WSLCB - Special Board Meeting
(November 18, 2020)

Here are some observations from the Wednesday November 18th Washington State Liquor and Cannabis Board (WSLCB) Special Board Meeting.

My top 3 takeaways:

• Policy and Rules Coordinator Casey Schaufler provided a lengthy, and at times defensive, description of the history of the Quality Control (QC) Testing and Product Requirements rulemaking project in an attempt to preemptively “address some mischaracterization of the proposed rule we’re aware of.”
  • Quality Control (QC) Testing and Product Requirements (Rulemaking Project, audio - 17m). The supplemental CR-102 of the long running rulemaking project was presented and adopted by the Board on September 30th. During the board caucus the day prior, Schaufler characterized the dozens of comments the agency received on the rulemaking project as “mostly a standard form letter signed by different licensees or interested parties.”
  • Schaufler introduced the public hearing by describing the “protracted history” of the rulemaking project. He reviewed the proposed rule revisions, the preliminary small business economic impact statement (SBEIS), the revised SBEIS, and Significant Legislative Rule Analysis. He identified opportunities stakeholders and the public had to share input, such as emailing comments or “individual meetings.” Participation during listen and learn sessions in April and August 2019 was high, Schaufler asserted, and the latter event included discussion of phase-in strategies. The rulemaking project had already received one public hearing on the original CR-102 on July 8th.
  • Throughout the varied events, Schaufler declared the Policy and Rules team was “not able to identify thematic consistency in the responses offered, and none brought proposed rules language to the agency for consideration.” Describing the volume of participation, he said, “Hundreds of comments have been received since the project began two and a half years ago, and many discussions have occurred with licensees and other interested parties who chose to participate in this process.” But, Schaufler complained, “to date, no actual language proposal supported by an analysis of costs or by verifiable data have been received” and “as of this morning, less than ten of those comments offer language or rule amendments beyond last minute pleas to further delay these rules.”
  • Schaufler reported that “many form comments have asserted that this proposal will unduly affect small businesses, including what are termed ‘craft cannabis’ and ‘organic cannabis’ farms, compared to what are characterized as ‘large, corporate’ cannabis farms.” He found it “important to note that an estimated 98% of cannabis licensees meet the definition of a small business under the Regulatory Fairness Act (RFA)” and objected that “craft cannabis is not a recognized or standardized product, since there is no statutory definition or regulatory structure for it, and similarly, the same is true for organic cannabis.” Schualfer said action would be “necessary at both the federal and state level” for WSLCB to recognize such claims.
    • Earlier in the meeting, Schaufler indicated the agency’s Tier 1 Expansion rulemaking project, undertaken to help the state’s smallest producers, had no defined next steps (audio - 1m).
    • During her webinar training for public health and prevention advocates the week prior, Policy and Rules Manager Kathy Hoffman began her rulemaking update on the Tier 1 Expansion project obliquely, saying “sometimes...the landscape of what we’re looking at changes” (audio - 1m).
  • Schaufler continued, “These arguments against standardized testing for all adult-use product are not new to this project. However, added now is the suggestion that we add third party sampling without a proposal of additional language to frame it, or a verifiable, data-supported analysis of how this would impact the overall cost of testing.” He claimed an agency “analysis of third-party testing” determined that “it would cost a rural cannabis farmer as much as $700 per sample, in total, to engage a third-party sampler.” The creation of a new sampling regime including standards and certifications would “require legislative action before any regulatory structure could be designed,” Schaufler said. He was under the impression that the cost of third-party sampling for testing would be borne “by the licensee,” claiming that was the practice in other legal cannabis states which relied on third-party sampling systems. He further claimed those states reported “that such testing does not necessarily increase sampling or chain of custody integrity.”
    • Check out the Washington State Department of Agriculture (WSDA) Hemp Sampling Protocol.
  • Schaufler took issue with commenters who had “asserted that this proposal would add an additional $400 in costs per test.” He felt those claims left “out the remainder of the analysis” in the SBEIS which found that “based on interviews with a subset of producers/processors and prices available from labs, we estimate the potential range of testing costs per sample to add pesticide and heavy metal screening” were “expected to range from $5 to $400.” He claimed labs had committed to work with licensees during the phase-in period to lower costs. Schaufler offered a consolation that “the full suite of tests would not be required until the final phase-in period that begins on February 1, 2022.”
