WSLCB - Board Caucus
(June 8, 2021)

Here are some observations from the Tuesday June 8th Washington State Liquor and Cannabis Board (WSLCB) Caucus.

My top 3 takeaways:

• The board was introduced to the new Deputy Director, Toni Hood, who spoke about her legal background and involvement in setting cannabis standards at another agency following legalization.
  • Director Rick Garza was “happy to introduce” Hood, who had previously served at the Washington State Office of the Insurance Commissioner as “Deputy Commissioner of the Legal Affairs Division.” In that role she’d overseen “a $12 million biennium budget and a large team of attorneys, investigators, and paralegals” which gave her a “background as a regulator,” he said. Earning her law degree from Gonzaga University School of Law in 1996, Garza noted she also had a bachelors degree in Political Science (audio - 1m).
  • Hood described herself as “very excited” to be joining WSLCB after working at the Insurance Commission, stating that prior to that office she’d worked for the Washington State Department of Licensing (WA DOL) and the Washington State Office of the Attorney General (WA OAG, audio - 2m).
    • Before working for the state, she said she’d worked in “private practice focusing on family law and criminal defense.”
    • Hood talked about being “very interested in the cannabis part of what you do. I know that the liquor part, and tobacco, is important, but I think that what you’re doing is really on the cutting edge with cannabis.” She indicated when legalization was passed in 2012 she’d been part of the WA DOL “team to change the [driving under the influence] DUI law and figure out what should be the per se limit for someone who was just smoking and not consuming alcohol, and so I got exposure to this agency in that process.” Board Chair David Postman greeted Hood and said “we’re really excited to have you, too.”
      • Learn more from WA DOL DUI resources.
  • Since our first observations in early 2018, the role of Deputy Director at WSLCB appeared to experience higher turnover than other leadership positions within the agency.
    • Peter Antolin resigned from the position in May 2018 and was replaced by Pat Kohler.
    • By May 2019, Kohler had left the role which former Deputy Director Megan Duffy took on.
    • According to remarks in April by Garza, Duffy was appointed Director of the Washington State Recreation and Conservation Office (WA RCO) and Hood took on the role of Deputy Director on June 1st.

