WA SECTF - Work Group - Licensing - Public Meeting
(June 30, 2021)

Wednesday June 30, 2021 9:00 AM - 12:00 PM Observed
Seal of the State of Washington

The WA SECTF is standing up work groups to assist with developing recommendations. The Regulation of Cannabis Production Work Group (WA SECTF - Work Group - Production) was established to develop recommendations regarding shifting oversight of production licensees to the Department.

https://healthequity.wa.gov/...Meetings/SocialEquityinCannabisTaskForce/August25

Observations

A presentation on the state medical marijuana program and confirmation of ongoing rulemaking for medical consultant certification preceded several questions by work group members.

Here are some observations from the Wednesday June 30th Washington State Legislative Task Force on Social Equity in Cannabis Licensing Work Group (WA SECTF - Work Group - Licensing) Public Meeting.

My top 3 takeaways:

  • Work group members were briefed by DOH Medical Marijuana Program Manager Allyson Clayborn on the department’s responsibilities to patients, caregivers, and medical practitioners (audio - 10m, Chat Log, Recognition Card County Map).
    • Clayborn reported that she’d replaced Shelley Rowden as program manager in January, and had a “program assistant named Reem” Aldaghestani as well as general DOH “support staff.” She relayed that the goals for the program were to “protect access for patients with qualifying conditions, ensuring product is safe, quality tested, accurately labeled.” She then described “three big things” which defined the program.
    • Patient Database. Patients choosing to register their authorizations in the database were afforded extra privileges in law, though Clayborn emphasized patient participation was voluntary “unless the patient is under the age of 18.” She told work group members patients could purchase from “about 286” cannabis retailers with medical endorsements without paying local sales taxes, possess greater quantities of cannabis products, had protection from arrest, could participate in a patient cooperative to collectively grow medical cannabis, or cultivate “up to 15 plants” themselves with their doctor’s approval. Patients and cooperatives could “purchase immature plants, clones, and seeds” from licensed producers.
    • Medical Marijuana Consultants. Clayborn explained that DOH certified consultants worked at endorsed retailers assisting patients by registering them into the database, issuing recognition cards, “and they can help with product selection.” Consultants completed “20 hours of training from a state-approved course” and were required to have completed cardiopulmonary resuscitation (CPR) training, and continuing education post-certification, she reported. As of April 2021, there were “583 certified consultants” and 574 were actively employed by an endorsed retailer.
    • Compliant Cannabis Products. “Higher quality products” specifically for medical patients had to pass stricter testing requirements, Clayborn stated. Perhaps unintentionally, these products were therefore "very hard to find in stores" and "expensive to make, the testing is very expensive." She expressed her intention to raise consultant awareness about the benefits of compliant products, “how to explain it to patients, and then where, where it can be found.”
    • WSLCB staff were responsible for the addition of medical marijuana endorsements to retail licenses.
      • Clayborn shared a map of endorsed retailers registering patients between October 2020 and March 2021, and described how it had been used to “identify some of the areas where medically endorsed stores exist but that they’re not using that endorsement.” She was planning outreach to endorsed stores not registering patients to refresh staff on “what it means to be medically endorsed and that they understand the patient community that they’re serving.”
      • Of 286 endorsed retailers, Clayborn told the group that only “about 157...are active stores” with at least one consultant on staff and having issued a recognition card, leaving around “129 medically-endorsed stores that are not actively using that medical endorsement.”