  • Schaufler extended his prebuttal when stating that continued delays to the rulemaking project would “not accomplish the Liquor and Cannabis Board’s legislatively mandated responsibility to Washington citizens to protect consumer health and safety.” He claimed that “the state-by-state legalization of recreational and medical cannabis remains overshadowed by its federal status and any risk to public health and safety in any of those legalized...states threatens legalized cannabis markets nationwide.” He noted Washington’s dubious status as the only legal cannabis state not mandating “pesticide and heavy metals testing for all adult-use products.” He speculated this could hurt the export viability of the state’s cannabis in the event of legalized interstate trade and assumed “if we are not prepared to meet quality standards in future destination markets, we will not be eligible to participate in those markets.” The call for pesticide and heavy metals testing for all products had originally come from the state’s own cannabis licensees anyway, Shaufler added, and after much staff effort expended such requirements were now deemed “necessary.”
    • Pesticide and heavy metals testing has always been required for medically compliant cannabis products.
  • Schaufler conceded that earlier comments had led to “minor revisions,” including an increase in testing lot size, which led to the supplemental version of the proposal. He declared, “To be clear, we have now delayed these rules an additional nine months” and extended the “full implementation” of testing changes until February 2022.
  • Lastly, Schaufler addressed the transfer of lab accreditation to the Washington State Department of Ecology, saying the agency had heard suggestions that rule changes wait for that transfer to conclude. He emphasized that “These rules concern marijuana product standards. LCB is statutorily required to establish and maintain those standards regardless of who performs lab accreditation...and regardless of what laboratory quality standards are adopted in the future.”
  • Following the hearing, the Washington SunGrowers Industry Association (WSIA) shared written comments its members sent to the agency along with a series of responses and reactions to Schaufler’s characterizations. The group also noted general difficulties some commenters had being recognized during the hearing.
    • WSIA Letter (Oct 19, 2020)
    • Ingredients (Oct 20, 2020)
    • Remediation (Oct 21, 2020)
    • SBEIS and Regulatory Fairness Act (Oct 26, 2020)
    • Business Model Change (Oct 28, 2020)
    • Equity and Systemic Racism (Nov 18, 2020)
    • Accessibility of Hearing (Nov 18, 2020)

• There was no love lost for the proposal as speaker after speaker asked for fundamental changes to the approach to testing for pesticides and heavy metals envisioned in the QC rulemaking project.
  • Micah Sherman, Raven Owner (audio - 4m). Sherman requested further delay on implementation of the rules “for a variety of reasons.”
    • Saying he was one of many to participate in the rulemaking project up to that point, Sherman felt that “everybody's done their best to contribute meaningful ideas." But he said his and others’ input had “largely been ignored and discounted,” and the resulting draft of rules would “dramatically increase the costs for me to operate.” He’d have to pay more or “change the way that I operate my business” in order to meet the rule’s standards.
    • Sherman called the inclusion of pesticide testing “incredibly important” but advocated for “harvest and farm-level testing that differentiates between allowable, disallowable, and heavy metals testing” as a better way “to effectively tell consumers that the products they’re buying are safe.” He felt the proposed rules had “not accurately incorporated what it is we need to keep consumers safe” in a way that was effective “at the farm level.”
    • Sherman suggested that “building a pesticide and heavy metals regime on top of a lot-level system” would not be “an effective way to show the analysis” for which licensees were paying. As written, he argued the rules would “exacerbate” the tensions between “small farmers and big farmers” who could more readily absorb the increased costs.
  • Anders Taylor, Walden Cannabis CEO (audio - 5m). Taylor said the rules were an example of "overreach by the LCB," and that chain of custody was a problem when testing self-selected samples. Nevertheless, he said that cannabis used fewer pesticides “than was typical of traditional agriculture" and produced safer products overall, despite the predisposition of some “bad actors to game the system."
  • Jade Stefano, Puffin Farm Co-Founder and CEO (written comments, audio - 4m). Stefano called the proposal "the most expensive way possible to test" for cannabis. She said her farm had received organic-equivalent certifications and proactively sought pesticide testing on everything they produced. The faults she saw in the rule changes included:
    • “Small and mid-sized producers” were likely to bear “the brunt” of any cost increases. Self-selection of samples would “fail to catch the most egregiously deceptive operators” as well, Stefano argued.
    • Pesticide use on cannabis cultivar mother plants or clones could still be missed by tests on “finished flower lots,” Stefano explained. She worried that employees required to use such pesticides could be endangered.
    • She believed that ten pound testing lots would “only help larger producers offset the additional costs and therefore further disadvantage smaller producers in an already cutthroat competitive environment.” Stefano added that heavy metal contamination hadn’t been seen on cannabis flower in states testing for it, but that heavy metals contamination was possible for vapor items “originating from the hardware.” Such testing, she concluded, should be implemented as “a scalpel, not an axe.”
