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Senate Health Care Committee Report on HR 3 Below is the Bill, HR 3, in consideration. Amendments to HR 3 as introduced proposed by the Health Care Committee are in Bold. An act for the purpose of the establishment of guidelines for the regulation of Marijuana distribution and production, the taxation and allocation of resulting revenue from Marijuana sales, classifying actions that shall be referred to as Marijuana growth for personal use, and sanctions against those that do not follow these established laws. Section 1. Certification Guidelines for Marijuana distribution and production. Medicinal and Recreational marijuana distributors will henceforth be merged into one entity. Recreational marijuana distributors will be allowed the option to apply for an medical endorsement that would permit stores to sell to customers who posses a valid patient recognition card and in turn require the store to carry products deemed appropriate for medical use. The distribution of these optional endorsements will be monitored by the liquor control board. I. Marijuana may legally be distributed within the State of Washington, if the entity distributing, henceforth referred to as distributor, falls within one of the two certified categories of distribution: recreational or medicinal. A) A distributor will be able to sell Marijuana and Marijuana-derived products for recreational use as a Recreational Distributor, if it will meet the following criteria: i) Distributor has obtained certification from the Washington State Liquor Control Board (WSLCB) based off of the mandates required by WSLCB. ii) License hasn’t been revoked within the past 2 years by the WSLCB. B) A distributor will be able to sell Marijuana and Marijuana-derived products for recreational use as a Medicinal Distributor, if it will meet the following criteria: i) Obtained certification from the Washington State Liquor Control Board (WSLCB) based off of the mandates required by WSLCB. ii) License hasn’t been revoked within the past 3 years by the WSLCB. iii)for Medicinal Distributor certification a distributor will be required to prove that all sales for Medicinal purposes are made exclusively to individuals holding Medicinal Marijuana Green Cards. II. Medicinal Distributors who have previously been distributing Marijuana for Medicinal purposes, as defined by the WSLCB, will have 2 years as of the passing of this bill to comply with the new regulation and guidelines as established by the legislature and the WSLCB to receive certification to be a Medicinal Distributor. During these 2 years they will have the same taxation guidelines and green card benefits as other newly established Medicinal Distributors III. Recreational Distributors are not allowed to sell Marijuana for Medicinal purposes unless they also have Medicinal Distributor certification from the WSLCB, in which case, it is required to sell Medicinal Marijuana only to those with a valid Medicinal Marijuana Green Card. Medicinal Distributors are not allowed to sell Marijuana for Recreational use, unless they also have Recreational Distributor appropriate certification from the WSLCB. IV. Marijuana producers and growers, henceforth known as producers, that supply distributors will be required to obtain a permit from the WSLCB to engage in such activity. A permit will cost a minimum of $50,000, to be adjusted to inflation on a yearly basis, and will require a quarterly audit, at the expense of the producer, from a neutral third party accounting firm to confirm compliance with state Marijuana sales taxes. A) Producers are required to sell Marijuana and Marijuana-derived products only to legally certified distributors - Recreational distributors and/or Medicinal Distributors. Failure to do so will be treated as distribution of Marijuana without a valid distributors permit and will thus be punishable by a fine and/or criminal charges. V. Any intermediaries between producers and the entity that will provide the final Point of Sale with a customer will be termed to be distributors and thus have to follow the regulations and guidelines outlined for the two different types of distributors - Medicinal and Recreational. Section 2. Establishment of Medicinal Marijuana Green Cards I. The Medicinal Marijuana Green Cards, henceforth known as Green Cards, will be distributed by healthcare practitioners to individuals who have a medicinal need for Marijuana, as determined by their healthcare practitioners. II. A Green Card will allow individuals to purchase Marijuana at the Medicinal Marijuana Taxation rate of 10% on top of Sales Tax at the Point of Sale. These purchases can only be made from Medicinal Distributors. III. A healthcare practitioner will be able to distribute Green Cards if they apply for a Green Card Distribution Permit from the WSLCB and renew it every 5 years. To obtain a Green Card Distribution Permit a licensing fee of $10,000 will have to be paid, and the practitioner in question cannot have had his Green Card Distribution Permit revoked within the last 10 years. IV. Each Green Card distributed will have a fee, to be established by the WSLCB, that can be paid either by the healthcare practitioner, patient, or their insurance provider. All proceeds from the distribution of a Green Card will be distributed in the same manner as the tax revenue from the sale of Marijuana. V. Unlawful distribution of Green Cards to individuals without health ailments that necessitate the use of Medicinal Marijuana shall result in a loss of their Green Card Distribution Permit and will be treated as a Class C felony. VI. The state will commission a study to identify a list of physical and mental medical conditions for which medicinal marijuana may be prescribed, with the goal of making the qualifications less broad and/or inclusive. The governor will appoint a taskforce of medical health professionals to complete this study by January, 1 2015. A) The state will appropriate $20,000 for the remainder of 2014 to commission this study. Section 3. Taxation of Marijuana distribution and production A) A 25% excise tax on marijuana will be applied to each level of the system: producer to processor, processor to retailer, and retailer to consumer. B) Medicinal marijuana patients will be exempt from the 25% excise tax applied on the retailer to consumer level. II. A trust will be established to gather all of the Marijuana sales related revenue, such as tax, certification fees, and Green Card fees, from which funds will be distributed as follows: A) Dedicated Marijuana Fund; The Following amounts are to be distributed every three months: • $1.5 million to the WSLCB (Washington State Liquor Control Board) for administration and implementation • $110,000 to the Department of Social and Health Services (DSHS) for the Washington State Healthy Youth Survey • $60,000 to the DSHS to contract with the Washington State Institute of Public Policy for evaluation of the initiative's implementation • $6,000 to the University of Washington Alcohol and Drug Abuse Institute for public education materials regarding the health and safety risks of marijuana B) The remaining funds are to be distributed accordingly: · · · · · Higher Education – 25% K-12 Education – 25% General Fund – 20% Enforcement – 10% Health Care – 20% Section 4. Marijuana growth for personal use. I. Marijuana growth for personal use is permitted under the following clarifications. A) An individual is exempt from the required Marijuana certification and taxation if they grow 5 or less plants a year per household. B) If an individual is determined to be growing and distributing an amount above these quantity limits, then they will face a $10,000 for the first offense. A second offense will elicit a $50,000 and/or a gross misdemeanor to be charged. Any offenses afterwards will be counted as Class C felonies. Summary/ Report 1. Purpose and Summary of the Legislation The Purpose of this bill, Distribution and Growth of Marijuana Act (with proposed amendments 2. Background and Need for Legislation In light of the recent passage for the legalization of the growth and usage of recreational marijuana, action needs to be taken to not only regulate but also to align with the previous legislature that legalized the use of medical marijuana. Action needs to be taken immediately to avoid federal involvement and to appease Washington state citizens. 3. Summary of Committee Consideration and Voting The committee met and discussed various options regarding potential legislation. They decided it would be best to recommend proposed legislation HR 3, with certain amendments that align with both the committees’ and the governors ideals, as expressed in the committee hearing this past week. As the bill stands, with proposed amendments, the final vote to pass the bill out of the committee went as follows: 6 Yeas 0 Nays 0 Abstentions (Sen. Cleveland and Senator Dammeier were not present and therefore not counted in the vote) 4. Minority Views There were no minority views to report. 5. Report Author Report prepared by Sen. Becker. Co-authored by Sen. Keiser, Sen. Pederson, Sen. Angel, Sen. Parlette, Sen. Cleveland, and Sen. Bailey.