WSLCB - Board Caucus
(January 12, 2021)

Here are some observations from the Tuesday January 12th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus meeting.

My top 3 takeaways:

• Nearly 30 months had passed since the Board’s last session setting their long term priorities for the agency, and board members summarized their impressions of WSLCB accomplishments in that time.
  • Paul Dziedzic, Owner of Paul Dziedzic and Associates, last facilitated a planning session for board priorities in July 2018.
  • Outgoing Board Chair Jane Rushford talked about delays since the last planning session beginning with the agency transition to new headquarters in 2019. The Board “moved [the next planning session] to the early part of 2020” before postponing to focus on the coronavirus pandemic. She viewed the agency as having stayed “very much on point” and was grateful for “all that we’ve been able to do together” (audio - 1m).
  • Dziedzic facilitated a review and invited board members to share “reflections” on their accomplishments since 2018 before looking at each priority individually. They then looked to “priorities ahead” focused on “supporting the transition to a new board chair” (audio - 3m).
  • Board Member Ollie Garrett said that she found the Board to be “great together” and WSLCB staff possessed a “willingness to start looking at things and not doing things just because we’ve never done them before or ‘this is the way we’ve always done it’.” The agency remained a “work in progress.” She spoke to staff efforts to “be creative” as well as “more proactive” around “the things that we can do as an agency” such as assisting licensees with business operations impacted by the pandemic, even making allowances she called “risky.” Garrett hoped “looking at things through a different lens” would continue at WSLCB and “instead of immediately saying no,” staff would “see how we can get to a yes” when possible (audio - 3m).
  • Board Member Russ Hauge remarked that a “major accomplishment” of WSLCB had been to “sustain an agenda in addition to just keeping the balls in the air while we’re dealing with COVID and everything else.” His “number one” priority was “helping the businesses that we regulate get through this terrible tragedy.” Hauge recognized the agency had still found time for “fundamental reforms” like “establish[ing] a culture of ‘why not?’ rather than ‘no’” and a “dramatic” example of this was the agency’s enforcement review and the resulting reforms. “This board, under Jane’s leadership, really decided that we’re going to carve out a different path in that part of our relationship with our regulated customers,” he said, and “progress is being made” (audio - 2m).
    • Director Rick Garza outlined enforcement reforms for lawmakers in January 2020 and provided an update for WSLCB leadership in September 2020. Chief of Enforcement and Education Justin Nordhorn, who is transitioning to another leadership position, most recently provided details on the agency’s enforcement changes during the January 6th Cannabis Advisory Council (CAC) Meeting.
  • Rushford felt the “resiliency that we’ve seen in the agency” was “remarkable,” and that agency employees responded to the pandemic with “creativity, collaboration, and...commitment” to doing everything “possible and reasonable within the context of public safety” to assist the hospitality industry. She was satisfied that board communication continued even if it was “different,” and called attention to the many changes in cannabis regulation including “penalty restructuring as well as compliance orientation” which took effect in 2020. She credited hundreds of rules passed during her tenure as a sign of “commitment and time” by staff and improved stakeholder engagement led by Policy and Rules Manager Kathy Hoffman. Hauge and Garrett were in agreement with Rushford’s perspective, with Hauge adding Garrett’s role on the Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis) revealed there remained “a lot of work to do” while at the same time “represent[ed] a step forward.” Garrett said her involvement on the task force was “interesting work, and it's been very informative on things” (audio - 5m).

• The Board reviewed progress around their 2018 priorities: medical cannabis, business support, enforcement consistency, and “inclusion for future issued retail licenses.”
  • Medical Cannabis Access (audio - 5m). “Help create more reliable access to medically compliant products including a vehicle for providing solid advice to potential patients,” was the first priority the board articulated in 2018. Dziedzic asked, “thoughts on that in terms of an area of accomplishment?”
