A Force for Stability

The Craft Cannabis Coalition aims to preserve Washington’s cannabis businesses through common-sense regulatory changes

For many businesses in Washington’s cannabis industry, just staying open has been a challenging road of hardships and small victories.

The relatively low barrier to entry — a mere $250 application for the chance at potential riches — led thousands of businesses to apply and created stiff competition. Now, six years after the program’s launch, cannabis consumers in Washington pay some of the lowest prices in the country, despite a 47% tax rate at retail, one of the highest in the nation.

In a Nutshell: The Craft Cannabis Coalition

Newly hired executive director Joanna Monroe explains the organization’s mission and what it will take to bring change

Craft Cannabis Coalition executive director Joanna Monroe. Photo courtesy Joanna Monroe.

Marijuana Venture: What is the Craft Cannabis Coalition’s agenda?

 

Joanna Monroe: Washington has the most consumer-friendly cannabis marketplace in the world. By and large, our regulations have fostered an environment that has discouraged consolidation and dominance by just a few large companies. The No. 1 goal of the CCC is to maintain an environment where many small producers and processors can thrive.

The CCC will continue to support measures that ensure innovation, diversity of brands and products and ongoing consumer access to the very best cannabis in the country. We want to protect the value and potential of our licensed businesses. We do that by educating stakeholders about the positive impact we make in Washington and the need to pass laws to strengthen, not damage our industry.

 

MV: What type of regulations do you support?

 

JM: We support common sense regulations that promote and protect the industry. For example, we are looking to place guardrails on the Washington State Liquor and Cannabis Board’s ability to negatively impact our industry through arbitrary rulemaking. We also support social equity, to include meaningful involvement from the minority community harmed by the War on Drugs, and to preserve all forfeited retail licenses for social equity applicants.

This year, we defeated a bill that would have forced unionization of our workforce. While we support the rights of all workers to unionize, it should be their choice, not something that is regulated by the legislature. That bill defied common sense.

MV: What does the CCC need to do to be successful?

 

JM: The cannabis industry has made a huge, positive impact in Washington state, but it is hard for businesses to be successful in this highly taxed and regulated environment. To be successful, the CCC needs to mobilize members to connect with policy makers, tell their story and celebrate the good that we do in our communities. We need to continually remind lawmakers that this industry is one that needs to be nurtured to reach its full potential.

In this challenging business environment, members of the Craft Cannabis Coalition are looking to protect the foothold they’ve established by lobbying for common-sense regulations and preventing disruptive new legislation.

The CCC is a relatively new trade group of retailers, producers and processors dedicated to stabilizing Washington’s cannabis market. The nonprofit organization formed in the fall of 2019 and officially implemented its bylaws in January 2020. For board members Daniela Bernhard, Shawn DeNae, Eric Gaston and TJ Werth, it’s about preserving the viability of an industry that contributed nearly $400 million in excise taxes to the state coffers in fiscal year 2019.

“We need the voice of reason, the voice of common sense, the voice of the commercial entities that are 80% of the market,” says Werth, CEO of Top Shelf Cannabis, a licensed producer. “We’re the ones bringing home the bacon. We figured out how to survive and do it properly while a lot of the other people faded away.”

CCC board member Eric Gaston meets U.S. Senator Elizabeth Warren. Photo courtesy Eric Gaston.

A Call for Common Sense

Werth says the CCC formed just in time to face down one of the biggest threats to the industry: mandatory unionization.

In early 2020, much of the cannabis industry rallied to oppose Senate Bill 6393, which would have forced every Washington cannabis business to unionize. The bill had been heavily backed by the local chapter of the United Food and Commercial Workers, UFCW 21.

Opponents say the law would have mandated wages that are unsustainable for many businesses, and it would have made annual license renewals contingent on having a labor peace agreement in place, potentially leading to annual contract negotiations.

“The narrative is that there’s a rampant workplace standard problem in the cannabis industry at large, and I haven’t seen this,” says Bernhard, co-owner of the Seattle-based retailer Uncle Ike’s. She says the law would not only have been disastrous for businesses to implement, but it could have left many employees in a worse position than they were before legalization. For instance, she says, Uncle Ike’s provides full medical benefits to its staff and pays 100% of the premiums.

“If we were forced to unionize, our employees would be paying monthly dues to an outside entity to ensure benefits similar to, or possibly less than, what they’re already receiving,” Bernhard says. “It doesn’t make sense.”

Legislators ultimately rejected the bill — but it’s not the only imminent threat.

Werth says another issue Washington cannabis businesses must address is the amount of power the state has given inspectors. He says the industry continues to face enforcement that is unequal to any other in Washington. During one inspection, Werth says, a state inspector told him that his video surveillance system wasn’t sufficient because he couldn’t see the feet of people working in the grow. Werth says the video surveillance expansion cost him $100,000.

“This kind of enforcement can wipe a business out,” Werth says. “And it’s just how he interpreted the regulations.”

Part of the CCC’s mission is to undo burdensome regulations that were established during the industry’s infancy. That includes rearranging the power structure so new regulations would go through the Legislature and not the Washington State Liquor and Cannabis Board, eliminating the current situation in which operators are subject to the whims of individual inspectors.

Werth says the Liquor and Cannabis Board played an important role in helping the state react quickly as the industry was being established, but at the six-year mark, the industry needs stability. The CCC also opposes other potential disruptors to the market such as efforts to increase the cap on canopy size and the bill that would have capped concentrates at 10% THC.

“We believe in a stable, inclusive, and diverse cannabis industry,” Bernhard says. “CCC’s mission is to preserve the unique craft nature of the Washington state cannabis industry. This means preserving consumer choice by promoting sound policy, which allows for common-sense business practices with consideration for the small and mid-size producers and retailers who are the foundation of the Washington cannabis business.”

Craft Cannabis Coalition board member TJ Werth. Photo courtesy Top Shelf Cannabis.

A Call to Action

Fighting for normal business practices, especially against well-established organizations like the UFCW, takes resources, Werth says. And the CCC is looking for likeminded members to continue its mission.

“We all crave stability,” Werth says. “Common sense should always win and that’s what we’re pushing for. A subject comes up, we look at it, discuss it, what makes sense, what makes money, what’s commercially viable and then we go from there. That’s what the CCC is about: people who agree on the middle ground.”

The CCC is funded by members to pay for an in-house lobbyist and political advisor and so it can advertise, host industry mixers and campaign for change at the state’s capital.

Gaston, the co-founder and co-owner of the Evergreen Market chain of retail stores, says the foundation of the group began with the now-dissolved Cannabis Organization of Retail Establishments (CORE), but reorganized under the CCC name to expand the scope of its mission and include state-licensed producers and processors.

“We needed to have more stakeholder engagement from a more diverse group of stakeholders than just retailers,” Gaston says. “That was the impetus for the CCC, to have a broader narrative in Olympia than just to be hyper-focused on the impact of laws on retailers.”

DeNae, the CEO and co-owner of Washington Bud Company, is one of those stakeholders. She says she joined the CCC because it is a coalition of business owners who are willing to do more than just talk about change; they are willing to fund it.

“That’s what this cannabis industry needs: well-funded trade organizations to represent the licensees so we can help improve our marketplace so there’s the potential for profitability for any well-run business,” DeNae says. “We at least need to advocate for a solid marketplace so those of us who are working hard to create tax income for the state and provide cannabis to the consumers of this state can have rules, regulations and laws that give us room to prosper.”

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