    • Clayborn commented that the rulemaking process at DOH was “incredibly long...a year, easy” and active rulemaking was focused on “trying to...correct some of the knowledge gaps that are existing right now...between the medical marijuana consultant and the patient.” She said that ongoing rule revisions aimed to ensure consultants were “well trained, that they know their products, they have a better understanding of the patient community that they’re serving.” Clayborn expected DOH staff to facilitate “annual training” to help consultants stay “up to date with the rules and regulations.”
  • Members of the work group and public raised several questions about medically compliant products and retail endorsements.
    • Work Group Co-Chair Michelle Merriweather inquired about the availability of compliant medical cannabis items. Clayborn admitted there were issues of availability and that retailer “awareness just isn’t there of what DOH compliant product is” and “who the patient community is.” She added that it was possible the cost of items was “off putting” (audio - 1m). 
    • Work Group Co-Chair Monica Martinez asked how patients were procuring medical cannabis, wondering if “it’s hard to get patients into the stores ‘cause the product’s so much more expensive...where are the patients getting their product?” Clayborn speculated patients were “just using any, any product” as compliant product was “hard to find and I think that there’s not enough knowledge about what it is and how it can help.” She assumed most patients used whatever cannabis items “they feel like is working best for them” (audio - 2m).
    • Micah Sherman, work group member and Raven Co-Owner, asked Clayborn her opinion of “the advantage of a DOH compliant product for a patient” (audio - 2m).
      • Clayborn stated that while she wasn’t a medical cannabis patient, she would “want my medicine to be...clean" in order to “be aware of what I’m putting into my body.” She continued, saying the presence of “pesticides or certain chemicals that can exasperate certain symptoms” would concern her, “and I feel like patients have indicated the same.” Clayborn hoped awareness about compliant products would increase so patients “have all the information that they can to make the best choices for themselves.”
      • Sherman wondered if producers “self-selecting samples for that testing is, is a sufficient way to make a claim that that product is safe for patients?” Clayborn said she was unaware of testing protocols and that her position at DOH wasn’t “part of that work.” Sherman responded that Raven didn’t participate in the DOH medical cannabis program as he found it “fundamentally flawed in its construction and has little to no value for patients” he’d interacted with beyond getting “that certification card so they can buy plants.” He wanted to see reforms in the program to address things that “disincentivize us as producers” as his impression was “that it doesn’t provide a lot of value for patients” .
      • Sherman’s company produces cannabis products including a range of CBD cultivars and blends.
    • Paul Brice, Happy Trees Owner, asked about the tax exemption process for endorsed retailers (audio - <1m). 
    • Paul Jackson offered gratitude to Clayborn for a prior presentation to another group (audio - 1m).
    • Gregory Foster, Cannabis Observer Founder, asked about “the designation for the different levels of product.” He presumed Clayborn knew about the long-running Quality Control (QC) Testing and Product Requirements rulemaking project at WSLCB which would “impact the, the definition of testing of products” including possibly achieving “parity with the DOH definition.” Foster was curious if Clayborn was “anticipating that or looking at that” and what could happen to DOH’s definition “if they’re the same” as WSLCB standards for all cannabis items. Clayborn replied that she’d been in communication with WSLCB staff and the DOH definition of compliant products was intended “to serve the patient community, and if that needs to adjust...we’re ready to do that.” Foster offered to assist with “engagement in the rulemaking process at DOH” (audio - 3m).
      • In a follow up email exchange with Clayborn, Foster described concerns he had heard about “patient trust in the registration database.” Sharing a 2016 DOH contract amendment with cloudPWR, the database provider, he asked about a deliverable titled, "Admin. - DEA File Access" noting “there are many, many things that could refer to...But in the absence of an authoritative statement, I can relay that speculation has filled the gap.”