• Director Rick Garza briefed on the approved “Joints for Jabs” vaccination incentive program as well as meetings he’d attended with prevention stakeholders, federal officials, and fellow cannabis regulators.
  • Joints for Jabs - The program, first publicly discussed on May 26th, was intended to incentivize vaccinations against coronavirus by allowing cannabis retailers to serve as temporary vaccination sites and provide a complimentary joint. Announced on June 7th (PDF), Garza remarked that the program---authorized from June 7th until July 12th---had been promoted by Stacey Peterson, Apex Cannabis Co-Founder, who had been approached by “a community clinic that was interested in...allowing her to host a vaccination site” and brought the idea to the attention of WSLCB leaders and Governor Jay Inslee’s staff (audio - 4m).
    • “We also got requests from a couple of other retailers around the state, one from Vancouver, one from Seattle, asking for the same allowance,” he noted, saying agency staff worked to develop 13 allowance conditions for prospective participating stores, such as requiring the gifted product to be a pre-rolled joint.
    • “The goal of our governor and our state is to get ourselves all vaccinated,” Garza reported, pointing to other vaccination incentives announced by Inslee’s office on June 3rd, including a $1 million dollar lottery. He added that the board had approved the option for liquor licensees to offer an alcoholic beverage to customers showing proof of vaccination on May 15th. The difference with Joints for Jabs, Garza explained, was that it was “only those cannabis retailers that are hosting a vaccination site.”
      • At publication time, Insee had made no public comment on the Joints for Jabs program specifically, but it did earn a mention on The Late Show with Stephen Colbert.
    • Garza had heard a “concern that I think makes sense” from another retail licensee, “which is, some folks choose not to consume their product...by smoking it” and the licensee inquired if edible items could be offered in lieu of a joint. “And from a health perspective, that probably makes sense too,” he reasoned, saying Policy Affairs and Outreach Director Justin Nordhorn may amend the allowances for the program “and possibly share with our licensees the ability for them to use another form of the product as a compliment to the vaccine.” Leadership chuckled that it would be up to the cannabis sector to find a slogan for edibles as catchy as Joints for Jabs.
      • Possible names for the program include ‘Edibles for Immunity’, ‘Vax and Relax’, or ‘Snacks For Vax’.
    • Learn more from the Washington State Department of Health (DOH) Covid-19 Vaccine and Covid-19 vaccine distribution pages. DOH also runs a mobile vaccination Care-a-Van program which can be requested to be present at your event. The DOH vaccination locator page---which can be contacted here---lists available sites by ZIP code, though most will not be authorized to provide cannabis as a perk of getting pricked.
  • Prevention Roundtable - The closed meeting between prevention advocates and agency leaders on June 3rd was one of a series of focus groups with prevention interests which Public Health Education Liaison Sarah Cooley Broschart previously explained started in 2019 and had been organized around the state. Garza found the meetings allowed for a “dialogue” between agency staff, “the prevention community, and public health.” He suggested having Broschart brief the board at a future meeting on the discussion from the June 3rd roundtable which Postman attended (audio - 1m).
  • U.S. Internal Revenue Service (IRS) Presentation - A presentation from WSLCB officials to IRS staff was first mentioned by Director of Communications Brian Smith on May 12th. Garza said “over the last year...federal agencies have been reaching out to us,” including the IRS “territorial manager for the west, northwest, and Denver, or Colorado,” Brad Martinez. He relayed that Martinez and his staff “that serve the western states, including Washington” received a “standard presentation” from agency representatives on “how [we] put this program together with respect to regulating cannabis...and it was basically just that, sharing specific information about how we audit and...what’s the tax structure, how do you set up your system?” Garza added that the presentation amounted to “a meet and greet” between officials which “answered questions” for the federal attendees (audio - 1m). 
    • Board Member Russ Hauge asked, “is this the first outreach that we’ve gotten from the feds like this?” Garza responded that, as cannabis businesses paid federal taxes, IRS officials had contacted the agency or the Washington State Department of Revenue with inquiries “specific to a licensee.” However, “this is the first one that really was” for the territorial manager, he stated. Hauge was “struck” by that development given that “the feds are finally going to allow their researchers to use cannabis other than the [University of] Mississippi ditch weed that’s been growing there for generations” (audio - 1m).
    • Postman wondered “what sparked the interest.” Garza speculated federal officials might be studying policies ahead of a change in federal cannabis laws and were “now seeing that we need to create a relationship with these states that have legalized adult use,” potentially including memorandums of understanding with state entities “which is something that they’ve done in other areas.” But he felt it “only makes sense that it’s because of the likelihood that there might be some changes federally” (audio - 1m).  
    • A March 2020 report, “The Growth of the Marijuana Industry Warrants Increased Tax Compliance Efforts and Additional Guidance,” from the U.S. Treasury Inspector General for Tax Administration (TIGTA) suggests another reason could be increased interest by federal tax authorities in auditing cannabis companies.
  • Cannabis Regulators Association (CANNRA) Meeting - Garza, the First Vice President of CANNRA, said the organization was planning a “mid-year meeting of the states” that would include a “dialogue with our congressional delegations.” He said Smith had contacted the Washington congressional delegation to invite Congresspeople or their designees to attend. Garza explained their message to delegations would be similar to a February 18th letter CANNRA leaders sent to Congress about “a new federal program” for cannabis which established “the concerns that the states would have with respect to making sure there’s not...areas that conflict between the states and the federal program.” WSLCB officials involved with CANNRA were ready “to start having those discussions...with our own congressional delegation” (audio - 1m).

