All right, folks and friends. I would like to introduce you, Jessica Pichardo is our Vice President, for, here at the Cannabis Alliance. And, as well as Katherine Phillip candidates. And I'll turn it over to you.
Hi, everyone. All right. It's tough to follow that, but we're excited. We have a bridge to our conversation today. I would like to just invite a round of applause for our panelists today. We have Gillian Schauer of CANNRA, Micah Sherman of Raven farm, David Postman of the LCB. And again, a round of applause for Laury Lucien of Parabola Center.
So today, our panel is "Innovation in Cannabis Regulation." We could argue that as the title of this, last 10 years, this chapter that we have had in creating cannabis in Washington, retail cannabis in Washington.
And so I was delighted to have these panelists here. We have some expertise and a lot of light to be shed on this. And it's a good time, especially with the conversations that we've had earlier today. So we'd like to first start with some introductions. So I'll invite Gillian.
Is this on? Thanks very much for having me. My name is Gillian Schauer. I'm the Executive Director of the Cannabis Regulators Association. We are a nonpartisan association of state governments involved in regulating cannabis, cannabinoids in hemp. We have 45 states and two territories in our membership, as well as Canada and the Netherlands. We're not an advocacy group, we focus on convening governments to learn from each other. I'm going to talk a little bit later about the challenge that has existed, which sort of the federal wave and so CANNRA came about as an opportunity for states to learn and grow. And we've expanded to other countries as well. So I'm here representing a national perspective, I'm not here to speak to specific policies in Washington state, but hopefully can speak to some of the trends that we've seen and always grateful to have interaction with different stakeholders. My background is as a researcher, I have a PhD in behavioral science and public health and prevention drug policy for about 20 years. So I welcome the opportunity and hope that lots of people will come talk to me after and share your perspectives as well.
Thank you. David.
I am David Postman, I'm the Chair of the Liquor and Cannabis Board. Been there a little over three years, and most of you probably know, but just real quick: it's a three member board. We are part time, we work three days a week. And then we hire our director, who's the full time manager of the agency. It is, frankly, one of the strangest governance structures in the state government. To have a part time over a cabinet-level officer. But it is one of the many remnants we have with the alcohol regulation system, but we're still living with. And even though, you know, everyone laughed when Laury asked if you trust government - I guess I'm the government out here today. But you know, I think that we have there's so many issues that we agree on. Many more than we disagree on, we often get crosswise over process. And, you know, the industry is not a monolith, as you may know. And there's, there's competing things. And one of the things I'm particularly interested in is how we can move toward a consensus with the industry and the regulators and the legislators. There's a couple here, here today. You know, who know so much about your business already and what I do. I think there's a lot of room to have more progress, but I think it takes a lot more work in the interim when we're outside of the legislative session to have these conversations. So look forward to this.
Thanks, everybody. My name is Micah Sherman. I'm the co-founder of Raven, also known as Raven Grass, we're a farm in the Olympia area. I'm also on the board of the Washington Sun and Craft Growers Association. And through that organization helped to found the National Craft Cannabis Coalition, which is a national coalition of state and local trade groups that predominantly represent small and craft growers throughout the country. So pleasure to be here today in sort of all those contexts. And my sort of origin story in cannabis policy advocating. In 2016 and 2017, I worked with my representative at the time, Representative Laurie Dolan, to introduce a bill within the state legislature to create a definition for craft cannabis similar to how craft breweries have a definition, that would have allowed us small farmers to have farm gate sales where we sold our own product directly to consumers and sort of that effort to change the market in that way. Sort of what led me into doing this. And you know, still kind of my chief policy goal is, is that.
Checking in with Laury, is there's anything else you'd like to add as an introduction to this convo today?
I think the only way I'd like to add about myself is that I guess I'm like low-key, government but not high-key? What that mean? I'm glad you asked. I was appointed by the Treasurer of Massachusetts to the Cannabis Advisory Board for the Cannabis Control Commission. So I sit on the Market Participation Subcommittee, and I chaired the Public Safety and Community Mitigation Subcommittee. So you know, I dip my toes a little bit, but not full blown, sorry!
You gotta be low-key to make some change, you know? So.
Alright, well, the way we like to go about this today, you've had some very fruitful conversations but we've gone long, so. We want to make this a productive combo. We're gonna chat for a while. And then we are gonna go to the audience briefly, and get some questions but I ask for your cooperation so we can do that smoothly. So thank you, everyone. So I'd like to make the first seed in our convo today about federal versus state regulation. And I want to touch this lightly because we've, we've touched it quite a bit this this morning. But you know, how has the tension between federal and state cannabis laws impacted the cannabis industry? And I know Gillian you might, might like to make a comment on that.
