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April 4, 2020

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Clark County pot industry wary of ‘seismic changes’

Cannabis businesses closely watching bills on legislative agenda

By , Columbian business reporter
Published:
4 Photos
A pedestrian walks past Main Street Marijuana in Vancouver. Co-owner Adam Hamide said his biggest concerns during the current legislative session are bills about THC content and industry labor standards. (Photos by Nathan Howard/The Columbian)
A pedestrian walks past Main Street Marijuana in Vancouver. Co-owner Adam Hamide said his biggest concerns during the current legislative session are bills about THC content and industry labor standards. (Photos by Nathan Howard/The Columbian) Photo Gallery

The 2020 legislative session agenda includes more than two dozen cannabis-related bills, and several of them have local connections — both in terms of their sponsors and which ones are drawing the most attention from Clark County’s cannabis industry.

Not all of the bills will pass, but the list sheds some light on where Washington’s marijuana policy is trending and what businesses see as the current key policy concerns.

“A lot of it seems like we’re just under attack,” said Adam Hamide, co-owner of Main Street Marijuana in Vancouver, which is the state’s largest single retail location by sales volume. “It’s a young industry and some of these changes are seismic changes.”

Clark County cannabis- business owners described three issues that stood out from the pack in this session: THC content in concentrate products, labor standards in the cannabis industry and the ability of individual Washington residents to legally grow marijuana at home.

THC content

One of the biggest industry concerns has been House Bill 2546 and its companion Senate Bill 6332, which would prohibit the sale of marijuana products with more than 10 percent THC content. THC stands for tetrahydrocannabinol, the primary psychoactive component in cannabis.

The bill is intended to close a loophole about marijuana potency. Edible products are already limited by law to 10 percent THC concentration and marijuana flowers can only be grown with so much THC, but there’s currently no limit on concentrate products such as THC-infused vape oils.

The bill text cites negative health effects of heavy THC consumption and argues that high-THC products were not previously widely available but now constitute nearly 40 percent of marijuana product sales in the state.

That 40 percent estimate is exactly why cannabis retailers were alarmed by the bill, Hamide said — the industry would likely lose that entire segment of products because concentrates with less than 10 percent THC would be less potent than raw marijuana flowers, thus defeating the purpose of creating them.

Clark County retailers would face the added challenge of competing with Portland-area shops that wouldn’t face the same limitations.

“Bordering Oregon, we’d probably lose half of our business,” Hamide said.

Retailers and producers have also tried to make the case that the removal of high-THC products would lead to a surge in black market concentrates. Testifying on behalf of Vancouver-based Fairwinds Manufacturing, Steve Schechterle raised concerns about the black market during a Jan. 30 hearing before the House Commerce & Gaming Committee.

“These materials are very cheap to purchase, and we should not take it lightly that people would take it upon themselves to provide it to the market, essentially, in the lapse of a legal market,” he said.

The House bill appeared to have stalled after the Commerce & Gaming hearing.

“This bill is not going to be moving out of this committee, but the conversation certainly is,” remarked committee chair Rep. Strom Peterson, D-Edmonds.

Labor standards

The other big industry focus has been on House Bill 2361 and its companion Senate Bill 6393, which would establish a new set of labor standards tied into license renewals for cannabis businesses.

Each standard is worth a certain number of points, such as (in the original version of the bill) 20 points for creating a workplace health and safety plan and 60 points for establishing a collective bargaining agreement with employees. Businesses would need to reach 100 points for license renewal.

It’s possible to reach 100 points without meeting every standard, and Hamide said some of the requirements, such as the safety plan, are easy, but others are more difficult for pot shops because marijuana is still illegal at the federal level.

“We can’t get access to any traditional retirement plan because of the industry we’re in,” Hamide said.

Jim Mullen, owner of The Herbery chain of shops in Vancouver, offered a similar assessment during public testimony before the Senate Labor & Commerce Committee. He said federal law already leaves the industry in a precarious position, and the new requirements would create new pitfalls.

“One of our stores we had to close recently because our landlord could not renew our lease because the mortgage holder said, ‘I don’t want cannabis money anymore,’ ” he said as an example.

Other Clark County cannabis businesses gave testimony in opposition to the House bill at a hearing before the House Commerce & Gaming Committee, arguing that the cost of the new standards would stretch an already tenuous industry too far.

“Adding extra expenses to our already very, very, very expensive business to run really leaves no margins for any of us to operate,” said Gareth Kautz, co-owner of High End Market Place in Vancouver.

“If this were implemented as it stands, we’d continue to run the numbers and do the right thing, which is close up shop and find something else to do,” said Chris Bell of DogHouse, a Vancouver-based cannabis producer.

On Thursday the Senate Labor & Commerce Committee approved a modified version of the bill that altered several of the point values and exempted businesses with 20 or fewer full-time employees.

Home grow

One bill has drawn more attention from outside the traditional cannabis industry: House Bill 1131 and its companion Senate Bill 5155, which would allow individuals to privately grow up to six marijuana plants at home.

The issue has attracted support from the Vancouver-based Hawthorne Gardening Company, a subsidiary of Scotts Miracle-Gro and a large-scale producer of hydroponic equipment.

Despite being at the front of the pack when it came to legalizing recreational marijuana, Washington has become something of an outlier when it comes to home-grow laws, said Hawthorne government relations manager Michael Diamond. There’s a market opportunity for small hydroponic equipment shops, he said — the kind of shops that tend to be Hawthorne’s wholesale clients.

“Because we sell to so many small businesses, we see this as an economic growth opportunity for our customers, and future customers,” Diamond said.

Clark County cannabis shop owners have either quietly supported the home grow concept or remained indifferent. Writing in a Jan. 25 blog post for the Washington CannaBusiness Association, Mullen described the organization’s position as neutral because it has had “bigger fish to fry” in terms of its political agenda.

Hamide also didn’t describe the bill as a major area of focus for retailers, but he said he supported the idea of home growing.

“We’re OK with it,” he said. “More access is great.”

The House bill cleared Commerce & Gaming and was scheduled for a public hearing in the House Appropriations Committee on Feb. 5.

Craft cannabis

The industry response to several of this year’s bills has featured a common theme: Support for Washington as a haven for craft cannabis where small operations can thrive and experiment.

That was one of the major themes of public testimony in opposition to the labor bill, and Diamond also mentioned the idea as one of the potential benefits of the home-grow bill.

“This issue is very much akin, I think, to the craft beer industry,” he said.

Hamide raised the issue again when discussing House Bill 2263, which would allow for some forms of out-of-state investment in the marijuana industry. That’s another area where Washington is currently an outlier among weed-legal states, but Hamide said the absence of big outside funding has allowed Washington to turn into a unique breeding ground for small, mom-and-pop cannabis businesses.

Hamide is also a member of the Craft Cannabis Coalition, a recently created industry group that aims to preserve Washington’s friendly business climate for small-scale cannabis operations. Representatives of the group have been quickly working their way into discussions during the current session, offering testimony on several cannabis-related bills.

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