Lawmakers Ought to Amend Marijuana-Legalization Measure, Says House Point-Man on Cannabis Issue

Could Trigger Free-for-All in Coming Legislative Session – Hurst Says Lawmakers Should Reopen Debate on I-502

Rep. Chris Hurst, D-Enumclaw.

Rep. Chris Hurst, D-Enumclaw.

OLYMPIA, Jan. 9. — Chris Hurst, the Enumclaw Democrat who has been designated as the House point-man on marijuana, says he wants to reopen debate during the coming legislative session on Initiative 502, the landmark legalization measure passed by Washington voters last fall.

Hurst says he thinks the Legislature ought to amend the initiative – a prospect that could trigger a legislative free-for-all as the law is reworked. Hurst says he doesn’t think license fees are high enough – he thinks they ought to be pegged higher to cover the cost of rulemaking. Yet even a modest change would require lawmakers to amend the initiative, and should they decide to do that, every interest with a beef about the new law will have a chance to insert new language to its liking. At the very least, it’s going to mean plenty of billings for the new industry’s advocates at the statehouse.

Until this point it seemed the battle would play out at the headquarters of the state Liquor Control Board, not the Capitol, but Hurst says lawmakers ought to have a say. “I think it is time to step on the brakes here for a moment and have a discussion and ask, where is the money coming from? What happens if the feds take action and make it impossible to recoup that cost? Are we talking about leaving Washington citizens on the hook for tens of millions of dollars? I think those are fair questions to ask.”

Together with two influential committee chairmen, Hurst has written to state regulators to urge them to place a temporary hold on the rulemaking process. It might take a few weeks to decide whether lawmakers should proceed with a rewrite, Hurst says. In this state, it takes a daunting two-thirds vote of the House and Senate to alter an initiative during the first two years after passage.  But if they can muster the will to do that – where will they stop?

Wants Time-Out

Washington voters, like their counterparts in Colorado, approved a first-of-its-kind marijuana legalization measure last November. In this state’s case, it is an enormously complicated measure that aims to turn marijuana into a highly regulated $1 billion a year business, and if all goes according to plan, I-502 will generate enormous tax revenue for the state. Regulators at the state Liquor Control Board face a strict one-year deadline to write rules for the marijuana marketplace. So they are planning to move at the governmental equivalent of warpspeed, announcing last November that they will spend $5.5 million in agency funds to launch the rulemaking process. “It is not really clear what will happen,” explained director Pat Kohler during a meeting of the Senate Labor and Commerce Committee Nov. 30. “We will be required to implement the law until we are directed to do otherwise.”

It could be a costly process, and certainly it will be a notable one. State officials say no government in the world has done what Washington and Colorado are doing – establishing a regulated and taxed marketplace for recreational use of marijuana. The hitch is that no one can be quite sure what the feds will do. Marijuana remains illegal under federal law. President Obama appeared to give a thumbs-up to the Evergreen and Mile-High states last month during remarks to television celebrity-interviewer Barbara Walters. But that’s a little short of a definitive statement.

So what happens if the feds yank the rug out from under Washington? Says Hurst, “If you went out and interviewed taxpayers who voted for the initiative and said, oh, would you vote for this if you thought that it was going to be funded 99 percent by taxpayer money, without being sure you were going to get money back? – I think they would say no. I think they probably thought the industry was going to pay the tab.”

Hurst is chairman of the State Government Oversight and Accountability Committee and has been given responsibility for most marijuana issues in the state House this session. In the letter he is backed by House Ways and Means chairman Ross Hunter, D-Medina and House Revenue chairman Reuven Carlyle, D-Seattle. But in his remarks to Washington State Wire late Wednesday evening Hurst took pains to point out that he is speaking for himself and not for the House Democratic Caucus. It will take considerable huddling between regulators and legislative leaders to decide whether to take on a legislative rewrite, he says.

Hurst says the fees established by the initiative strike him as rather low. The initiative establishes a $250 application fee and a $1,000 license fee for producers, processors and sellers of marijuana. If the feds blow the whistle sometime before the finish line, the state will be out all the money it spent to draft regulations. So Hurst says the state ought to seek a higher number – perhaps on the order of the $18,000 the state of Colorado charges for medical-marijuana licenses. Or maybe it might limit the number of licenses, taxicab-style, and auction them to the highest bidder.

Had Their Chance

One of the troubling things about a legislative rewrite is that lawmakers had plenty of opportunity last session and they sat on their hands. Initiative 502 was placed before them last session as an initiative to the Legislature. The state constitution allowed them to pass the measure into law or draft an alternative for the ballot. But they decided the issue was too hot to handle and sent it on the fall ballot, where it passed handily 56-44.