Yeah, as an association of government folks, that's mostly at the state level, I can speak very clearly to this challenge. I think the federal-state tension exists not just in cannabis, but also in the hemp space as well. It has resulted in the cannabis space in spades, as you all know, well in Washington having to set up their entire own system within the state, which is really unlike anything else that we have, that's, that's for sale in the country. And I think that's also had implications for the architecture that we see of the markets, especially for the first states that were doing this, because they were doing this in an illicit environment where nobody had ever done this before. So I think we saw a lot of focus on compliance and enforcement to try to sort of appease the federal entities, as opposed to things that are much more in the regulatory discussion now. So it, it influenced you know, the fact that every state has their own A to B for cannabis, and also how that sort of A to B came about. There's an absence of federal guidance on everything from contaminant thresholds and lab testing to packaging and labeling. And as was mentioned earlier, it is very difficult to have, you know, 45-odd individual state approaches to this when you're a business that is hoping to operate outside of the state. And it's not as easy as waving the magic wand and changing that. I came into my position thinking, "hey, there's some things that we can probably get everybody on the same page about." There's no reason we should have different lab testing from state to state, except maybe for metals. We have packaging and labeling, we should be able to get to some commonalities there. But the bottom line is, it's not as simple as getting regulators on the same page. Every state has their policy been made through state legislatures, and they have different priorities, and they're being lobbied by different groups. And so it really, I think, will take some federal minimum standards to harmonize. And I don't think that you will be able to see individual states come together and say, "This is what good looks like, let's all do it." Because somewhere along the line, something's going to get off the rails. So we do need federal minimum standards. And we need federal guidance in spaces where the feds usually give guidance, and they're not, which is honestly one of the reasons that CANNRA originated because they needed a place to talk about what do we do with this situation? We've never faced this before, what are other states doing? And I think it's exacerbated the situation where policy as far as the research, you know, the federal dynamic around research has also been challenged. And that was talked about a little bit with rescheduling. So as a researcher, I just want to sort of give my opinion there. I don't think that rescheduling is going to just bang open the box on research, I don't think we're going to see a ton of research, it changes a couple of things that we know are likely and then there may be some unknowns, it basically means that a researcher can have a smaller safe, and that when they make a change to their study protocol, they don't have to go through the DEA, but they still have to go through the DEA when they start, they still have to go through the FDA when they start. So there's been this tension around getting the data we need about the plant, the data we need to regulate the plant and settings minimum standards. So one of the things that I think all of our regulators agree on is we need more abililty to [inaudible] this space to help the situation on the ground.
Thanks, Gillian. Micah did you, or David did you have a comment?
It's just a very open ended question. So I'm trying to decide where to where to answer it in a way that hasn't been redundant so I have something to talk about so. I agree that rescheduling is very much a mystery at this point for a lot of specifics and I think that's important. For me, the core of my business and my interest as a cultivator is really kind of fundamentally most influenced by the state regulations that we operate in. And because of the scale that I operate at, that's ultimately going to be the case. So I do think it's important that we track on federal issues so that we understand how they're going to affect us. But for a vast majority of the market structure, the distributional questions, all these things that really fundamentally affect kind of what the cannabis economy looks like, and who's in charge of it is going to be determined by State rules for quite a long time into the future, many years, no matter what happens at the federal level. So I think that it's really important for us to kind of mention really strongly upfront is that the work that we're doing at the State level matters a great deal, and is going to continue to matter a great deal, even post deschedule. We're still going to have state regulations that determine who can buy what from whom, in what terms, in what conditions. What's allowed to be made and sold in that state. And so we're seeing that in hemp, where it's the sort of federally legal, but it's still up in the air about what can be done in every state. So that's a reality that we need to get square in our minds all the time is that it really matters a lot what we do in Olympia in the legislature, and we have an awful lot of work to do in that arena to bring us to a place where we can even hope to coherently respond to a federal status change. Were it to be litigated right now and just thrust upon us, we would be in a really difficult position. So I think it's important for us to in this conversation about, you know, sort of innovation and cannabis regulations talk a lot about what things look like here in this state so that when a meaningful, material, federal status change occurs, that we're prepared to do that. And so a couple of examples of those policies at the federal level that we work on through the NCCC is the first is called the Ship Act, and the Ship Act was introduced. And it would have allowed direct to consumer sales for cannabis products grown by a small cannabis producer, through the mail upon descheduling. And that bill was really about introducing the idea of market crafting into the minimum standards that Gillian just referred to at the federal level. So one of the things we were looking to guarantee was that cultivators and consumers can have a direct relationship. So that that relationship between caretaker of the planet and the consumer of the product is as direct as possible. And then the rest of the industry, the rest of the ecosystem that's turned and got referred for the last day, the rest of the business ecosystem can be predicated on that core relationship being available to both the grower and the consumer. And that opens up opportunities to build a business ecosystem that has a fundamental unit that produces a particular kind of result. And so that sort of result of direct to consumer relationships with farmers, for me is key to building a sustainable business ecosystem in the cannabis industry. So that's the sort of policy that I think at the federal level would be real meaningful for us.
Thank you, Micah. And I appreciate, you know, especially on the heels of all this rescheduling news, being in a room full of like minded people who can stop, drop and roll, and just pause - to understand things better and ask questions, because there's a lot that's of note. So I appreciate being amongst those like minds.
I'd like to drop another seed when it comes to innovation and cannabis regulation in regards to social equity. We've heard the buzzword a lot today. And so I'd love to just pose the question, how does social equity play in cannabis regulation? And how maybe how different states approach this? We know how Washington's doing currently still in the throes of building that program and getting equity licenses out to licensees? Gillian, perhaps you could start with a little bit of the national perspective on how that's going?
Sure. I think every state regulator in this space will tell you that nobody's gotten it perfect. You know I think we've worked with folks like Cat Packer and Joy Hutchinson, who were early regulators fighting for equity. And think it's important, there are some best practices around three pillars. One would be equity in the marketplace, one would be expungements, making sure those are automatic and easy to get, happen at the state and county level. And then the other would be community reinvestment. I think we've seen states try at those and learn some lessons. But we still, this is one of our most talked about issues at CANNRA.
