Out-of-State Investments Bill Challenged In Washington

A bill to lower residency requirements for cannabis business investors, while simultaneously creating a “minority and women” low-interest cannabis loan program designed to increase equity in the Washington state cannabis market, was introduced in the Washington legislature.

HB 2263, “Expanding opportunities for marijuana businesses by removing residency barriers and providing access to capital for minority and women-owned businesses through a fee on certain investments” and its companion Senate bill SB 6085, seeks to create a “Marijuana Equity Loan Program,” implement a 1% fee to fund the program, and remove the six-month residency requirement for cannabis investors.

The bill would set up a Department of Commerce (DOC)-administered “Marijuana Equity Account” funded by a 1% fee on aggregate yearly investments greater than $500,000, unless the fee is less than two million — then, the fee will be assessed for investments over $200,000. Loan interest rates would be between 0-2% and all loan repayments would go directly into the “Marijuana Equity Account.” A “Marijuana Equity Board” made up of representatives from the DOC, LCB and existing minority-owned cannabis businesses will be convened to assist in implementing the program. Finally, the six-month requirement to own a cannabis license in Washington state would be “eliminated,” according to the House Bill Analysis.

Despite the bill having 11 sponsors and support from the Washington Cannabusiness Association and former state Senator and LCB board member Mindon Win, the bill received major pushback from other industry groups like The Cannabis Alliance, Washington Sun Growers Association, and Black Excellence in Cannabis.

Many concerns have centered around the market destabilization that out-of-state money would create, while others point out these large investors would “drive out small minority-owned businesses the bill is meant to help.”

Some of the most impactful testimony in opposition to the bill came from Paula Sardinas, a Commissioner on the Washington State Commission on African American Affairs, and Black Excellence in Cannabis.

“… [You] are talking about allowing billionaires, the top 1%, who already own most of your businesses, who already own most of your licenses, to basically garner outside capital with the soul intention, if we’re going to be truthful, of launching IPOs. Couching that behind women and minorities, while not addressing the fact we are locking up black and brown people at 4 times the rate of any other community for cannabis, is dishonest and disheartening.” — Paula Sardinas, Commissioner on the WA State Commission on African American Affairs