Mary B. Segawa M.S. December 3, 2014 I-502 Implementation Creating Washington’s system of legalized marijuana Mary B. Segawa M.S. December 3, 2014

Overview Today’s Presentation Disclaimer I-502 key elements Agency objective for implementing I-502 Rules highlights Licenses Sales activity Education and outreach Issues and challenges Staying connected

Disclaimer Today’s presentation is designed to inform this audience of the current status of Initiative 502’s implementation. The views expressed today represent the speaker’s summary of these current events and are subject to change based on the final decisions of the Board.

I-502 Background The initiative The sponsors and supporters The vote License and regulate marijuana production, distribution, and possession for persons over twenty-one Remove state-law criminal and civil penalties for activities that it authorizes Tax marijuana sales Earmark marijuana-related revenues The sponsors and supporters New Approach Washington Law enforcement, health professionals, educators, ACLU The vote Passed 56% to 44%

I-502 Key Elements Legalized for adults age 21 and older 1 ounce of useable 16 ounces in solid form 72 ounces in liquid form [7 grams of extract – added in the 2014 legislative session] Three-tier system of growing, processing and retailing Taxation 25% tax at all three license levels B&O and local sales tax apply Earmarks revenue for healthcare, research and education

Agency Objective Public Safety Agency Role and Responsibilities Create a tightly controlled and regulated marijuana market Agency Role and Responsibilities Created a 3-tier regulatory system for marijuana Created licenses for producer, processor and retailer Enforcing laws and rules pertaining to licensees Collecting and distributing taxes/fees

Law and Rules The Difference Between I-502 Laws and Rules Laws (RCW) Enacted by Legislature and signed by Governor Enacted by voters (initiatives and referendums) Rules (WAC) Detailed regulations necessary to implement the law Clarifies what is allowed or not allowed under law Created by state agency, board (WSLCB) or commission Cannot change the law in any way Public and transparent process Once final, they provide the structure for participation in the system

Focus on Public Safety Laws and Rules No one under 21 on any licensed premises 1,000 foot setback rule from specific child-centered locations Advertising limits and restrictions Traceability system Compliance checks and enforcement of laws and rules Production limits, caps on number of retail outlets

License Requirements Licensed Location: 1,000 Foot Measurement 1,000 foot buffer from specific child-centered locations Costs and Fees $250 application fee $1,000 annual renewal fee Additional fees for background check and filing for local business license Taxes Must attest that they are current on taxes owed to the Washington State Department of Revenue Insurance Required to carry commercial liability insurance

Public Safety Producer Structures Traceability Secure indoor and outdoor grows, as well as greenhouses Traceability Software system that traces product from seed/clone to sale LCB enforcement can match records to actual product on hand Local Authority Objections Substantial weight given to a local authority during the renewal process based upon chronic illegal activity associated with the licensee’s operation of the premises

Public Safety Background Checks Security and Safeguards Personal criminal history form Fingerprinting of all potential licensees WSP and FBI background checks of licensees and financiers Security and Safeguards Alarm and surveillance video camera requirements (including minimum pixels and lockbox encasement) Strict transportation and record keeping requirements (no third party transport of product) Hours of operation limited to 8:00 a.m. to 12:00 a.m.

Public Safety Violation Guidelines Child Resistant Packaging $1,000 administrative penalty for minors frequenting Sets strict tiered system of violation record over a three year period. Example: Group 1 public safety: First violation: 10 day suspension or $2,500 Second violation: 30 day suspension Third violation: license cancellation Furnishing marijuana to a minor remains a felony offense Child Resistant Packaging Specific requirements for marijuana and marijuana infused products in solid and liquid forms

Public Safety Advertising Restrictions No advertising within 1,000 feet of schools, public parks, transit centers, arcades, and other areas where children are present May not contain statements or illustrations that: are false or misleading promote overconsumption represent that its use has curative or therapeutic effects depicts a child or may be appealing to children All advertising must contain two statements: “This product has intoxicating effects and may be habit forming.” “Marijuana can impair concentration, coordination, and judgment. Do not operate a vehicle or machinery under the influence of this drug.”

Public Safety Limits on Retail Stores Behind the Counter Storage Allocated 334 retail licenses statewide to cities and counties to ensure dispersion. In areas where applications outnumbered available licenses, lotteries were held to award licenses Behind the Counter Storage No open containers or handling of product Sniff jars with sealed, screened-top lids allowed

Consumer Safety Strict Packaging and Labeling Requirements Package limits 10 mg of THC per serving 100 mg of THC per product A single unit of marijuana-infused extract for inhalation cannot exceed one gram Lot number Warning label Net weight and concentration of THC Usage warnings (specific warning for ingestible foods and/or liquids about effect delays) Upon request Third party lab that tested lot and results All pesticides, herbicides, fungicides found in product

Consumer Safety Further restrictions for infused, edible products No gummy candies, lollipops, cotton candy, or brightly colored products. Cannot be especially appealing to children 4 millimeter plastic minimum Re-sealable packaging No easy-open devices Poison Prevention Act compliant

