WA House COG - Committee Meeting
(November 30, 2020)

Here are some observations from the Monday November 30th Washington State House Commerce and Gaming Committee (WA House COG) work session.

My top 3 takeaways:

• Washington State Liquor and Cannabis Board (WSLCB) Director Rick Garza led the agency’s presentation to lawmakers with a summary of the agency’s response to the COVID-19 pandemic including temporary allowances.
  • WA House COG members and staff present included:
    • Strom Peterson, Chair
    • Shelley Kloba, Vice Chair
    • Drew MacEwen, Ranking Minority Member
    • Kelly Chambers, Assistant Ranking Minority Member
      • Chambers is the House Republican appointee to the Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis).
    • Melanie Morgan
      • Morgan is the House Democrat appointee and elected Co-Chair of the WA Task Force on Social Equity in Cannabis.
    • Brandon Vick
    • Jesse Young
    • Peter Clodfelter, Committee Counsel
  • WSLCB leadership in attendance:
    • Rick Garza, Director
    • Justin Nordhorn, Chief of Enforcement and Education
    • Chris Thompson, Director of Legislative Relations
  • Peterson said that, in light of the continuing pandemic, members wanted to hear from state agencies about “significant regulatory issues” or ”legislative priorities.” He explained that lawmakers were attempting to stay informed about challenges “so we can all better prepare ourselves for decisions we might have to make.”
  • Garza began the WSLCB presentation on “our response to COVID-19” including “enforcement actions,” the agency’s progress implementing legislation, and “a cannabis policy update” (audio - 11m, video).
    • Regarding COVID-19, Garza said the agency’s “incident response team” included “our management team and Board Chair [Jane Rushford].” That group made many “critical decisions” which formed WSLCB’s response such as “a newly remote workforce,” he stated. WSLCB staff had been provided with resources and surveyed multiple times “to see how they’re doing” since the outbreak began.
    • Externally, Garza said WSLCB created web pages describing temporary allowances to support businesses. Garza noted that WSLCB made “immediate allowances” because “our priority was to help the struggling industries.”
    • Enforcement Officers had worked with the Washington State Emergency Operations Center (EOC) at Camp Murray “to respond to issues and complaints that come in.” Additionally, the agency had “suspended our compliance checks with minors,” he reported.
      • At publication time, the most recent statistics on compliance checks for cannabis sales to minors were offered during the WSLCB’s September 28th presentation to senators and the agency continued to hire Investigative Aides.
    • In the Licensing Division, Garza said the agency had “immediately expanded our customer service desk” and set up a “triaging system” for incoming questions and policy complaints from licensees.  He commented that resources in the division had been moved to “expedite these requests from our licensees.”
    • The agency shared guidance to licensees from other state agencies and found many of their licensees had been in one of the hardest hit sectors, hospitality. Garza pointed to Washington State Department of Commerce data showing the state’s construction industry was at about 80% of “where it was before COVID.” In contrast, the state’s hospitality sector had only reached 30% of prior business activity. “Probably the hardest hit industry has been the hospitality industry and the industry that we regulate,” Garza told the committee.
    • “We are currently working with 19 cities to find ways to allow outdoor seating and shared space,” Garza said. The WSLCB collaborated with local governments to permit seating allowances to keep restaurants and bars open. The agency established a COVID Legal/Policy/Rules team to develop responses to some issues. He elaborated on the agency’s support of the alcohol industry, such as curbside service and delivery, allowances which have come under scrutiny from substance use prevention advocates.
  • Garza addressed the cannabis industry which had “remained open...because that’s the only place you can legally obtain cannabis.” One allowance permitted minors to be on the premises of licensed producers, an acknowledgement of abruptly limited childcare options, he explained. Garza noted curbside or window retail sales had been allowed as well as relaxing “some of the timelines” for transportation due to wildfire activity (audio - 2m, video).
  • Lawmakers had several questions about the impact or nature of the agency’s temporary rules or policy changes.
    • Kloba wanted to know how allowances had impacted checking customer IDs (audio - 2m, video). 
    • Chambers asked about the number of licensees “going out of business” (audio - 1m, video) and license type transitions (audio - 2m, video).
    • Morgan inquired about WSLCB’s reduced processing times in the Licensing Division. Garza clarified expedited processing had occurred for alterations to existing business licenses so they could resume service. Morgan wanted to know whether this acceleration would be available “when we need those 35 licenses” for cannabis equity applicants. Garza responded that alterations moved quicker in part because the business was already licensed and that it was “an entirely different process to be licensed if you’re not already licensed with us” (audio - 2m, video).
    • Vick had a question about codifying temporary allowances that legislators felt “would be good laws,” and asked if the agency had “really seen any problems” stemming from the changes. Garza responded that the “prevention community, law enforcement have expressed real concerns” about allowances like mixed cocktails being served to-go. Nordhorn said the agency had partnered with the Washington Association of Sheriffs and Police Chiefs (WASPC) to survey law enforcement for opinions or “demonstrated issues” on each allowance. The results showed that while concern about safety remained high, “tangible evidence” of a “problem at this time” based on received complaints and officer observations was low (audio - 5m, video).
      • Vick’s House Biography noted that he was designated a “Legislative Hero” by the Washington Hospitality Association (WHA) in 2017.
    • MacEwan praised WSLCB’s efforts and offered remarks around flexibility for space allocation (audio - 2m, video).
      • MacEwan’s legislative biography indicated that he owns Smoking Mo’s in Shelton, an alcohol licensee offering “CURBSIDE TAKEOUT ONLY DUE TO CURRENT MANDATE, Until restrictions are lifted by Wa State.”
      • MacEwan was also listed as the owner of The Dock Bar and Eatery in Port Orchard, whose most recent Facebook post stated, “Don't forget about us we are here waiting to serve you with all your favorite Dock menu items and cocktails, wine, beer to go (GROWLERS in tomorrow)! AND we can't wait to have you hang out with us when dine in returns”

