Pubdate: Tue, 27 Aug 2019
Source: Minneapolis Star-Tribune (MN)
Copyright: 2019 Star Tribune
Author: Gene Johnson, Associated Press


SEATTLE -- Five years after Washington launched its pioneering legal
marijuana market, officials are proposing an overhaul of the state's
industry rules, with plans for boosting minority ownership of pot
businesses, paving the way for home deliveries of medical cannabis and
letting the smallest growers increase the size of their operations to
become more competitive.

Liquor and Cannabis Board Director Rick Garza detailed the proposals
-- part of what the board calls "Cannabis 2.0" -- in an interview with
The Associated Press. It's an effort to picture what the legal
marijuana market will look like over the next five years, after
spending the past five years largely regulating by reaction as the
difficulties of building an industry from infancy absorbed the
agency's attention.

"We've typically been so challenged with the issues of the day we
haven't been looking out long-term to determine what the future looks
like," Garza said.

The board has been freeing up its bandwidth by coordinating with other
agencies to share the responsibility of regulating the market, such as
having the Department of Ecology oversee the certification of
marijuana testing labs and the Department of Financial Institutions
examine the sometimes complicated ownership structures of licensed
cannabis businesses.

One big-picture issue the board could rethink is whether to abandon
the state's seed-to-sale marijuana tracking program, which has long
been beset by software issues, sometimes grinding business to a halt,
in favor of a system where businesses report their transactions to the
board and are then audited. Another is whether to prepare to allow
marijuana exports, as Oregon did this year, in the event the federal
government approves it.

For the next session of the Legislature, the board has proposed two
bills. One would create what some critics describe as a long-overdue
"social equity" program, encouraging greater ownership of marijuana
businesses by minorities, women and military veterans. Part of the
rationale of legalizing marijuana in Washington state in 2012 was to
remedy the disproportionate effect the drug war has had on people of
color, but minority ownership of cannabis businesses in the state
remains paltry.

While Washington is not currently issuing any more marijuana licenses,
11 of the more than 500 retailers have surrendered their licenses,
Garza said. Under the board's proposal, those could be reissued, or,
if cities or counties agree to increase the number of pot shops within
their boundaries, new licenses could be granted -- this time, to
participants in the social equity program.

Businesses would be eligible if they are owned by a woman, minority or
veteran, or if a majority of its ownership group are members of a
"protected class" under state anti-discrimination law. Applicants
would be barred from consideration if any owner already has a majority
share of another cannabis retail license.

The legislation would also create a technical assistance program run
by the Department of Commerce that would provide grants totaling at
least $100,000 per year to help minority-, woman-or veteran-owned
businesses navigate the licensing process, receive compliance and
financial training, and buy equipment, software or facilities.

The Washington CannaBusiness Association, an industry group, said it
agrees there is a need for a social equity program, and it's been
working on its own version.

"We think there's an opportunity to go even beyond" what the board is
proposing, said spokesman Aaron Pickus.

Another legislative proposal would allow struggling "tier one"
producers -- the smallest size, limited to 2,000 square feet (186
square meters) of plants -- to sell medical-grade product directly to
the state's 36,000 registered marijuana patients. The patients have
long complained that they have a hard time finding medical-grade
cannabis, which must go through additional testing for pesticides and
heavy metals, in retail stores, and Garza said the proposal could help
the patients while giving the growers an incentive to offer more
medically compliant product.

The tier-one growers could sell to patients onsite, with other growers
at indoor farmers-market-style locations, or by delivery, Garza said.
Local jurisdictions would have to approve, and to avoid competition
with other licensed retailers, the growers or farmers markets would
have to be at least 3 miles (4.8 km) away from established retailers.

Any proposal to allow delivery or sales by small growers is certain to
be controversial, as other retailers might object to additional
competition. Garza said the board will consider industry feedback.

"There's going to be real concerns by retailers out there," he said.
"If we're going to do that, we've got to be cautious."

Even more significantly for the smallest growers, the board wants to
allow them to expand, first to 5,000 square feet (465 square meters)
and then possibly to 8,000 square feet (743 square meters). Those
producers have long complained the tier-one licenses, designed to
ensure craft growers have a place in the market, are so restrictive
that they can't succeed. Though they must make similar investments in
security, insurance and product tracking as the largest growers, they
are allowed to grow and sell only tiny fraction of what the largest
growers produce.

Paige Berger, CEO of Hygge Farms in Onalaska, said she's excited about
the board's proposal. She initially obtained a tier-one license
because she didn't have enough money to invest in a larger operation.
Now, she said, she's hamstrung by her limited size: She can only
produce enough marijuana to have product in 10 licensed cannabis shops.

"I can't get out there and expand my brand to what I think it could
do," Berger said.