Because it's really tough to figure out how to do it right, and where the burdens are. I think we engage with a lot of stakeholders to try and get better at that. As a public health person, I think the community reinvestment stands to have a really huge impact in disproportionately impacted communities. Not everybody whose benn harmed by the war on drugs wants to or can get a license. But, you know, if we are giving money to the communities that were harmed to repair some of those harms, I think that can go a long way. And I am personally concerned, this is not an official CANNRA position, but I am personally about, as the market is shifting towards cannabinoid hemp, and we see a lot more sales happening in cannabinoid hemp now than we do in the state regulated markets, I'm concerned about what that means for equity. I'm concerned about how we're advancing equity in hemp.
I'm not aware of any states that have an equity program for cannabinoid hemp, in the states that are trying to regulate it. I'm also concerned about what that means for tax revenue that will not be collected from the sale of state regulated products, because it's coming through cannabinoid hemp, and particularly the revenue that was going to get reinvested in communities that are disproportionately harmed by the war on drugs. So I think we have a lot of work to do. And CANNRA has been having conversations and in our meeting in a few weeks, we'll be having a panel on this. And we're working with MCBA and others to continue these discussions about how do we advance equity when it comes to hemp? And how do we continue to serve communities that have been harmed by the war on drugs? So, that's what's on my mind.
Thanks, Gillian. Let's pass, Laury, I want to just tap in and see if you have some comments and move on with this seed.
Yeah, thank you. Sometimes it's really difficult, because it's, it comes down to defining what it means and who are the participants. Like I said in my talk, the government literally came out and said they were targeting hippies and Black people. The Supreme Court said, you gotta jump through fire in order to remediate some of the harms that were caused on the basis of race. It's very difficult to have race-based restorative justice practices and that's a difficult aspect of social equity. But then I'm willing to say you have seen social equity applicants who probably should not be social equity applicants. I mean, I'm a Black woman. I personally, almost feel like I shouldn't be qualified for economic empowerment. Why? My dad ran the telecommunication department for Haiti, the country. He's an engineer, my mom is a freaking nurse, I'm a lawyer, my sisters are. Like I don't, I'm not the target, because I've never even come close to being arrested.
So we need to make sure that we define this community effectively so that the resources, the finite resources that we have gets funneled to the proper people who actually need it. So that's the [inaudible] part: how do we define this group? We already know, what we need to provide, community investors, we needs to provide grants, we need to provide the real estate, etc. But the "who" is what we really need to come to the definition and consensus with.
Thank you. In the same lane of social equity, I wanted to, maybe David, tap in with you. The question is how can cannabis regulation address the disparities, again, caused by past drug policies, especially in disadvantaged communities? I'd love to know your take here in Washington, along with anybody else.
Well, I'll say this, it's one of the most important things we're working on now and it is by far the hardest. For a lot of people, I suspect, for me personally it really is, it's been tough. And you know, I was thinking, Laury, during your, your lunch talk when you're talking about those dates back to 1924.
We only have to go back to 2012 when the initiative passed, by a large majority, by the way. You know, more people voted for legal cannabis than voted for the governor or the attorney general that year. So, it was a big vote. With not one word about social equity in it. It wasn't in that ecosystem. It wasn't in the, you know the ACLU brought that word, it was harm reduction, it was harm reduction in a window. And it didn't look at that. And then, you know, they came to the legislature to start building what that program looked like. And again, not part of it. And so we're really late to the game.
Now some of the newer states, enough has changed in that ten years, that when they do start to legalize, it's part of the conversations from the start which I think is better. As Gillian said, no one's figured it out yet. No one can point to a program and go, "see it works." And you know it is a lot more than just licenses and so I'm glad that this State did the Reinvestment Act, I think that probably has the potential for the greatest good to come because it's got the most money going to it. I mean, it's gonna, it can be a real powerful tool. Licensing has to be a part of it though because of that issue of what was the State's role. And we know the State played a role in what this market looks like today and we have a responsibility to play a role to make it more equitable.
There are people in the industry who disagree with that. And we've been able to keep moving forward, but not at the pace that we would have liked. Or the pace that some of the applicants would like. But it's not something everybody agrees on, it's still a fight. And it is true, it's very hard. And all the advice we got was don't do a race-conscious system, because it will end up in the court so fast. And you know, and this was during the Trump years, and people, and it still his, it's his court, you know, so if you want to bet on the Supreme Court, to stand up for a social equity program, we would rather have a program that is immune from that, or at least protected from that. And that's what we're trying to build.
And, you know, I would, I've talked about a lot but one thing I would say, I really hope that those that are in the industry today, can help us with this in terms of input, advice, mentorship of the new licensees, working together, because we're going to do this. There are some people in the industry that don't want us to continue with the licenses. I get requests to stop, "can't you stop it?" No, we can't. And we don't want to. But we need you all to be part of that, too. And to say we welcome that competition, we can survive without competition. And the last thing I'll say is, I'll give a plug if I could work for Parabola because I've been reading everything on the website for the last couple of weeks. And there's a article there "How to federally legalize cannabis without violating the Constitution or undermining equity and injustice." So understand that even when people get excited about rescheduling and descheduling, national legalization and decriminalization, social equity could be a victim in any of those things, other state programs which I care about it, but that's a big one. So we have to really pay attention. And I think you should all go and read that article. It's really, it's great. Thank you.