      • After “some digging”, Clayborn replied, “When a healthcare provider who authorizes medical cannabis has a patient who registers in the database, they are able to see their authorizations in the system, if their patients chose to register in the database. Non-authorizing healthcare practitioners who are allowed to prescribe controlled substances may access healthcare information on their patients for the purpose of providing medical care for their patients. Practitioners who are allowed to prescribe or dispense controlled substances will have the option to search the database by the patient’s name and date of birth to review the patient’s healthcare information. In order to have those query privileges, the provider must enter their DEA number when they register in the system.”
      • She concluded, “Since healthcare providers are given the option to enter their DEA number, that report is imported from the DEA so we can verify the numbers, but no data ever goes back to the DEA. They do not have access to any information in return, they can’t request information, card numbers or names, the only purpose of their interactions with the database is to verify healthcare providers DEA numbers if they choose to enter it when they create an account.”
    • Pablo Gonzalez, WA SECTF appointee, asked “what makes it attractive for a retailer to carry the medical endorsement” and what would make prospective social equity retail licensees want “to get a medical endorsement.” Clayborn’s response was that the process for retail business owners to set up a medical endorsement “takes work and, and money to make sure that you’re set up in it.” She acknowledged it wasn’t easy, but could bring a retail establishment “the patient community” which was “a group of customers there...that you can serve that other stores wouldn’t be able to.” Clayborn added “there is space there where there could be better incentives” and her staff had looked at “changing...the database itself and one of the things that we’re looking at is like how can being part of the medical cannabis industry provide value to the store owners.” Gonzalez remarked that security of the patient database was important, as was the option for retailers to charge more than the minimum $1 to issue recognition cards. Clayborn shared her understanding that the majority of retail licensees already possessing medical endorsements charged “between, like, 10 and 20-ish” dollars to cover operating costs and added that officials at DOH were considering a “new data system” that could automate some responsibilities of retailers (audio - 3m).
    • Sherman said the patients he’d interacted with “want to be able to have a relationship with the person that’s growing their medicine” (audio - 4m).
      • Prior to I-502, he said the association between patients and those providing their cannabis was a "legal, above-board relationship" and a “much more effective way of ensuring that you have clean and safe product that works for you.” Sherman believed that “transparency, relationship, and care” between the patient and producer “is always going to be more valuable than some analysis from a lab after the fact."
      • Regarding equity in the cannabis industry, Sherman wanted to see “parity across the different points in the supply chain.” If producers were able to interact directly with patients, he predicted Raven could undertake "customized production" suited to individual patient medical needs such as specific “terpene recommendations” - a process “next to impossible” to conduct with a retailer as the intermediary. Sherman mentioned this request was something he’d heard “so consistently from every person that I’ve talked to in that world that I just feel like I would be remiss in not mentioning it in this context.”
      • The work group could make recommendations on “what would the ideal medical provider license in the 502 market look like?” He encouraged the work group and WA SECTF members to evaluate how “the economic structure[s] that we’ve produced facilitate or hinder the sort of social and care relationships that we used to have in the medical system.”
      • Sherman had long advocated for the right of smaller producers to conduct direct sales with adult consumers.

