WSLCB - Board Meeting
(October 14, 2020)

• Policy and Rules Manager Kathy Hoffman indicated that BIP 06-2018 (“Allowing marijuana licensees to spend their own money on their businesses prior to the Board vetting the funds”) was superseded by recent True Party of Interest (TPI) rule changes (audio - 3m).
• A “technicality” tripped up the filing of the Consultation and Education Program CR-103 approved by board members on September 30th, leading Hoffman to seek reapproval of an identical rulemaking package. No impact was expected on the implementation timeline (audio - 3m).
• We’ll include more detail and rulemaking updates in a subsequent summary.

Here are some observations from the Wednesday October 14th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• The Board rescinded an interim policy on the vetting of licensee personal funds added into their cannabis businesses following the implementation of revised true party of interest (TPI) rules earlier this year.
  • Board interim policy (BIP) 06-2018, which allowed cannabis licensees to spend their own money on their businesses prior to WSLCB vetting, was approved by the Board in December 2018. On September 15th, Policy and Rules Manager Kathy Hoffman raised the prospect of rescinding the interim policy. She reviewed the upcoming action with board members the day prior on October 13th, remarking that it was “nice that we could bring this one full circle” (audio - 2m).
  • During the board meeting, Hoffman said the BIP was filed “shortly after the CR-101 was filed to begin consideration of rule revisions regarding true party of interest provisions” (audio - 3m).
    • Under the BIP, funds added to cannabis businesses by licensees or financiers would continue to be vetted by agency staff, but “if the source of those funds was an identified owner on the business...the LCB would allow the funds to be used upon receipt of the application.” This provided the licensee with “immediate access to funds to support business expenses.”
    • Hoffman said the “end date of this BIP was upon adoption of rules to implement TPI changes, which occurred on September 2nd and took effect on October 3rd. The vetting policy was “incorporated into those rules” making BIP 06-2018 "no longer necessary," she concluded.
    • Upon rescission, stakeholders would receive notification via WSLCB’s GovDelivery listserv as well as “posted on the agency website.”
    • The Board moved to rescind the policy without further comment.
• Policy and Rules Manager Kathy Hoffman re-visited the recently adopted Consultation and Education Program rulemaking project to deal with a "technicality,” and the experience encouraged her to build greater flexibility into the agency’s rulemaking process.
  • Consultation and Education Program (Rulemaking Project, audio - 3m). Legislatively mandated in 2019 as part of SB 5318, the Enforcement reform bill,  the Board had already formally adopted the program’s CR-103 on September 30th. However, Hoffman had to ask the Board to “refile the CR-103” as there had been a “technicality” preventing the document’s acceptance by the Washington State Office of the Code Reviser (OCR).
    • Staff had attempted to “file it two weeks earlier than the stated date of adoption that was noted in the CR-102 form” but OCR had refused to accept the document.
    • Hoffman told the Board that the sole revision in the new documents presented “is the date of adoption, which if approved today, aligns with the CR-102 form and the rule effective date.” With board approval, Hoffman planned to file the revised CR-103 with OCR and the rules would take effect November 14th.
    • Hoffman noted “this does not preclude licensees from submitting requests to us for consultation at the end of the month, as would have been the case if the rule had been filed on September 30th.” Additionally, Hoffman attested that the refiling wouldn’t “delay any of the internal or external training plans, communications or other measures” described in the rulemaking memorandum.
  • At the board caucus on October 13th, Hoffman delved into the cause at greater length (audio - 5m).
    • Because of a revised timeline approved on July 8th, Hoffman said the “date of intended adoption was actually October 14th” but OCR “sticks pretty hard and heavy to those dates of intended filing.”
    • Hoffman added that the Enforcement and Education division was preparing to “open up the application process online at the end of this month” and that the process would move ahead.
    • For future rulemaking, Hoffman expected the agency’s CR-102 documents would move away from a “date certain” and towards language akin to “as soon as...some date that gives the Board the flexibility of, and certainly staff as well, to bring a rule forward to you...a little bit sooner than having to wait for a date certain.” WSLCB staff was doing “so much more work on the front end” and Hoffman pointed out that since there had been no comments at the September 16th public hearing, staff were able to finalize the CR-103 faster.
    • Board Chair Jane Rushford was supportive and said the Board would “look forward to discussing it further as we go.”
• Policy and Rules staff briefed the Board on active cannabis rulemaking projects, including plans for another public hearing on re-proposed cannabis quality control rules.
  • The last rulemaking updates Cannabis Observer covered were on September 29th.
  • Tier 1 Expansion (Rulemaking Project, audio - 1m). Policy and Rules Coordinator Casey Schaufler said the agency would “seek responses from additional tier 1 licensees” on a survey and an “invitation will be going out in the next week to two weeks.” Comparison of survey results with comments at two prior listen and learn sessions “will inform LCB staff on the next steps forward for this project.”
  • HB 2826 Implementation (Rulemaking Project, audio - <1m). Rule development around cannabis vapor products “continues with review of written comments received as well as comment from the two listen and learn sessions.” Schaufler said he “anticipate[d] bringing a CR-102 for your consideration in December.”
    • On Tuesday October 13th, the Washington State Board of Health (SBOH) hosted a public hearing and adopted the proposed rule language as final to more permanently encode their prohibition on use of vitamin E acetate in all vapor products (Rulemaking Project). Interestingly, Representative Gerry Pollet dialed in to share his perspective that “This is not the be all end all and that further work is needed to ban flavors that have serious potential for harming lung tissues, especially that in youth.”
  • Location Compliance Certificates (WSR 20-15-043, audio - <1m). Schaufler announced that the CR-102 for the project would be presented “on or after October 28th.”
  • Quality Control (QC) Testing and Product Requirements (Rulemaking Project, audio - 1m). Hoffman stated that there’d been no comments received on the supplemental CR-102 adopted on September 30th. She expected the agency was “still going forward with the hearing on that” on November 18th.