WSLCB - Board Meeting
(July 21, 2021)

Here are some observations from the Wednesday July 21st Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Staff provided new information on the tetrahydrocannabinol (THC) and quality control rulemaking projects then reviewed the status of efforts around criminal history.
  • THC (audio - 2m, video, Rulemaking Project)
    • Policy and Rules Coordinator Kathy Hoffman reported on the “evaluation of THC compounds rule project,” telling the board that WSLCB staff hosted a second deliberative dialogue around cannabis plant chemistry on July 20th, the first having occurred June 3rd. She said the event was attended by 132 participants including agency staff “at peak.” Hoffman stated that the session was useful for staff to learn information “based on scientific fact and empirical evidence,” specifically mentioning enhanced “understanding of the differences between ‘botanic,’ ‘synthetic,’ and ‘artificial cannabinoids,’ and how we might articulate those differences in regulations.”
    • The next output from the project would be draft conceptual changes that Hoffman expected to have “ready for release by the end of August, if not sooner.” She said a listen and learn forum was being scheduled for early September and that if agency officials could stick to the “revised timeline” there would be “a CR-102 presentation in late September, and a hearing in November.”
  • Quality Control (QC) Testing and Product Requirements (audio - 1m, video, Rulemaking Project) 
    • Policy and Rules Coordinator Jeff Kildahl told the board they’d finished “four internal rule drafting sessions and we have one more scheduled this week to continue” work redesigning the rules.
    • “We received only one bid concerning our request for an economist to help with drafting an updated small business economic impact statement” (SBEIS), he said, adding that WSLCB staff met with representatives of the Governor’s Office for Regulatory Innovation and Assistance (ORIA) on July 8th “to review the bid.” Kildahl stated that officials had “finalized details of the contract with the vendor and we received the final bid yesterday and will review the bid this week.”
      • Hoffman first mentioned contracting with an economist to improve the rulemaking project SBEIS on March 17th.
      • Read the September 2020 SBEIS on the project.
  • Criminal History (audio - <1m, video, Rulemaking Project)
    • Kildahl noted the CR-102, approved on July 7th, had not received any comments since being presented to the board. He told board members a public hearing on the proposed rules was scheduled for August 18th.

• A prohibition on vitamin E acetate as an ingredient in cannabis products was adopted by board members, finalizing the agency’s response to an outbreak of vaping-associated lung injuries (VALI) which occurred in 2019 (audio - 4m, video, Rulemaking Project).
  • Kildahl presented the CR-103 to add “permanent cross references in our cannabis processor and retailer rules to the [Washington] State Board of Health (SBOH) permanent prohibition of vitamin E acetate.” He described how the agency first began restricting the compound’s use by licensees under emergency rules in September 2020, saying it added “emergency amendments” to WAC 314-55-077 and 079 allowing for “disciplinary action if a licensee failed to comply with the LCB prohibition.”
  • SBOH passed a ban on vitamin E acetate in vapor products in November 2020 that Kildahl asserted was applicable to cannabis licensees. “As intended when we began emergency rulemaking, the proposal makes permanent reference” to the SBOH prohibition, he commented, describing how adoption of the CR-103 meant that “the LCB prohibition can be rescinded and the emergency rules currently in effect will be allowed to expire.”
  • Kildahl went over the background of the rulemaking project which began on March 31st, saying “no comments have been received on these rules” and final rule language had not been changed. He relayed that with the board’s adoption, the rules would be filed and take effect on August 21st. Given no questions from members, the board voted to adopt the CR-103 and Board Chair David Postman remarked it was “good to see that one across the line.”