    • Hauge noted this priority was something he had “tried to focus on as a board member” which had left him “not discouraged, but disappointed in our progress on this.” He said WSLCB shared the blame with other regulators, citing “standards by the [Washington State] Department of Health (WA DOH), the realities of a marketplace, the fact that our tax structure” created a “substantial burden” on patients in the form of an excise tax of 37% “that other states don’t impose.” Hauge also found significant time was being spent on the agency’s cannabis testing expectations in the Quality Control (QC) Testing and Product Requirements Rulemaking Project and that more time and effort was needed “before we can say confidently that our approach is one that’s really going to benefit the industry.” The main success for the priority, he felt, was to “identify how complicated this problem is” and that WSLCB “needs some more tools if we’re going to attack this.”
      • WSLCB staff have been planning more outreach events on QC rules.
      • SB 5004, legislation “Providing a tax exemption for medical marijuana patients” was introduced by Senator Karen Keiser after she voiced an interest in removing the tax in November 2020.
    • Rushford was in concurrence on the work ahead, saying the “quality control effort” needed broad engagement “to make that work turn out well.” Ollie agreed testing rulemaking had been “a slow process so far.”
    • Dziedzic acknowledged the broad responsibility being handled by several agencies and the need to partner with them while keeping in mind “what LCB’s role was and wasn’t.” Rushford commented that 2018 was when she first expressed interest in bringing state agencies together for Cannabis 2.0, the development of a different approach to cannabis regulation. Early discussions were “very productive” but she hadn’t been able to pursue that collaboration in 2020, efforts Rushford hoped to “rekindle as we move into the year ahead.”
  • Help Businesses Succeed (audio - 7m). “Identify what role the Board could play in helping businesses be successful as businesses” as well as the “steps to start,” was the next priority identified by Dziedzic. He noted that the Board was concerned about this before the pandemic but its importance had expanded as businesses were impacted by restrictions.
    • Rushford clarified that the priorities had been focused on the cannabis industry but understood that the “enforcement work applies in the overall” and that WSLCB staff sought ways “maintain a degree of business during the pandemic.” She added that the “new normal” for the industry remained unclear “and we want to be resilient and responsive to what can help” even if that included “new allowances, possibly.” Regardless, Rushford indicated “commitment to that which is always our priority, public safety.”
    • Hauge’s perspective was that while the suggestion had been “targeted at the cannabis industry” the Board had worked on it “generally” and felt that had made a difference for the “day to day business of running a restaurant or something like that.” His recommendation was to maintain that emphasis and not allow WSLCB to “be a rock in the road” when it came to business success. Moreover, Hauge said the Board “have something to do for all our regulated businesses to help them be successful.” While business allowances have been “very helpful,” he argued, “people are still hurting.”
    • Garrett said that this “should always be a part of what we want to do” as a board, but highlighted this priority had affected “litigation and cases” which were getting a “harder look at.” In addition, “creating an Education division within Enforcement to go out and work with the cannabis” industry to help bring licensees into compliance had been a positive step. She said that leadership in Licensing and the Enforcement and Education divisions understood this and were taking a “a second look” when problems arose.
  • Enforcement Consistency (audio - 3m). “Promote...consistency in enforcement both in terms of seeking and prosecuting violations and supporting licensee’s efforts to get into compliance and maintain compliance” was the next priority, Dziedzic said.
    • Hauge responded that enforcement was “an area of effort that we’ve opened up” even though “it’s not done, but we’re making progress.” He called the reforms “substantive and real,” saying that even “in those worst cases” of emergency suspensions, “I would like to think that we’ve still managed to include an element of rationality in that discussion” and he hoped it would continue.
    • Rushford said the “new team” in the Enforcement and Education division included non-commissioned educational officers who would use an “alternative approach” to some problems. She anticipated it would be “really successful.”
  • Inclusion for Future Licensees (audio - 3m). “Develop a plan of inclusion for future issued retail licenses,” was the last priority Dziedzic had noted in 2018.