• WSLCB Chief of Enforcement and Education Justin Nordhorn gave an enforcement review centered on the division’s coronavirus response.
  • Nordhorn spoke to “enforcement impacts and some of the issues that we’ve been looking at and dealing with throughout the pandemic” (audio - 12m, video).
    • Nordhorn said the State had received “about 7,500 complaints” at EOC, of which he estimated WSLCB handled “13% of the total complaint load.” He noted about “51% of all the complaints” were “mask related” followed by issues around social distancing frequently directed at bars. Nordhorn conveyed that complaints had recently shifted towards businesses ignoring service or crowd limits. He said Enforcement Officers’ first step in these situations was a notification and request for compliance, and then “follow up checks if necessary.” He added that public “perceptual issues" meant a majority of complaints went unsubstantiated.
    • For businesses with numerous complaints which had been followed up on, officers still performed “onsite visits.” Nordhorn reported that as of that morning the division had issued “about 390 formal corrective actions” which went “beyond education.” However, only “29 tickets have been written since March,” he observed, and only one business saw an emergency suspension following “multiple violations.”
      • WSLCB also issued an emergency suspension to an Olympia vapor retailer on October 29th.
    • Nordhorn brought up implementation of SB 5318, a WSLCB enforcement reform law passed in May, saying they had worked with licensees and stakeholders to reform cannabis penalties and on “the development of the [Voluntary] compliance notice-to-correct program” adopted on September 30th. To date, he said staff had observed “really good compliance from that approach.” The agency was also moving forward with hiring non-commissioned and unarmed “education personnel” for cannabis, Nordhorn confirmed, something first noted by Garza on October 12th. Nordhorn anticipated the first such “consultants” would be working “by December 16th.”
    • For external outreach, Nordhorn indicated the Division's online resources had improved and the agency collaborated with cannabis trade groups to “curb mass volumes of people coming on April 20th...and it was actually very successful.” He noted the agency hosted educational webinars providing guidance to cannabis licensees on April 13th and May 21st. In general, Nordhorn said the cannabis industry had received “very few complaints on the COVID-19 issue” compared to restaurants and grocery stores, and he called the cannabis sector “very responsible in this manner.”
    • Nordhorn acknowledged reduced premises checks since the pandemic began in part due to staff vacancies “as we’re trying to convert some of the officer positions into the non-commissioned staff members.” He described “about 26,000 contacts, almost 27,000 contacts since March” and officers had “contacted almost 45% of all our licensees across the state.” Nordhorn added, “16,000 of those visits have been in-person.” Product seizures were down, he told lawmakers, though the agency continued to partner with local law enforcement to police “unlicensed grows.”
  • WA House COG members asked for elaboration on several points. 
    • Morgan wanted to know if the agency had learned or applied lessons from their outreach engagement to communities of color, “and if not, do you plan on addressing those things that you heard” (audio - 6m, video).
    • Young asked about “stats of complaints that were made” and how WSLCB dealt with sources of “blatant misinformation” (audio - 5m, video) as well as the “volume of complaints” received and how complaints could impact a licensee (audio - 3m, video).

