House Finance committee hears HB 2037 to lift cannabis residency restriction, expand tax relief and allow agricultural associations; industry divided

The House Finance Committee on March 25 held a public hearing on House Bill 2037, a package of changes to Washington’s cannabis licensing and taxation rules that would remove the state’s six-month residency requirement for license applicants, allow licensed cannabis producers to form agricultural associations, and create temporary business-and-occupation (B&O) tax exemptions for social-equity licensees and certain license transfers.

Michelle Harris, committee staff, summarized the bill’s main provisions and said the Liquor and Cannabis Board issues producer, processor and retail licenses. Harris explained that the bill would permit producers to form agricultural associations and would create two separate B&O tax exemptions for producers, processors or retailers licensed through the cannabis social equity program. Under the draft language cited by staff, an exemption would apply for five years after a licensee exceeds $5,000 in sales revenue and would expire on specified sunset dates in the bill; a similar five-year exemption would apply when a social-equity license is obtained via transfer. Harris said the provision eliminating the requirement that applicants have lawfully resided in…