    • Rushford observed the WA Task Force on Social Equity in Cannabis was “certainly supporting that objective.” She believed cannabis retail title certificates were one way to “assist in areas where equity was not as easily achieved” due to local restrictions outside of WSLCB’s “purview.”
      • The task force last met in December 2020.  On January 5th, Garrett suggested the task force would next convene on January 14th, but a meeting was not announced.
    • Garrett said that aside from the task force, WSLCB had hosted several community engagements centered on equity and inclusion which benefited staff consideration of “things that the task force may come back to us with” regarding the agency’s equity program. The advanced prep was yielding results like “contacting all of municipalities that have bans and moratoriums” on cannabis businesses, she explained, to learn “what’s their challenge right now” in the hopes that the jurisdictions remove those obstacles. Garrett then indicated that agency staff were preparing for “what we can be doing” ahead of task force feedback.
  • Cannabis 2.0 (audio - 2m). Dziedzic brought up the campaign for collaboration among cannabis regulating entities in the state which Rushford kicked off in September 2019 by mentioning the meeting notes from an internal meeting on the initiative in September 2020. Rushford said the board priorities had been “part of that discussion” with the internal group as well as “the relationship work that we do on an ongoing basis with all of our licensees, stakeholders, with the tribes, with other agencies. That is just the richest place to invest.” Thankful for the progress, Rushford deemed relationship building something the Board should “continually commit to.”
    • The most recent discussion about Cannabis 2.0 was in December 2020.

• The end of Rushford’s tenure and the transition to a new board chair was the centerpiece of the group’s 2021 planning as a new appointee was expected at the agency in a matter of “weeks.”
  • After acknowledging Rushford’s departure, Dziedzic suggested a conversation around “transition of the board chair” and what Rushford and the current board wanted to communicate to a new chair. He said that as a priority for the group, he wanted Rushford to “share some thoughts” on her experience as chair for a “handoff to the new board chair” and then for Garrett and Hauge to add their input “for Jane to consider including in her thoughts” (audio - 26m).
  • Rushford said she’d had an “opportunity to talk with a few folks that are being considered” for appointment by Governor Jay Inslee. “I’ve talked with two already,” she continued, “and we will not be discussing any policy,” rulemaking, of “any content like that, but rather, how do we work... How are we structured, and what is the process that we follow.” Rushford knew her successor would bring “fresh ideas, that’s the advantage of a transition like this. But I think we have some things that work really well and I’ve emphasized that.” She said this included the “schedule that we have, and our commitment to that, seems to work pretty well” as well as the “restrictions of the board...for example if two members are together that’s a quorum.” Rushford’s conversations would end once a new chair was appointed, but she was taking a “chance to walk through much of what we’ve done, to look back on” her tenure’s “highlights and successes” such as 460 rules passed since she joined the board in 2015. She cited work with stakeholders and advisory groups like the CAC and the Alcohol Advisory Council as things “subject to modification and reconsideration” although the cooperation was “well regarded by the people that participate.” Rushford asked for feedback on other things her successor should be aware of as the Board’s work moved “to a post-pandemic environment that will, that will shape differently.” She had been sure to communicate that the position was a part-time job, as one applicant believed “it was a board assignment” not realizing “we actually have jobs in these roles.”
  • Hauge spoke up to say Rushford’s last point would be “the most significant to somebody coming in.” He and Rushford had been appointed to WSLCB around the same time and “between us we didn’t have a whole big picture of what was going on” but whoever joined the Board would need to appreciate “that this is a job. This is not a ceremonial position where you sit around with like-minded people once a month” to talk. “We’re actually charged with some significant responsibilities,” Hauge noted, “and how we exercise those...is very significant to a large segment of the population. And we have a lot of authority to screw things up and we’ve got to be very mindful of that as we go forward” because “everything has a lot of consequences.” Garrett agreed on the importance of communicating that WSLCB was “a working board.”