    • Stefano called for testing farms rather than finished lots as well as greater testing of end products from retail stores.
    • See Stefano’s comments from the original CR-102’s public hearing.
  • Jessica Straight, Eagle Trees Co-Owner (audio - 2m).
  • Scott Berka Dreaming Green/Full Throttle Farms/Fresh Productions Owner (audio - 4m). Berka said four producer licenses were situated on his 97 acre farm where he’d tested his soil for heavy metals “and every type of soil contaminant.” He said that testing expenses were his business’s largest line item cost after payroll. As a result of this cost, Berka’s farm grew more of “fewer strains,” all of which were “grown in the same soil, with the same production program.” This was evidence, he said, that “five pound lot sizes need to be expanded to meet larger yields of the same strains that are grown the exact same way.” Berka also supported a third-party sampling system, as “not all owners feel it is their responsibility to provide the public truly safe and pesticide-free recreational cannabis.”
  • Joe Rammell, The Plant Factory (written comments, audio - 3m).
    • See Rammell’s comments from the August 2019 listen and learn forum.
  • Gary Green, Vancouver Weed Company (audio - 4m).
    • See Green’s comments from the original CR-102’s public hearing.
  • Bethany McMartin, Blue Mountain Organics Distribution (audio - 2m).
  • Stephen Jensen, Green Barn Farms Owner (audio - 2m).
  • Crystal Oliver, WSIA Executive Director (written comments, audio - 4m). Oliver conveyed that the proposal was “a long way off” from benefiting consumers or employees in the industry.
    • The “reliance on self-selected samples is incredibly problematic. An honor-based system will not allow the LCB to readily identify those who disregard existing pesticide regulations,” she argued.
    • One result of the proposal would be to “enrich the labs” doing testing by maintaining a small lot size, Oliver said, noting that other states with legal cannabis tested larger lot sizes. She felt “Washington will not be able to compete with other states on costs with this arbitrarily low lot size” and the proposal’s phased-in increase to a ten pound lot “does not efficiently mitigate the disproportionate impact these rules will have on small businesses.” Discussion on cost mitigation during a listen and learn session “seemed secondary,” Oliver stated, since “there were so many issues with the proposal” already.
    • She predicted “unintended consequences” for small businesses implementing the proposal, such as “decreased production of low [tetrahydrocannabinol] THC flower, decreased production of low-potency concentrates, and increased production of high-potency distillate at very low prices.”
    • Oliver asserted that the Regulatory Fairness Act didn’t require citizens “to provide comments in the form of regulatory language in order for them to be considered valid” as it would result in making “the rulemaking process inaccessible to non-attorneys.” She said, “we’re disappointed to see that the LCB uses this as one of the primary justifications for dismissing previous comments that have included outlines of proposed programs.”
    • WSIA recommended distinguishing pesticide and heavy metals testing from cannabinoid testing, Oliver added, with the former done “on a regular basis at the farm level and sampling should be done by a third party.” Heavy metals testing should “focus on soil and vape cartridges.”
    • She closed by proposing WSLCB create a committee “to assess the costs of the proposed rules and more effective means of reducing the costs for small businesses.”
      • Under the Regulatory Fairness Act at RCW 19.85.040(3), agencies can “survey a representative sample of affected businesses or trade associations and should, whenever possible, appoint a committee under RCW 34.05.310(2) to assist in the accurate assessment of the costs of a proposed rule, and the means to reduce the costs imposed on small business.”
    • See Oliver’s comments from the April and August 2019 listen and learn forums in addition to the original CR-102’s public hearing.
  • Gregory Foster, Cannabis Observer (audio - 4m). Foster highlighted a new cannabinoid testing requirement at WAC 314-55-102 (3)(a)(iii), which in an earlier version of the rule proposal stated that “any psychoactive cannabis derivative intentionally added to the formula of a product must be tested for potency, including but not limited to delta-8.” He noted the current iteration of the proposal had been modified to read “any psychoactive cannabinoids intentionally added to the formula of a product must be tested for potency.” Foster called the wording “very vague” and emphasized that he had been led to believe intentionality can be difficult to prove by WSLCB Enforcement and Education staff. In addition to it being “not really clear” what cannabinoids labs were expected to test for, he remarked that the agency’s goal was further muddied by comments from Policy and Rules Manager Kathy Hoffman that the agency was preparing an interpretive statement on delta-8 specifically. Foster also faulted the SBEIS, saying “the data that is actually being relied on to make the calculations is at issue, and not representative of the actual transactions that take place.” He wondered why the agency chose not to use information on every transaction in the 502 system available in the State’s “expensive” seed-to-sale traceability system to develop a better sense of probable impacts on smaller businesses.