At the same time, Hurst’s concerns about inadequate license fees won’t be an issue over the long haul, if Obama honors his pledge to Barbara Walters. Tax revenue will be somewhere on the order of $1 billion over five years, according to an estimate last year from the state Office of Financial Management. That’s more than enough to cover the cost of writing rules.

Hurst says he didn’t vote for the initiative last year because he thought the state was getting ahead of the feds. But now that the voters have said yes, he says the state has to honor their wishes. It’s just that he says they didn’t get their wishes.

Interpreting Public Will

“We’ve got to make sure that citizens are getting what they voted for and what they were told they were going to get,” Hurst says. What they wanted, he says, is a tightly regulated and highly taxed marijuana market, free of the criminal element. “You can look at the ads. That’s what they were promised.”

He says the initiative didn’t deliver. For instance, before regulators can take action to pull a marijuana seller’s license, there has to be evidence of chronic illegal activity. “Who in the world would require an unreasonably high number of incidents of selling alcohol to a minor at a local grocery store before the liquor board could take action against them? That is ridiculous.”

And he says lawmakers need to ensure that organized crime is kept out of the business.

Hurst says he actually doesn’t have any problem with the element of the initiative that sparked the most controversy last year – the new DWI penalties that could trip up constant marijuana smokers, because the new standard depends on THC levels in the bloodstream rather than on evidence of impaired driving. Medical-marijuana advocates might love to reopen that one – they have been complaining since the initiative was filed. Hurst points out that issue will go to other committees, still to be determined.

“I think the liquor board has the first say,” he says. “If the liquor board feels that it should be amended for them to properly implement it, then we should do it. If there is no support for amending it, I guess we will enact it as-is. But I don’t know who is going to pay for it.”

Text of Letter

The following is the text of the letter sent by Hurst, Hunter and Carlyle to Sharon Foster, chairwoman of the state Liquor Control Board.

“Jan. 7, 2013

“Ms. Foster:

“As the chairmen of the three legislative committees tasked with the oversight of the Liquor Control Board and the collection and distribution of state revenue, we are writing to express our believe that it is vital for the staff and leadership of the Liquor Control Board to work in a more coordinated fashion with the Legislature on implementing Initiative 502. Let there be no doubt that we are committed to enacting the will of the citizens of Washington as expressed in their support of I-502. However, there are many unresolved questions regarding the federal government and marijuana’s continued listing as a schedule 1 controlled substance, taxation policy, impacts on local governments, LCB appropriations for implementation and other policy considerations such as the role of the LCB itself.

“While members of the executive and legislative branches of our state government are in active discussions with various representatives of the federal government, there has been no decision from the U.S. Department of Justice on whether it will exempt Washington state officials and employees from prosecution for enacting a regulatory regime overseeing the production, processing and distribution of marijuana for recreational use. It is inappropriate, in our view, for the LCB to assume this agreement exists.

“Of specific concern to us is the aggressive timeline being pursued by the Liquor Control Board in issuing licenses to producers of marijuana. At a broad level this is an unprecedented step in United States history and could lead to significant state resources being wasted on an effort that could ultimately be shut down due to the institution of legal proceedings by the federal government. We believe that there are alternate paths toward implementing both the letter and spirit of compliance with I-502, informed by the behavior of the federal government towards medical marijuana, that provide firmer legal protection for the state, its employees and its citizens.

“Finally, we are aware [that] the LCB’s comments at the November state government committee included the disclosure that the LCB is considering diverting $5.5 million from other purposes to fund these new operations, including marijuana producer licensing and the hiring of 40 new personnel and consultants. We strongly urge the Liquor Control Board not to engage in any such diversions of existing funds for marijuana licensing without further discussion. Given the paucity of funds available, the question of marijuana remaining a schedule 1 controlled substance under federal law and a lack of a reasonable level of assurance that future revenue streams will justify such expenditures, we believe delaying such diversion of funds to be the most prudent course of action.

“In light of these broad ranging matters, we request that the Liquor Control Board meet with us immediately to discuss ways to change their approach towards implementation of this unparalleled effort to ensure that precious state resources are not wasted and that our valuable state employees not be exposed to any criminal liability. We look forward to meeting with you.

“Rep. Christopher Hurst

“Chair, Government Accountability and Oversight Committee

“Rep. Reuven Carlyle

“Chair, Finance Committee

“Rep. Ross Hunter

“Chair, Appropriations Committee”