Members learned about specific laws and factors regulators had to consider when changing cannabis retail allotments, evoking several questions and suggestions from participants.

Here are some observations from the Wednesday June 30th Washington State Legislative Task Force on Social Equity in Cannabis Licensing Work Group (WA SECTF - Work Group - Licensing) Public Meeting.

My top 2 takeaways:

  • Christy Curwick Hoff, lead staffer for the task force, provided a presentation on statutory requirements for cannabis retail allotments to the work group (audio - 24m, Presentation). 
    • Work Group Co-Lead Monica Martinez introduced Hoff, stating that her briefing would address “statutory considerations for determining how many licenses should be allocated” and include information on “population growth, safety and security, retail stores per capita, and growth in sales over time.” She explained there would be a question and answer (Q&A) session for work group members afterwards and Washington State Liquor and Cannabis Board (WSLCB) staff were in attendance to “answer some questions, hopefully.” Once work group members had asked questions, the Q&A would be opened up to members of the public in attendance.
    • Hoff began by describing what laws would apply for “the LCB to issue additional licenses...what those requirements would be.” Her presentation laid out three applicable statutes:
      • “RCW 69.50.345 – LCB has authority to determine the number of retail outlets licensed in each county (consideration to population distribution)”
        • RCW 69.50.345(2) described WSLCB staff authority to determine how many retail outlets could be licensed. Hoff said agency officials needed to consult with the Washington State Office of Financial Management (WA OFM), apportion stores “by county,” and consider:
          • “(a) Population distribution;
          • (b) Security and safety issues;
          • (c) The provision of adequate access to licensed sources of marijuana concentrates, useable marijuana, and marijuana-infused products to discourage purchases from the illegal market; and
          • (d) The number of retail outlets holding medical marijuana endorsements necessary to meet the medical needs of qualifying patients.” 
        • Hoff suggested the work group could weigh these aspects as part of a recommendation to WA SECTF to request more retail allotments. She noted Washington State Department of Health (DOH) Medical Marijuana Program Manager Allyson Clayborn had reported on that program earlier in the meeting so work group members could better consider cannabis patient needs.
      • “RCW 69.50.335 – LCB has authority to open retail license applications for social equity applicants (unused, current allotments)”
        • Hoff reiterated that “the current number is 38” available licenses but she anticipated “that will change” as more retail licenses qualified as “unused.”
      • “RCW 69.50.336 – Any recommendation of the SECTF to increase the number of retail outlets must be approved by the legislature.”
        • Hoff acknowledged that the “co-leads and several of our members have explicitly stated in this meeting” that they believed additional retail licenses were warranted. She shared that staff assessment of the laws was that “Legislative action is required to increase retail license allotments specifically for the social equity program.” Although WSLCB leaders possessed “the authority to issue additional licenses, it wouldn’t be able to do that and set them aside for the social equity program,” she argued. Any new licenses would be “available, sort of, generally” and not specifically for prospective social equity applicants.
    • Hoff then spoke to “some data that I pulled together which I think could shed some light on....what does the industry look like right now...can it support more retail licenses” and “if so, how many?” She asked the work group to consider “what are the other metrics and data points that you would want to know” beyond the subjects she identified.
    • Hoff noted that limited demographic data available for current retail licensees from WSLCB staff indicated that, of active licenses, 82% self-identified as “White.” She added that Washington state’s population was “67% White, and yet our retail licensees are 82% White, so we definitely have a disparity there.”
      • Seven percent of retailers self-identified as Asian American, with nine percent of the state’s population being part of that community.
      • Three percent self-identified as Black or African American while four percent of the state’s population were from that community.
      • Only two percent of retailers were Hispanic/Latina/Latino, while 13% of the population were from that community.
      • Four percent of retail owners self-identified as multiracial and another two percent as “other,” with a breakdown of the latter group provided. Hoff indicated that “Native Hawaiian/Pacific Islanders and American Indian/Alaskan Natives both make up one percent of the population.”
    • Considering “equity,” Hoff noted that “cannabis convictions and arrests have not been felt equally across our populations,” citing data provided at the first WA SECTF meeting in October 2020. Her presentation included statistics showing disparities in the arrest rates for cannabis possession among communities of color in Washington in the years before passage of Initiative 502, which she noted hadn’t included equity provisions. She posited that retail ownership could counterbalance the negative impact of disparate enforcement from “the war on drugs” as work group members prepared to offer “long-term goals” for equity in cannabis licensing to the task force.
      • In 2019, WSU researchers shared a presentation on post I-502 cannabis arrests in Washington, finding a 14% decrease in the disproportionality of African Americans arrested for cannabis possession between 2009 and 2015. However, the same data revealed a 127% increase in the proportion of African Americans arrested for cannabis sales. 
  • Work group members and public participants had several inquiries and remarks about retail license allotments, suggesting increased licensure, tax changes, and ways to incentivize local controllers.