Thank you, David.
All right, we're gonna move on to our next seed which would be regulation, the economic impact and innovation of that regulation. So the question is, how has the legal cannabis industry impacted local and state economies? What innovations have emerged in this industry? And what are the implications? And oh, Micah, perhaps maybe you want to go with that.
I want to take just one minute to say something about the last topic. So, and this is kind of related to what I'm going to say is: the war on drugs is talked a lot about today, I just want to sort of say something that I think is a little distinct is that the war on drugs was started not because we didn't like drugs, it was because we didn't, we wanted to control the behavior of communities and people that already use those substances. And so we're not going to, in my opinion, solve the war on drugs by essentially relying on cannabis and the cannabis industry to remedy those harms. I think it's a small component of what a social equity program might look like. And I think that it's not appropriate to the scale of the problem of the war on drugs, to put it at the feet of the cannabis industry alone to remedy those harms. And I think that it sort of does, it does a disservice to the memory of the war on drugs to just focus on on our industry. The war on drugs is about housing, the war on drugs is about finance.
So I think it's very important to put it in right size, like what we can do in our industry, to go back and solve those problems, we can do a lot, but it's limited in the sphere that we operate in. And so having said that, I think the, and I think Amber spoke to this really well earlier, like developing a business ecosystem, that is mindful of that history and understand what it's going to take for us to have an industry that, five years from now, 10 years from now, people can come into, and have an, a system that they can operate in and be successful at a small scale. And so that's something that I think we need to permanently work towards having be an integral part of the cannabis industry. And I do think that, you know, I came into this industry in 2013, from doing other work in the world, because I knew that this was going to be a moment where norms in a transitioning industry from the illicit market to a regulated market was going to be probably one of the biggest transitionary moments that I had the opportunity to participate in. And I wanted to make sure that values that, that I felt good about, which are about the sort of developing ecosystem that people that are growing the plant and consuming the plant, are the drivers of what's going on in our industry. I think that's really important to social equity, because that's about making sure that community is in charge of how things go. Which is, for me, just as important as who keeps the bag at the end of the transaction is who gets to make the decisions about what that happens along the way. And so I think developing a system where we really identify who's in control of the decision making processes about what matters, how it's valued, who gets to buy what from whom, all of those questions about market structure, allow us to make moments where we can build successfully into these social equity programs. But if we don't have that small business ecosystem, we're not going to be able to bring those sorts of programs in. And the last thing I'll say is there's also been a lot of conversation about small versus big today. And I want to mention a different distinction, which is what I like to call the FIRE sector. So finance, insurance, and real estate, versus what I call the real economy, which is what we do. And so if we create a paradigm where the FIRE sector's interests are the guiding force in what we do and why we do it, which is the direction we're headed right now, we're going to have a cannabis industry that is oriented and subservient to interests other than cannabis, and interests other than cannabis patients, and interest other than cannabis growers, consumers. We're going to be oriented towards the interests of financial intermediaries, insurance networks, and the real estate system. And so I think we need to be really clear and direct in that we want a cannabis economy that's primarily interested in the production of cannabis, and not the production of real estate profits, and not the production of insurance profits. And so small versus big is important. But there are big players that are our allies in that fight against the FIRE sector control of our economy. And so I don't want to be centrally planned by Wall Street. I want to be locally planned by business owners that are touching the plant and know what's going on. So I think that's where the cannabis industry can be a model for the rest of our society in that we don't have to do it like the rest of our country is oriented, is organized. We can do it in a way and empower business operators over that sector.
And if I can just, this, yeah, the key to that.
If I can jump in, I think we're at a really pivotal time to talk about those market architecture questions because of the change that's afoot with cannabinoid hemp, and the change afoot with interstate commerce and, you know, channeling some of the interstate commerce remarks from this morning. We have interstate commerce, right? We have it from traditional markets, we have it from new illicit markets, we have it in cannabinoid hemp. The only place we don't have it is state regulated cannabis. But as we're in this pivotal moment of thinking about what is the market going to be? Are we going to bring cannabinoids together somehow? I think it's really important to think about what survives in an interstate or multinational environment in your state. And this is a question that regulators are starting to think about: what survives, what do they want to survive? And do you have the policies in place now to protect and grow what you want to survive? So those are essential critical questions for boards, regulatory agencies, and stakeholders to be talking about together. Because I think there's a critical window right now, where we need to be having those conversations and making any necessary changes.