  • Rushford said that when she and Hauge came to the Board in 2015 “the Board met every week.” After observing the process, the Board chose to “go to every other week, and it worked beautifully” as it granted the agency’s Policy and Rules staff more time. The change “actually sped up our rulemaking activity,” she remarked. Also, the agency “cut back on a number of other exercises” such as litigation review, she commented. While board members used to receive “books that had all of the documentation in them,” Rushford noted that members now “get the files in advance, we review them, we come into the meeting ready.” This freed up more attention for cannabis issues, she added, and now there was a “maturity of that effort and [time to] find ways to make it even better.” Rushford credited the board’s staff.
  • Hauge remarked that changes to WSLCB rulemaking were one of the “major innovations” that the agency “backed into here,” as their team had grown to include “a very competent supervisor” in Hoffman, and two Policy and Rules Coordinators, Casey Schaufler and Audrey Vasek. This development had “rationalized a process that” appeared to be “catch as catch can” when he came to the agency. Hauge felt the agency “cannot let this slip” as they’d become “a more responsive rulemaking body now.” Rushford said board meetings used to feature “a lot of testimony” but that “now when we get to the public hearing people have been heard” and there was less testimony. She felt this indicated that “all parts that can be considered have been, and I’ve really appreciated that.”
  • Rushford said another commitment the Board had made was “to work with the department” to “leverage” experience from the staff who now “feel comfortable with the board” as well as keeping everyone “informed.”
  • Executive Assistant Dustin Dickson shared the importance of emphasizing the working nature of the board. He handled “employee orientation” and told new hires that members were “very active” at the agency and with stakeholders. Rushford noted she and Dickson were evaluating the use of WebEx to host the agency’s virtual meetings along with Chief Information Officer Mary Mueller “to be as accessible to our stakeholders as possible.” While meetings had seen “lots of participation,” some individuals still couldn’t connect, despite “a lot of work” by Dickson, she told her colleagues.
  • Looking at teleworking by the agency, Rushford expected that a nationwide “cultural shift” was underway “in the way we work” and recommended the agency “take a look at the real estate footprint and contemplate whether we can shrink that” as it was the “second largest expense next to salary and benefits.” She expected agency staff needed “to be more fully back” before that could be sufficiently gauged. Additionally, Rushford and Dickson were creating “an org[anizational] chart for the office” and other “reference tools that might be helpful.” However, “I believe that transition belongs to the three of you,” she said, indicating that she would watch “from the sidelines” to see any “process improvements.”
  • Asked by Hauge when to expect the naming of any replacement, Rushford said that it would be “a few more weeks” as she was still talking with the Governor and his staff about the appointment, but the Governor’s office had “many moving parts” at the moment related to other issues. She stressed that her departure was not “because I’m unhappy” but rather she felt “six years is...an amount of time that, that means something and I hope that my impact has been positive.” It was “time for someone new.”
  • Hauge stated he appreciated meeting with his predecessors before joining WSLCB and asked if it would be possible for him and Garrett to meet with an incoming chair before their appointment. Rushford promised to check but agreed it was a common practice “before someone is official” on the board “so long as, again, there isn’t a discussion about specific orders of business.” 
  • Calling attention to the newness of the cannabis market in 2015, Hauge said “we were making it up as we went along” and the agency was currently at a point that was “not perfect but not bad.” He viewed WSLCB as being beyond the point where “we’re making it up as we go along anymore, we’ve got a foundation to build on.” Rushford agreed that “we’ll always be refining” but that significant progress was achieved after a “challenging time for everybody in the department.” She anticipated the Board’s “conversation will be richer with a new chair.”
  • Before closing the meeting, Rushford noted prevention advocates were valuable stakeholders for WSLCB whom she’d “attempted to stay connected” with. She hoped that Public Health Education Liaison Sara Cooley Broschart and the Board would continue outreach as prevention advocates were “really learning how to work with us and they’re participating more and more often” (audio - 1m).