Funding Disbursements Quarterly allocations per I-502 Dept. of Social and Health Services Healthy Youth and Young Adult Surveys $125,000 Contract with the WA Institute for Public $50,000 Policy for cost-benefit evaluation Univ. of Washington Alcohol & Drug Abuse Institute Web-based public education $5,000 (www.LearnAboutMarijuanaWA.org) Liquor Control Board Administration and regulation $1,250,000

Funding Disbursements (Qtrly) Of the remaining funds: DSHS Prevention and reduction of substance abuse 15 percent DOH Marijuana education & public health program 10 percent UW Research on short- and long-term effects .6 percent WSU Research on short- and long-term effects .4 percent Basic Health Trust Fund Account 50 percent WA HCA Contracts with community health centers 5 percent OSPI Drop-out prevention .3 percent General Fund Remainder

Current Status 80+ retail stores licensed Increased scrutiny of infused edibles Local moratoria, bans Unregulated medical market

Adult vs. Medical Market Adult (Recreational) Medical Taxed and regulated Untaxed, largely unregulated Possession of 1 ounce useable 16 ounces solid 72 ounces liquid 7 grams extract Possession of 24 ounces of useable Must be 21 years of age or older May be authorized by anyone 18 and over, and under 18 with parent permission No home grows Allows personal grows, collective gardens Cannot be used in view of the public No public consumption

Civil/Criminal Laws Infraction/Crime Penalty Possession above legal limit More than 1 oz. up to 40 grams More than 40 grams With intent to distribute Misdemeanor (24 hrs – 90 days, max $1,000) Felony (5 years, max $10,000) Opening or consuming marijuana or marijuana product in public view District Ct: Class 3 civil infraction (avg. $127 w/fees); Municipal Ct: Varies Cultivation - any amount Sale or distribution Any amount To a minor at least 3 years younger Felony (10 years, max $10,000) Cultivation, sale or distribution within 1000’ of school, public park, etc. Punishable by double the fines and imprisonment State and federal enhancements exist for locations such as school zones and drug-free zones.

Education and Outreach Dedicated website – www.LearnAboutMarijuanaWA.org Consumer Guide and Parent Education materials Tool Kit distributed to communities

Education and Outreach Initial media campaigns Radio Social Media – Digital ads Electronic billboards Forums DOH Public Education campaign Current focus – parents, will include youth next year Digital ads resulted in 39,000 visits to website WA State Department of Health WA Traffic Safety Commission

Future Plans DSHS Division of Behavioral Health & Recovery Youth and young adult surveys Treatment Youth prevention for targeted communities Department of Health Media-based education campaigns for adults and youth Local grants Public health hotline Washington State Institute for Public Policy Cost-benefit evaluation Young adult survey Population with the highest rate of marijuana use Goal: Reach young adults in universities, community colleges, trade schools, military, and those not in school.

Preliminary Evaluation Plans Examining impacts of I-502 on: Public health Usage rates Public safety and criminal justice Economy State and local agencies Reports due to the legislature in September 2015, 2017, 2022, and 2032 Analysis of administrative and survey data from national, state, and local sources Collection and analysis of primary data Systematic literature reviews and meta-analysis Benefit-cost analysis using WSIPP’s ROI model Value-neutral We do not have preconceived notions of whether, on balance, legalization will be beneficial or detrimental Current use, lifetime use, age of initiation, abuse/dependency Amount of use Does marijuana use among current users increase after legalization? Examine changes in these indicators as they relate to alcohol, tobacco, and illicit drugs Are people substituting marijuana for other substances? Does concurrent use of substances increase? Public safety and criminal justice: Impacts on police, court system, jail and prison systems, etc. Economic: Job creation, workplace safety State and local agencies : Costs associated with staff time (e.g. LCB), provision of prevention and treatment services (e.g., DBHR) Tax revenues from sale of marijuana distributed to agencies Impact of research, education, prevention, and intervention programs on marijuana use Health costs associated with marijuana use and decriminalization of marijuana e.g., costs associated with lack of product safety and quality control Changes in epidemiologic indicators e.g., marijuana-related MVC, alcohol-related MVC, vital statistics

Potential Issues Federal Guidelines Minimizing Illicit Market Doesn’t change federal law Focuses on eight points of emphasis including youth access and public safety Minimizing Illicit Market Balancing product demand with production and over-production Medical Marijuana Uneven playing field, competing system that is largely untaxed and unregulated Confusion over what is/isn’t allowed and which locations are/aren’t licensed Banking Dept. of the Treasury allows banks to do business with marijuana licensees

Staying Connected Visit the I-502 Webpage. www.lcb.wa.gov Factsheets FAQs Timelines YouTube video and/or audio of public forums Listserv with over 10,800 subscribers to date Webinars with city and county officials Public hearings on rules are posted on website and publicized on the listserv News coverage

WA State Liquor Control Board 9/13/2018 Thank you! Mary Segawa, MS WA State Liquor Control Board mary.segawa@lcb.wa.gov 360-664-1771