substance is a felony. Selling to a minor can lead to a penalty of up to 10 years in prison. Sometimes marijuana retail employees make mistakes when checking identification, and sell to minors. This leads to fines and, suspension, and up to license cancellation for a marijuana licensee. Those penalties were a little to harsh for Washington lawmakers, so HB 1792 makes a new gross misdemeanor crime when an employee of a retail outlet sells marijuana products to a person under the age of 21 in the course of his or her employment. A marijuana retail employee may still be prosecuted for a felony, if the employee knowingly sells marijuana to a minor, or distributes to a minor outside of his or her place of work.
HB 1794 “Concerning agreements between licensed marijuana businesses and other people and businesses, including royalty and licensing agreements relating to the use of intellectual property.” The LCB vets all investors and financiers of a marijuana business. This vetting is extended to all “true parties of interest,” which includes anyone who shares in the gross revenues of a licensee. The LCB has long held that royalty fees equal revenue sharing, meaning that anyone owed a royalty fee had to be approved by the LCB true party of interest. However, Washington law allows marijuana licensees to enter into consulting and licensing agreements, so long as those agreements are disclosed to the LCB. HB 1794 allows marijuana licensees to enter into agreements related to goods or services with trademark or other intellectual property protection, so long as those agreements are provided to the LCB for recordkeeping. These agreements can include provisions such as:
(a) A royalty fee or flat rate calculated based on sales of each product that includes the intellectual property or was manufactured or sold using the licensed intellectual property or service, provided that the royalty fee is no greater than an amount equivalent to ten percent of the licensed marijuana business’s gross sales derived from the sale of such product;
(b) A flat rate or lump sum calculated based on time or milestones;
(c) Terms giving either party exclusivity or qualified exclusivity as it relates to use of the intellectual property;
(d) Quality control standards as necessary to protect the integrity of the intellectual property;
(e) Enforcement obligations to be undertaken by the licensed marijuana business;
(f) Covenants to use the licensed intellectual property; and
(g) Assignment of licensor improvements of the intellectual property. Exempts non-licensed parties to authorized intellectual property agreements from qualifying for a marijuana license for purposes of the agreement.
HB 2052 “Clarifying marijuana product testing by revising provisions concerning marijuana testing laboratory accreditation and establishing a cannabis science task force.” HB 2052 transfers authority and responsibility for marijuana testing from the LCB to the Washington State Department of Ecology by July 1, 2014. This includes laboratory accreditation.
SB 5276 “Authorizing hemp production in conformance with the agriculture improvement act of 2018.” I wrote about SB 5276 earlier this year. The bill aligns Washington’s hemp program with the 2018 Farm Bill. It also removes a previous prohibition on processing hemp into any product intended for human consumption.
HB 1094 “Establishing compassionate care renewals for marijuana qualifying patients.” HB 1094 exempts a qualifying medical marijuana patient from in-person physical examinations in order to renew his or her authorization or from being physically present for a photograph to renew registration in the Medical Marijuana Authorization Database if either scenario would cause the patient severe hardship.
HB 1095 “Concerning the administration of marijuana to students for medical purposes.” HB 1095 allows qualifying medical marijuana patients to consume marijuana-infused products for medical purposes on school grounds, school buses or while attending school events.
HB 1415 “Modifying funding of the medical marijuana authorization database.” This bill doesn’t have much to write home about. It ends use of the Health Professions Account for the administration of the Medical Marijuana Authorization database and requires that fees collected for the recognition card issued by a medical marijuana retailer with a medical marijuana endorsement be deposited in the Dedicated Marijuana Account.
HB 1430 “Concerning the licensing and enforcement system modernization project account.” Washington lawmakers created the Licensing and Enforcement System Modernization Project Account in 2015. The account is for expenses relating to replacing and modernizing licensing, enforcement, and imaging systems.
Expect us to write more on many of these bills in the coming months, especially as the LCB and other agencies promulgate regulations under these new laws.