• Director of Legislative Relations Chris Thompson talked about the agency’s implementation of laws, shared revenue data, and announced that WSLCB was drafting agency request legislation around certain allowances.
  • Thompson began by outlining activities at WSLCB undertaken in response to enacted legislation (audio - 14m, video).
    • He said the agency was focused on implementing HB 2870 despite delays in the formation and convening of the WA Task Force on Social Equity in Cannabis. Thompson noted equity efforts in other states included laws expunging or vacating cannabis convictions, while Washington had passed SB 5605 to narrowly address misdemeanor convictions - so the state had “an initial step in that direction already.” Though the agency’s BIPOC engagements included public perspectives that were “hard to hear,” he felt staff had taken the input seriously and were looking at, “in the short term, what could the agency do...to respond to the concerns that came forward.”
    • Considering tax revenue, Thompson established that “there were some impacts” on the industries WSLCB regulated. He said beginning in May “there’s a 44% [year-over-year] increase” in sales of cannabis whereas “prior to COVID, it was in the low double-digits range.” Sales hadn’t increased as sharply as in the spring, but continued growing in recent months, Thompson explained. A similarly “significant increase” in liquor sales had also occurred despite limited service by restaurants and bars.
    • Thompson announced WSLCB had a legislative agenda for the following year. He said that, “a couple of weeks ago," staff started discussions “with the governor’s office” and agency leadership to craft legislation “around allowances that have been granted temporarily since the pandemic hit.” Thompson reported that “more than a dozen allowances" for alcohol licensees were being considered for “permanent status” in law. Staff were still looking at “parameters” for the allowances and any “fiscal impact on our agency to implement” them.
      • On July 9th, Garza cast doubt on any request legislation coming from WSLCB.
      • Thompson did not indicate any cannabis policy allowances were being considered in the agency’s request legislation. It’s Cannabis Observer’s understanding that the WSLCB Policy and Rules team undertook an evaluation of all temporary allowances to distinguish ones which would require statutory change versus regulatory change, the latter of which could be within the agency’s authority to encode via rulemaking.
  • Peterson inquired about cannabis sales data (audio - 1m, video) and praised the panel for WSLCB’s “very proactive and very helpful” work since the pandemic outbreak began. He recognized a “culture change” at the agency that was “very apparent” even as “tensions are high in some places” (audio - 2m, video).
    • Peterson may have been referencing a November 24th incident during which armed WSLCB enforcement officers were thwarted from closing a Kennewick bar violating temporary restrictions by a crowd of customer “freedom fighters.”
    • Peterson’s legislative biography shows he owns The Cheesemonger’s Table in Edmonds, an alcohol licensee currently open “for TAKE OUT and Curb-Side Pickup!”