And this is such a big issue right now, for regulators and it is for us. And I tell you, we get a lot of pressure right now from some in the industry who say "all these great things are about to happen federally, we need to get ready for it. And that means we need outside capital investments. We shouldn't have residency requirements, you know." But there's a lot in this system that, I don't know, any day now may look like it's quaint, you know. But the fact that we had, still have a prohibition on out-of-state investment, that we, in our social equity program we have the residency requirement. A lot of people don't want that, and it's gonna, if there's national legalization, changes like that. And so we do need to think about, you know, what are the pieces that's important to all of us, and all of us means the consumer and legislature and public health and everybody else. And what do we go to Congress and say, "when you do this, don't lose sight of this piece here?" Because I got, I don't think we'd be having these conversations thinking that legalization is even anywhere on the horizon, if the states hadn't done a pretty good job setting up these recreational markets. And by the State I mean the people who have the licenses, too. The parade of horribles that people predicted before this initiative passed, have not come true. And that's from public health, and that's from, from law enforcement, it has not come true. And it hasn't because we all kind of overreacted at the beginning, we needed to in order to get the Obama administration's, you know, kind of uneasy truce with us, to allow us to go forward. If, if, if those states start to lose regulatory control, if those parade of horribles start to emerge, I don't think that's going to lead the federal government to act sooner to legalize, they're going to slow down and they may even try to crack down on us. I don't think that's gonna happen. I do want to say the cannabis industry is so much better than the alcohol industry in terms of that, one of the most important things is keeping the product out of the hands of children. You know, we meet every week in closed session, the board does, to issue violation notices and hear appeals and those sorts of things. Every time we make those comments like, "well, these folks can do it, why can't they do it?" And we talked about in the meeting just the other day. So that's how we've gotten to where we are is because I think the industry across the country is operating in a professional manner. I think the regulators have kept their their wits about them in terms of, you know, we do have to operate under this rubric that was sort of forced on us under the Cole Memo. It doesn't really exist today but kind of consists in the negative form and we're not sure where that line is and we're trying to find out. So we got to evolve. We got to mature we got to change, you know that curve of acceptance and things like that is coming too quick. We have legislators in our legislature who say that the initiative was a failed experiment and should be repealed immediately. So we're not to total acceptance by any means. Now on the flip side, they say, sitting in 2012, Jay Inslee opposed the cannabis initiative as did all the statewide candidates, I think, at least the major party ones. And then he ran for President and one day I was in my office, I was going for a run down in my office, and somebody came in and said, the Governor was in Los Angeles and just said that Washington has the best weed in America. And I thought, well he didn't even want it in the first place. But he was out there talking about Washington wine, and now it's Washington cannabis. And so there that that change is coming, folks. But, but it's gonna take a while for us to even get our authorized environment to be committed to the to the expansion that some people want.
Change always comes around election time. All right, Laury, just wanted to check in. We had some lively commentary, did you have anything to add before we move on to our next seed?
No, I think that one of the things that stood out to me is the conversation about folks, not necessarily needing to be put into licenses, but be invested into in whatever endeavors that they want to do prior to enforcement. I know many people who were selling weed to drop an album, right? I know many people who are selling weed to take care of their people. For social equity to mean licensing, is completely ridiculous. And I also think that social equity should expand to be, to include ancillary businesses. For example, in Massachusetts, there was money that was given to social equity businesses, but only to licensees. But there are many companies that don't have licenses that are brands, that, that should have had access to that money as well. I think by limiting it to just, well, to just licensees, we're missing a mark. And we're also not in alignment with how business is done globally. Most companies are not manufacturing their own branded products. That just doesn't happen. I own a brewery. I don't brew all my own beer. I wouldn't be able to keep up with distribution. I hire somebody, and they make my recipes for me. And so recognizing that that's the way that business is conducted globally, ancillary businesses, including brands should have a pathway for accessing funding and resources as well. In addition to folks who don't want anything to do with cannabis, who might want to still work on that album, and drop a mean 16. That's me. I'm workin' on those bars, okay, let's get you and yours. So we can, so we want it to be more inclusive, we want it to really impact people in a significant way. And we can't, it cannot just be licenses.
Yeah, you're getting a round of applause. And I appreciate that. So that, you know, so many of us did so many things before we were in cannabis. And now that's the common thread that ties us together. But entrepreneurs of all kinds, find yourself taking the big green leap. So I appreciate hearing that.
Okay, I'm looking at time. So I wanted to just look through maybe one more here and talk about the public's health and safety kind of piece. And what the best practices are for ensuring public health and safety in cannabis regulation is there and how we can, our state can ensure the cannabis products are safe for consumers. So we're gonna start with Gillian.
Yeah. So on our website, we just on Wednesday launched a public facing best practice and guidance document on regulating cannabinoids for safety. It was a great process it aggregates insight from regulators from many different jurisdictions. And anytime we convene at CANNRA, we let them come to the table with their expertise, not necessarily with what their State is having them implement. I think it frees them up to think about what does good look like. So we came up with seven different areas that we think are important for regulating for safety. And I want to focus on regulating cannabinoids for safety, not just regulating cannabis for safety, because there's an opportunity to create more consumer safety in the hemp market right now as well, too. So that's licensing and registration of cannabinoid processors, manufacturers and retailers, a bunch of different things under processing and manufacturing standards again things that are standard in a lot of different businesses. Testing for cannabinoid products, especially things that might be intoxicating product for those that content regulations especially on the heels of the vaping lung injury outbreak. Packaging and labeling regulations to really fully inform, inform consumers about what they're consuming and what's in the products they're consuming. This is something that we all want in every product we consume. And when when we go to the grocery store or gas station, I think everybody rightly assumes that there's a level of regulation to keep them safe for what they're purchasing. Some advertising regulations, you know, so advertisements are not misleading, don't make false statements. And then education, compliance, and enforcement. So each of these buckets, I think, has a lot under it. The framework that we put out gives a lot of flexibility. But those are the core pieces that our membership felt like were really important to protect consumers. And at the end of the day, while regulatory agencies vary often in their mission, the one thing that they all have in common in their mission is protecting consumer safety. That is why you have a regulator, whether you choose to like them or dislike them, they are often just trying to do their job of protecting consumer safety, which has been made really difficult by the void in science in this space. So productive engagement is the most valuable thing that you could do, instead of saying, "I hate this regulation," come to the table with "here's a different way that we could do this." I often hear people say, "the market's over regulated." my first question to them is always, what regulations would we do without that don't compromise consumer safety. Like we are all ears, tell me what we could do without. And I think most regulators would do everything to try to strip that down. So I think I hope that we're at the beginning of a discussion about consumer safety. And again, as we're looking at the hemp space and thinking about how that reflects on what we've done in cannabis.