    • Micah Sherman, work group member and Raven Co-Owner, was curious about the comparison between alcohol and cannabis tax revenue, noting that the “concentration of access points” in cannabis retail was vastly different from the “around 18,000” diverse venues where alcohol was sold in Washington. He said there was a different scale of “market power” between the products and “when we’re talking about equity, that’s about power, and that’s about relative power, and how it’s distributed.” Sherman found that because the “path to market is funnelled through a very narrow moment, the retail store,” cannabis “concentrated” power in that tier (audio - 6m).
      • Hoff said it would be “significant work” for WSLCB staff to break the 18,000 licensees into the various license privileges such as on site consumption, but they could do so if the work group requested it. Sherman and Hoff agreed that his point was made without “a parsing of the data.”
      • Paul Brice, Happy Trees Owner and WA SECTF Advisory Member, wondered if there was an increase in liquor sales once that industry was privatized in 2011 and the number of licensed spirits retailers increased dramatically.
      • Martinez mentioned the relative tax rates imposed on alcohol and cannabis, asking if any increase in spirits sales after privatization could be evaluated with sales data. WSLCB Chief Financial Officer (CFO) Jim Morgan assured members agency staff could check on any change in sales and get information to the work group.
    • Sherman then sought to confirm his understanding that the initial number of cannabis retail stores allotted was decided by WSLCB officials based on the quantity of state-owned liquor stores before privatization. Hoff relayed her understanding that this was the "primary way" the number was determined, and WSLCB Director of Legislative Relations Chris Thompson confirmed in the chat log. Pablo Gonzalez, WA SECTF appointee, suggested there had been other distinctions like hours of liquor sales and “other policy changes.” Sherman felt the number was functionally “arbitrary” (audio - 2m).
    • Sheley Anderson, Craft Cannabis Coalition (CCC) Policy Advisor and Washington State Legislative Task Force on Social Equity in Cannabis Technical Assistance and Mentorship Work Group (WA SECTF - Work Group - TA and Mentorship) member, wondered about the excise tax appropriation and if the task force was “able to make recommendations on how that tax revenue is allocated, specifically with a focus to social equity licensees and” disproportionately impacted communities. She wanted to see tax “re-allocating more with a social equity lens.” Hoff said there were specific issues the task force had to make recommendations on, but she interpreted an opportunity for “broader recommendations to the legislature” in the task force’s mandate to advise on a “more equitable cannabis industry.” She mentioned that the TA and Mentorship work group might consider also making a recommendation on the issue to the wider task force, adding that there had already been a presentation reviewing equity investments in other jurisdictions. Hoff said she had “hope” the call for more cannabis equity spending would be endorsed by WA SECTF (audio - 2m).
    • Brice asked about local control, wanting to know the “the ability of the cities to stop the allotments,” as it had impacted his path to cannabis licensure before. He argued that WSLCB leaders had “pretty much doubled” allotted stores in counties during a medical retail application window in 2016, including counties hostile to cannabis retail operations. Saying there was sure to be a mix of jurisdictions which wanted more stores and those that didn’t, Brice called attention to a resolution from the City Council in Tacoma in July 2020 calling for more retail shops for social equity purposes and wondered if there was anything that could be done to stop other jurisdictions from opposing new equity licensees (audio - 10m).
      • Martinez remarked that “we do not need to move forward with the current system that exists with our recommendations” and that the task force could advise that new equity businesses be “roamable." She presaged that the August 25th work group meeting would “be tackling bans and moratoria” and one idea was for an allotment increase only in areas without bans and moratoriums.
      • Hoff said Washington was a “local controlled state” which meant that municipal authorities were allowed to ban cannabis retail directly “or they can use their zoning laws in order to make different restrictions.”
      • WSLCB Board Member Ollie Garrett, the agency appointee to WA SECTF, stated that licensing staff had been “reaching out to all of those areas” and “trying to educate them on cannabis” to learn their concerns in hopes local officials might “reconsider” their opposition.
      • Sherman encouraged participants to get “innovative” in making their case. While working “to establish craft cannabis” via legislation, he’d evaluated “adding something that allocates a portion of the excise tax to the municipality where the transaction occurs” to encourage more participation. He believed local leaders lacked an economic argument to end a ban or moratorium in places where cannabis businesses weren’t popular. Sherman also suggested lawmakers could reduce cannabis taxes at equity cannabis businesses to help their competitiveness against established retailers. Martinez commented that she believed the Disproportionately Impacted Communities Work Group (WA SECTF - Work Group - Disproportionately Impacted Communities) was “tackling” the possibility of recommending the task force ask legislators for tax changes, though Hoff was uncertain.
    • Mike Asai, former dispensary owner and work group member, inquired about a tax exemption from the business and occupational (B&O) tax for medical cannabis collectives “from June 30th of 2015 to July 1st of 2016” that was included in SB 5052 in 2015, a law which merged Washington’s unlicensed medical and licensed recreational markets. He reasoned that if “it has been done before” it “should be done” to assist cannabis equity applicants (audio - 4m).

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