    • See Foster’s analysis of the agency’s activities on delta-8 THC as well as his comments from the original CR-102’s public hearing.
  • Mark Ambler, Breeze Trees Owner (written comments, attachment 1, attachment 2, audio - 4m).
  • Jeremy Moberg, CannaSol Farms Owner (audio - 4m).
  • Jeff Merryman (audio - 2m).
  • Bart Ramsay, Cascadia Cannabis Company and George Washington Hemp Company (audio - 4m).
  • Royce Reed, Free Range Farms (audio - 3m).
  • Lukas Hunter, Harmony Farms Director of Compliance (written comments, audio - 4m). Hunter acknowledged the time agency staff had invested in the project and confirmed he was supportive of “some form” of pesticides and heavy metals testing that was both “effective” and “equal.” He called attention to WAC 314-55-102(3)(g) on “terpene testing” which was also in packaging and labeling rules at WAC 246-70-050(5), and asked if the proposal was “duplicative of what's in rule" already. Hunter felt overtesting botanical terpenes could represent “a burden to the industry.” He also indicated that WAC 314-55-102(1) asked for “testing on all constituents” in a cannabis product, and wanted a sense of whether “we’re talking about having flour tested? Sugar tested?”
    • See Hunter’s comments from the April 2019 listen and learn forum and the original CR-102’s public hearing.
  • Ryan Sevigny, High Tide Ranch Owner (audio - 5m). Sevigny told the Board he had participated in earlier outreach “to the extent that I’ve had the time” and worked with trade groups engaged with WSLCB on the rulemaking, in part, because he understood he lacked “the skill set to write draft language.” He took issue with Schaufler’s earlier assertion that only those who could draft alternative rule language could meaningfully contribute to rule development. Sevigny said Oliver’s comments “clearly articulated the main concerns from the farmers around the state.” He believed the proposal did “little to protect the consumers while maximizing the cost on us farmers...and dramatically increasing the revenues for the testing labs.” He joined with others who preferred a third-party sampling process as a way to “prevent some of these nefarious actors from participating in our system.”
  • Nicole Michael, Tier 3 producer (audio - 1m).
  • Sean Stewart, Fresh Kind Farm (audio - 3m).
  • Dave Varshok, BroCo Head Grower (audio - 2m)
  • Jim MacRae, Straight Line Analytics (audio - 4m).
  • Caitlein Ryan, The Cannabis Alliance Interim Executive Director (written comments, audio - 3m). “The complexities and history of quality assurance testing run deep,” Ryan stated, and described her group as “supportive of the themes and the comments” heard in the hearing. She said her organization had provided a survey and proposed rule language to agency staff, “however, our primary recommendation is broader in scope.” Ryan conveyed “apprehension” about the “scientific reliability of the proposed testing” and believed “product testing standards must be developed by dispassionate scientists and industry experts.” She advocated for “a detailed implementation plan that addressed the need for third-party scientists to develop product testing standards” as well as a “detailed timeline for a standards efficacy review.” Ryan said that the Alliance wanted an agency task force “of scientists and industry experts, along with stakeholders, to provide a defensible answer to the question, what product testing do we require to meet all the reliable standards for safe process.” While not wanting further delay, she was unable to “see a way forward without consulting non-stakeholder scientists and product testing experts.” Ryan expected continued “strife” around the testing rules unless WSLCB engaged “in a similar level of due diligence” as the Cannabis Science Task Force. 
  • Kelsey Taylor, Gorilla Gardens  (audio - 4m).
  • Tina Morelli (audio - 4m).
  • Hader Tureen (audio - 3m).
  • John Kingsbury (written comments, audio - 4m). Kingsbury said he was “very heartened by this presentation because safe and tested" cannabis was critical for medical patients like himself. He offered two recommendations that he’d previously shared with the agency “but they didn’t show up in the rules.” Following passage, Kingsbury anticipated WSLCB and other state agencies would claim "medical and recreational cannabis are the same now" and asked that the “floor for testing standards” meet “medically appropriate quality assurance.”
    • Kingsbury was concerned about mold levels, asking that “like other states, there be a minimum standard for mold testing.” He said other states had set mold levels at 10,000 colony-forming units (CFUs) but advised Washington’s levels be set at 50-60,000 CFUs. In his written comments, Kingsbury clarified the higher threshold “will make the number below the number established for every sample I tested in which a patient claimed that regulated cannabis was making them ill, while still preserving Washington’s tradition of setting a much lower standard for public safety than all other states.”