Thanks, Gillian. And one more time the name of the resource, you said it dropped this week. So.
Yeah, if you go to our website, which is cann-ra.org. It's under the news. It's just the best practices and guidance for regulating cannabinoids for safety.
Thank you, David.
This is great and I can, and we, we're focused more and more on public health, trying to help, we just added it to our mission statement, which, surprisingly, with some amount of debate internally. But it is one of the primes in view. I think the industry has done a pretty good job in Washington state, in terms of minding the public health. But what I want to mention is that there's a large community in Washington saying we need to regulate, the prevention, public health people, some of them are government, health agencies, some of them are nonprofits and things of the sort, who have a very different view than, than I do, and that you all do. And we have different views. And they worry a great deal about everything. So I talked about, you know, kind of this overreach that we all had to do at the beginning, you know, we the Cole Memo syndrome. I don't think that's the model for long term. But But public health and prevention likes that. Anything we move away from that feels like a loss to them. And so I just to this is it, there's always some debate about this. And a quick example is science. You know, I've had some conversations with a couple of retail licensees about how big the signs can be and there's pretty specific regulations around that. Is that a priority for us? No, but it's on the books, what do we do? We supported legislation in this last session working with a lot of different cannabis, business owners and organizations. We were going to do our own version, got it funded, we decided we would work with, with a sponsor of another bill we were trying to get there. Seemed reasonable. But I can tell you, we get a lot of pushback from prevention and public health. They're very worried that we might allow, you know, signs this big rather than this big. And I'm not belittling that, that to them is real. They worry about normalization. They don't want to normalize what you do. Now, I think the voters normalized it in 2012. And it's just it's our turn to regulate it. I really think that stuff and they don't. And so all these things, which may seem so simple to the business owner, "why are you getting up on a ladder and measuring square inches of my sign, when you should be worrying about the guy down the street whose got product going out the back door. We can do that. We in the LCB in terms of the sign discussion, is make the case for what we could do if we weren't doing that? And I think you'll see that we'll try to talk about that more specifically, the next time that issue comes up.
All right, we'd like to give everybody maybe just might at first a moment, and then we're gonna go to y'all for some questions and skip the chat. So get your questions ready to go.
Just to sort of comment on the public health element. So the most important thing we can do for public health and safety in regards to cannabis policy is end the war on drugs. Because the harm in the war on drugs came from prohibition and from law enforcement, and not from drugs. So we need to disabuse ourselves of the notion that we need to solely focus on protecting ourselves from cannabis. And we need to protect ourselves from the forces in our society that caused this harm. And not completely set up our regulatory processes around protecting us from cannabis because cannabis has both benefits and drawbacks, and stigmatizing its use in this new era of moving out of prohibition---that we still remain in---into something else, I think it's really important that our regulatory structures start being about building something positive and constructive. Instead of just being in a reactive mode, where we're trying to respond to the damages of the past. Those are really important to be mindful of. But that's not the be all end all what cannabis regulation should be about. We're in the process of building something that doesn't exist from the wreckage of horrible public policy that destroyed lives for generations. And we have to be mindful that we can't overreact on demonizing something that is relatively safe, and has been used by humans for tens of thousands of years. So this relatively new and novel approach to drug regulation was a failure, it was always a failure, that approach will always be a failure. And we need to completely divest ourselves from that approach. And that's, in my opinion, the most critical aspect of public health and drug policies to end the war on drugs.
Questions and Oh, please, yes, and I will get ready for our first question.
This is my only issue with framing it in terms of public health, we're keeping people safe. I really want to enumerate what the risks are. Like what are we actually protecting the consumers from? The only thing I think is that the risk is, is contaminated products and testing. Apart from that, all we're doing is we're actually empowering consumers with information. It's not protecting their safety. Remember, my concern with like couching in safety, Anslinger and his homies, that's the tactic they used: "we gotta keep the American people safe." It's specifically, "we gotta keep our White women safe." This is our market. If you smoke marijuana it's gonna cause the White women to leave the White men and go sleep with Black men. That was, that was the propaganda.
There is no real, there is very minimal risk with consuming cannabis. And to rise to the level of protecting the consumers, no. We are educating the consumer. We're protecting consumers from, from contaminated products. But apart from that we are just educating them. And kids. I know it should not smoke marijuana, but how many children have actually died from consuming cannabis? So like, we need to really put these risks into perspective, because if we just say, for protecting public safety, we might run the risk of creating some Anslinger-esque hysteria, which is not helpful to anyone. So that's Big Momma's two cents. Let's call it consumer education, consumer empowerment, and the risk, only limiting it to testing.
Thank you. We have our first question from Mitzi.