• Policy and Rules Coordinator Jeff Kildahl provided an update on cannabis rulemaking including the tetrahydrocannabinol (THC) project which continued discussion around the impacts of hemp biomass in the regulated market.
  • Quality Control (QC) Testing and Product Requirements (audio - 1m, Rulemaking Project)
    • Kildahl said there were “four internal rule drafting sessions scheduled in the coming weeks to begin cannabis quality control rule redesign.” He also expected to hear from staff of the Washington State Office of Financial Management (WA OFM) “either today or tomorrow on bids concerning our request for an economist to help with drafting an updated” Small Business Economic Impact Statement (SBEIS).
      • Policy and Rules Manager Kathy Hoffman first conveyed the plan to contract an economist for QC rulemaking on May 11th.
      • See the most recent SBEIS regarding the supplemental CR-102 for the project released in September 2020, though that version was automatically withdrawn on May 19th "under RCW 34.05.335(3), since the proposal was not adopted within the one hundred eighty day period allowed by the statute."
  • Criminal History (audio - <1m, Rulemaking Project)
    • Redesigning how agency staff consider cannabis license applicant and renewal background checks was proceeding after a “listen and learn session on June 1st” was “attended by approximately 25 people,” Kildahl reported. Staff heard “a small amount of feedback on the draft conceptual rules shared,” he said, and would meet internally with the goal of bringing “a CR-102 package for your review to the board meeting on July 7th.”
    • Postman wanted to know if the feedback from the session revealed any “sense of where people are generally” or if there “is a sense this is an important step on, in equity work?” Kildahl had “the sense that they’re generally supportive of the rulemaking” (audio - 1m).  
  • Vitamin E Acetate (audio - 1m, Rulemaking Project)
    • Kildahl told board members that the CR-102 on “permanent rules referencing the State Board of Health vitamin E acetate prohibition” had received no comments to date. “As a reminder, the public hearing is scheduled for July 7th, and under that timeline we can bring a CR-103 package to you by July 21st,” he said, and then the board could “allow the emergency rules we have in place to expire” as they would end “a few days after...the effective date of these rules.”
  • Tier 1 Expansion (audio - <1m, Rulemaking Project) 
    • “One comment has been received thanking the agency for the proposal,” Kildahl noted, “and one comment has been received that is opposed to the proposal.” He indicated the public hearing would take place on June 9th, “and under that timeline we can bring a CR-103 package to you for review on June 23rd.”
  • THC Compounds other than Delta-9 (audio - 1m, Rulemaking Project)  
    • Kildahl described how a deliberative dialogue on “Cannabis Plant Chemistry” had been hosted by agency staff on June 3rd “and we had 129 attendees participating at the peak of engagement.” He took the opportunity to thank panelists for their participation and for “helping keep us on focus on cannabis plant chemistry.” Agency officials were committed to data-driven policymaking, Kildahl said, calling it an “appropriate and productive way to situate that work.” He believed that WSLCB staff had “a great foundation from which to start that work” and would “curate” the remarks from the deliberative dialogue, “reconvene our project work group, and plan for the next session.” 
    • Hauge shared that he’d attended the session, and said “as far as my experience in rulemaking goes...it was an outstanding exercise.” He felt the cannabis products at issue were “a very complicated problem” and the Washington State Legislature would “have to take some steps in the not too distant future.” Hauge considered the “level of participation” reflected “how rational our rulemaking process has become over the last months and years” (audio - 1m). 
    • Postman had also heard “good things about that session” and that it was possible agency representatives would “reconvene at least some of those same experts at a later date.” Kildahl confirmed there were “some follow up sessions planned” but didn’t “know the specifics” (audio - 1m).  
  • Hauge later brought up hemp biomass, which he’d been discussing with fellow board members in the preceding weeks. He said the listen and learn session had influenced his thoughts on the topic, which he predicted would “continue to be a real, major focus for us and ultimately for the legislature.” Postman promised to become more familiar with the topic, and considered extending an invitation to the chemistry experts from the session to attend a board meeting so that he and Board Member Ollie Garrett “can hear the same thing too.” Hauge called it “a great idea” and committed to seeing “if I can help make that happen” (audio - 1m). 
    • Garza suggested the agency host a board work session including presentations from staff as well as outside experts which would allow board members to “ask questions specifically” and “hear from one another.” He’d found the deliberative dialogue session so technical that “you have to be a chemist to understand the discussion, but once we get beyond the chemistry of the plant and we start really digging deep into what this really means and what we need to do with respect to legislation” (audio - 1m). 
    • Postman called attention to the June 9th Executive Management Team (EMT) meeting where “delta-8 [tetrahydrocannabinol] will once again be a major subject of that.” The board would hear from Hoffman and Broschart on “what other states have been doing,” he commented, saying the draft spreadsheet he’d reviewed showed policies “all over the place, really” (audio - 1m).
      • On February 10th, WSLCB contracted with research scientist Gillian Schauer, to work “at the direction of the Public Health Education Liaison [Broschart] and interdependently with respective program leads as called upon” on THC policy questions.
      • Schauer offered testimony and a presentation on delta-8-THC to the Oregon State House General Government Committee on March 25th.
      • In the deliberative dialogue chat box on June 3rd, Schauer commented that “These questions about sterochemistry [sic] and byproducts are important ones. But when we talk about the public health and safety effects, I think the major issues are
        • (1) the lack of consumer awareness about [delta-8-THC] D8 products (which many consumers may think are hemp/CBD products that are not psychotropic), 
        • (2) the lack of labeling and required testing of products to inform consumers about what is in them and that they contain a psychotropic substance, and 
        • (3) the lack of any regulation in most states on the amount of psychotropic D8 that can be in the products on the market (many of which are more concentrated than allowable D9 edibles, for example, on the adult use markets), and 
        • (4) the availability to youth (largely through online markets). As a public health professional - it's these areas that I think are particularly concerning in terms of public health and safety.”