    • On neem oil, Kingsbury asked that WSLCB be looking at the oil and its “concentrates and derivatives,” stating that it was “not as safe as they say it is….especially when it's being inhaled.”
    • Kingsbury agreed "self-sampling is fraught with hazards" and even though it was “complicated to not do it that way,” he advised WSLCB to “not waste this opportunity by making a mistake like self-sampling.”
  • Others who signed up to speak were either unable to connect to the event or unavailable when invited to speak. They include:
    • Sabina Boehm, Glass by Sabina
    • Glenn Van Borbock
    • Vicki Eneas, Tier 1 producer
    • Lo Friesen, Heylo Cannabis CEO
    • Gregg Harrison, Str8fire Farms President
    • Mary Ann Kaufmann
    • Xavier Kelly
    • Alison Kutz, Sound Horticulture President (written comments)
    • Vincent Lee
    • Colin Lukey, Yield Farms Owner
    • Nolan Marchand, Pacific Land and Cattle Owner
    • Kevin Oliver, Washington NORML (written comments)
    • Jason Poll, Gorge Gold CEO
    • Ben Potter, A-Action Group Utilities Manager
    • Robert Saito
    • Clayton Sperry, Gorge Gold Owner
    • Shawn DeNae Wagenseller, Washington Bud Company Co-Owner (written comments)
    • Teri Tai, Topp Valley Growers
    • Steve Walser, Buddy Boy Farm President
    • Jeff Wilhoit, Puffin Farm
  • Additionally, several people who did not participate in the webinar sent written comments to WSLCB:
    • Vicki Christophersen, Washington CannaBusiness Association (WACA, written comments)
    • Pat Dullanty (written comments)
    • Frank Fauls (written comments)
    • Micaela Wakefield, Double Delicious Co-Owner (written comments)

• During general public comment, speakers addressed the agency’s continued backslide away from transparency and cannabis testing lab options in the state.
  • Foster raised the topic of transparency with the Board. While sympathetic to the challenges of adapting “to a purely digital context,” he was “sad to see...that we are still not privy to the information that’s provided within the Executive Management Team meetings.” Foster spoke to the Board on July 8th about the absence of the meetings, subsequent to which Board Chair Jane Rushford committed to hosting public meetings of agency leadership once a month. While the agency did convene one information-rich EMT meeting on September 16th, in the months since he said “we still haven’t seen that.” Foster explained that “in order for your stakeholders and the public to be meaningfully engaged we need good information about what the Board is thinking and doing.” Foster added that the EMT gatherings were “the best places for that to happen because that is where you are interacting with staff directly” and were “holding them accountable.” In their absence, and with the “terseness with which the board caucus meetings have been conducted lately” Foster warned “people fill in the gaps with...well, without that information” (audio - 4m).
    • In the November 16th Week Ahead, Foster stated that “the last 8 regularly scheduled EMT meetings have been cancelled. Although still listed as a weekly event, the Board had indicated these meetings would be hosted monthly through the end of the calendar year. At publication time, the EMT last convened on September 16th after a 7-month hiatus, did not meet in October, and had met 4 out of 47 possible occasions in 2020.” Subsequent to that writing and prior to Foster’s testimony, the Board had cancelled the two remaining EMT meetings in November.
  • MacRae believed there was “something not working” in the arena of “informed consumer safety” if “the real core focus of the LCB is supposed to be concerning itself with consumer safety, public safety, presumably a degree of health.” Addressing Schaufler’s claim that “the choice of the lab is up to the licensee,” he assumed WSLCB wasn’t using the “incomplete” but extensive information provided through Leaf Data Systems. Whereas MacRae had used the data to observe “a dramatic concentration” of licensees “going to a handful of labs” for product testing, resulting in five labs handling “almost 75% of the testing volume in the state right now.” He further noted that four of those labs had “significant history with the LCB’s oversight of the certification of the labs” and two of the labs had been previously sanctioned by the agency for “egregious inability to, you know, fulfill the mission of having their lab testing efforts be a downstream assurance of consumer safety.” MacRae also said that two years of the agency’s own random testing with the WSDA found 228 instances of “products taken from farms or processors failed pesticide testing” without “a single product recall” ever taking place. He said other testing found between 25-35% “failure rate for pesticides when you look at product that’s taken from the shelves” of 502 retailers, a likely reference to Uncle Ike’sOK cannabis testing program. MacRae concluded that “the current status of the market is not protecting consumer safety” and asked the Board to put an “emergency testing protocol” in place until pesticide testing was required (audio - 4m).