Hi, thank you so much for being here, you guys are amazing, and I really appreciate that you're here. I represent social equity applicants, licensees, and also contractors administering programs. And something that we discuss a lot is what seems to be the inevitable paternalistic characteristics of social equity. Of restricting where you can sell your license, how you can sell your license, whatever. And so I'm wondering what your thoughts are and how to address it. I mean, it's a hard problem, right? But I was wondering if you have any thoughts about how to move that discussion, hopefully, over and then move on to other topics? I know, I'm sorry, it's not an easy question.
I don't, I don't feel like, I don't feel like nationally, we have the right answers to that and we've seen states take different approaches. You know, the obvious concern is if anyone can just sell their license then do you end up with a program that has no equity left in it. I mean, it's it's, it's a tough one. Like, this is one of those questions that we talk about in CANNRA circles all the time, and states sort of share, this is the approach that we took and this is how it's working. And I think there are hybrid approaches, right? Where you keep your license for a certain period of time, or you sell it to another equity, but you know, then you're limiting people's earning potential. So, it's, it's not, it's not one where I feel like I have an answer. And if you have suggestions, and it's like, I'd love to hear, because I, like we need creative thinking to get this right. So, I'm all ears.
I too don't have the answers, that's the short version, but. You know and Representative Morgan can say this much better than I, but you know, even during the discussions around the Task Force, there's a lot of disagreements in any group of people who we've discussed social equity with about some of those very things, about how long do you keep it, you know, in the hands of the original applicant? Or is it 49%? Or whatever? And, and, and, and I don't know the answer by what I hope is, it will be an evolution in this, you know, it's not unlike the the tied house system we started, we start in a certain way, get it started. But then you got to see, we got to be able, and luckily, we're able to do that already. Because we have the first social equity program, those lessons, we just came out about the second one that'll start at the end of the year, or next year, we learn. So what can change? And I think we're going to grow on those. And those are the things again, if you look at what's happening nationally, could change all those reasons so dramatically. Dormant Commerce Clause, you know, what happens to our residency requirement? Luckily, so far, we've won that, and but they're, the fights are coming up.
Well, and Laury, you talked about the importance of defining equity 100%, because as soon as we enter interstate commerce, if there's not a universal definition, like what happens to those programs, how do you preserve those programs. Like, we have a lot of foundational work to do. And that's one of like, 100 questions today that is important to that.
I have a question from the chat. If I can, and Micah you might be able to roll it in about Washington. So from Andy Brassington, Evergreen Herbal, what changes to the Washington industry do you expect in the next three years?
I just want to real quickly respond to Mitzi. In my opinion, the social equity programs that leverage limited licensure as the mechanism for bringing value to those social equity licenses aren't, that's not a long term, viable strategy. And I think those conversations about selling licenses are often predicated on the limited licensure bringing value to the license outside of the value of the business. So I think our goal with social equity programs need to be to create viable businesses that are valuable, independently of limited licensure. Because limited licensure is temporary, and is going to go away. And if you want long term viability of those programs, that needs to be designed around, not leveraging that. So that'd be my answer to that as designing social equity programs.
And as far as changes in the next three years, I think that we're going to see, largely, at least our day to day operations are going to be more or less how they are right now, with the possibility that we can get some changes in the next few years in the legislature to update our rules, to some of the focuses that I've talked about here is moving away from responding to prohibition into building something new. I think we need to look at how additional agencies can be leveraged to resource our industry with the sorts of things we need to be successful. So that includes, you know, expanding the Department of Agriculture's role in our program, collating hemp and cannabis into a single program, that then diverts off into high THC, low THC so that we can have a coherent, comprehensive program for one for the cannabis plant. These two sort of divergent programs that don't really make any sense. So I hope that we can see iterative legislative progress, and that we can enable LCB and the other agencies that are in charge of regulating our industry, with the tools and resources they need to update our laws from a reaction to the Cole Memo to being something that's forward thinking and is trying to build the sort of ecosystem that we've been talking about all day.
I think that's our goal and, was the payment petition yours?
Yeah.
I think so just the other day we approved a rules petitions that had to do with which, which took us a year to do because we had a lot of turnover in that department and nothing's easy.
I love the next door accountability.
But it's kind of common sense, evolution. And that's one of those things that when it comes to us it's like, "yeah," okay, I understand why the law was like it was and why the rule was the way it was originally. Some of that is, if you call it an alcohol hangover from tied house and those laws. But this is a different issue, it's a different time. So I would say that one of the things I hope we see from us over the next two, three years is more of that sort of work. We are working internally to, where are those things that don't get us much, you know, it's not advancing public safety, it's not advancing public health, it's not advancing even consumer education. If it's tax collections, it's going to remain really important. But there's things that maybe aren't and we can take that step back. And so I think, petitions like that's helpful. Alright.
We have two more questions. We're gonna try and make time for both, for sure.
Hello, my name is Walter Terry, and I'm with Panacea Cannabis. And I work, in the store experience in the state of Nevada, you could go in the store, it's, they put it in a small little container, you can smell the product. That's the big disadvantage because the consumer doesn't know what they're buying. Cannabis, when I was out in the gray market, the consumer made the decision based on how it smelled. You can't smell in the state of Washington. And so for public safety. We don't assume the consumer will know what they're buying by smelling it. So why wouldn't the State allow the retailer to put it in little small case in the state in Nevada, where we can, we can smell the product.
Good question. Well I'll say what, can we do a scratch and sniff maybe on the package? But somebody in a commercially raised this question, but from a different angle, which was about packaging. If we had bulk flower, you wouldn't have as much waste from the packaging and all of that. And so why don't you do that? And that would allow then for that. So I hadn't though of that. Yeah, appreciate the question.
Alright, we have one final question today.
Thank you, ready. I was in medical from prior to getting my store, and then also medically authorized. We do have the sniff jars are available here in Washington, not commonly used because they, you have to inventory keep track of them and be accountable for them, and have a warrant. And then also they only smell for so long, and they don't come every week, and you have to order them and then send it back. So it's cumbersome. So and we didn't have any requests for them. And if you've got good product, you can typically smell through the, through the jar.
My question is, I'm going to go on to my question. The question is the war on drugs, is in my opinion being as a retailer. One of the things I haven't heard you talk about at all today was the tax in Washington State and with the sales tax is 47 percent and then I have our national taxes, federal taxes exceeds 40%. And we're talking about how can you, why are we having trouble getting the social equity stores online because nobody will finance them because after they look at our books they say "you can't afford to repay it." I'm not going to make any money on my store myself at all, because they're, I don't get to walk away with any problem with any profit, you take a minimal wage under a thousand a month. I don't have a big bank account. That's the reality and it hasn't change. Our market is it hasn't been grown for at least in our area. And then we have more of marijuana. Now we're talking about exporting. I don't think the export things can help most of us cannabis retailers, it will help the bigger, the bigger chains, the bigger growers, the very top of, the very top of the line growers, that save the shelves of the cannabis stores. But I don't think, I think it's going to hurt the rest of us, that's just my opinion. But if the State can comment, if you have any comments, has there been any discussions about lowering taxes, that's my main question.
I'll tell you when legislators in earnest, you know what taxation questions come up around cannabis, the LCB has historically bravely and boldly taken no position. So they've had this sort of practice which is well "that's not our bag, that's department of revenue or that somebody else." I think that these things are now enmeshed so much in actual policy that we are looking at them differently, and it certainly around high THC it comes up. And so we're trying to have a different level of conversation about that. And again, we're evolving. So, I don't know that the LCB would be the agency that would go and say, "Let's reduce the taxation" as much, because one of the real benefits that you all brought is money for the State treasury. And yes, yes. And you know, it's it's more than people thought and it's paying for great things and now we're able to do even the reinvestment fund. So anytime anything comes away from that some people are going to not like cannabis as much as they do today. So we have to figure out how to do this. How do we modernize the tax system, particularly if there's national competition or interstate business, without cutting a hole out? And I gotta believe when the federal government does legalize cannabis, it's gonna come with its own tax, right? They don't do that out of the goodness of their heart. We didn't either.
Yeah, welcome. I was just going to chime in. A lot of people in the industry at the national level have told me they want to TTB to run the thing. Well, guess what TTB is Treasury and they only run the thing if there's a tax. There has to be a tax to bring them to the board. So yeah, I agree. But I think there's going to be a federal tax. And hopefully, there'll be a lot of stakeholders around the table to talk about what's already happening in, in states and what that federal tax adds to what states are already hold you.
We will do the best we can but we also win the highest tax game on weed. So not the one we want to win. All right, I just wanted to tap into Laury real quick for any final thoughts, and then I'll tuck away our panelists and we'll be done for the day.
I like that we started talking about taxes, because it's one of my favorite things, because that's how you know how government really wants to control the people. You see they get you for the taxes. So I personally feel like social equity, probably legitimately once they've defined it, that they shouldn't be able, they shouldn't have to pay taxes.
Instead of trying to keep it at a percentage, we give them a little benefits to overcome the actual harm that was to start their businesses and that absolutely based on the run out the industry. If they don't have to pay taxes, they are well positioned to succeed, first of all. Secondly, the federal government and state governments, local governments, used their tax dollars to unjustly enforce these prohibitionst laws against us. I think it's all, its down up to Nixon. And unfortunately, because of the economic system we have in the United States, there's never going to be that many social equity businesses no matter what we do. So it's not going to cut in that much into the tax you're looking for the states and the federal government. So if we're considering, if you're considering rewriting regulations, consider removing taxing the need to be paid taxes for legitimate social equity businesses, because they can bring in the taxes the taxes are quarterly. I tell my niece all the time: I go in their room and I grab their toys and I say, "I'm the IRS." So that's my two cents.
So for any final thoughts for our other panelists,
I would just leave people with the reminder to engage respectfully and productively with your regulators. They are, I've worked in government for 15 years, they are some of the hardest working folks in government, even if you dislike what they're doing. So come to them with solutions, not with problems. And CANNRA is here to listen, we're focused mostly at the national and international level, because I can't be in 50 states and I can't work with 50-plus state trade associations. But we want to hear from stakeholders too. And I take all the data points and feedback I get really seriously and try to make sure that regulators in all states are hearing those perspectives. So please engage, because your engagement's important.
Thank you. And as a reminder of the Alliance is dedicated to the advancement of vital, ethical, equitable and sustainable cannabis industry. And that's what we all do together. So if you're not already a member, your neighbor is not a member, please engage with them and have them join us in the work that we do. And hopefully join us next year. I want to thank Micah, David, Gillian, and Laury for their time today.