• A licensed producer/processor called for “equitable results” among cannabis licensees and a citizen expressed concerns about product safety for consumers and medical cannabis patients.
  • Micah Sherman, Raven Co-Owner and Washington Sun and Craft Growers Association (WSCA) Board Member (audio - 4m, video)
    • Sherman shared that he’d attended the cannabis plant chemistry deliberative dialogue the day before and thanked Hoffman and agency staff for a “very informative event” that “really clarified the situation.” 
    • Sherman announced that the Washington SunGrowers Industry Association (WSIA) was “in the process of becoming” the Washington Sun and Craft Growers Association (WSCA).
      • In an announcement authored on July 10th, WSCA members said the group would spend “the next few months integrating the interests of all Washington craft producers into our strategy and mission.” Incorporation of craft producers was “a strategic expansion that aligns with the group’s long history of working for small and independent producers and processors regardless of their cultivation method.” Expanding beyond outdoor cultivation, “sets up a strong alliance of growers to push for structural market changes” such as “a supply chain with equitable relationships between farmers, processors and retailers.” At time of publication, the new organization website was under construction.
      • WSCA planned to hold “a series of workgroup meetings to help us set a long-term strategic plan” online and would be endeavoring to “to bring on as many new members as possible.”
      • As outlined in the announcement, WSCA legislative priorities for the 2022 session were to:
        • “Introduce a legal definition for Craft Cannabis Production in Washington State
        • Begin the process for allowing for farm direct sales for Craft Cannabis Producers
        • Produce a legislative plan to prepare our state for national legalization”
      • WSIA members had self-identified as craft producers at previous board meetings. Sherman had also lobbied for craft cannabis legislation.
    • Sherman noted there continued to be a need for “updates in rule and law to make sure that we’re all operating in...an environment that is going to be able to produce equitable results for everybody in the cannabis supply chain.” He called 2021 “a very difficult year for a lot of farmers” and said he wanted agency leaders to engage in “forward thinking conversations about how do we solve that dynamic, and how do we bring relief to farmers throughout the state?” Sherman said WSIA members previously advocated for allowances to have “farmers markets in cooperation with existing retail stores and other creative solutions to get paths to market for small farmers.” He wanted those conversations to continue since producers were “struggling to get by” due to “structural issues that are built into the marketplace.”
    • Without changes, Sherman stated, “we’re selecting outcomes for the industry that I don’t think was the intention of the original initiative and I don’t think has been the intention of laws passed by the legislature since then that have really tried to focus on equity and inclusion.” Doubtful there were enough “active steps to move in that direction,” he asked for consideration of the “spirit” of equity legislation passed in 2020 and 2021 while the work of the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) continued. He asked WSLCB representatives to plan for “an industry that can support successful farmers.”
    • Sherman also offered public comment on June 23rd, June 9th, and April 14th. 
  • Jim MacRae, Straight Line Analytics (audio - 5m, video)
    • MacRae began by recognizing one of the “larger successes” of WSLCB leaders and staff in facilitating “a new source of revenue for the state.” He said officials were “incrementing the overall revenue generated by the agency and contributing to the operations of our government” exceeding expectations set by staff for the Washington State Economic and Revenue Forecast Council (WA ERFC). However, MacRae reported his own expectations had not been met, and registered his skepticism that the legal cannabis market regulated by WSLCB had captured “the vast majority of consumers” when accounting for “consumption on a consumer basis.”
    • There were two areas where MacRae saw room for improvement to maximize “positive good for the state, and the realization of the mission and goals of the agency”:
      • “Do a better job of ensuring that the products that are moving in the regulated market” possess “a reasonable expectation of safety,” he asked, adding “right now, that is simply not the case.”
      • MacRae argued medical cannabis patients previously had “a very functioning green cross system” while conceding it had been “abused by many.” Dispensaries had been “something that served people’s needs, it had providers out there, we [had] the genetic diversity,” MacRae said. Claiming medical dispensary owners tended to be “craft” and “mom and pop” operations, MacRae pointed out “all of them, virtually, were illegal at the time” though “some were accepted by the state.” By contrast, he said the medical cannabis program that replaced dispensaries “effectively killed the service that entity once supplied to the state.”  In what he called a “post-prohibition” era of cannabis control, MacRae said some of these providers and patients went “underground” but he was dismayed that they’d be treated as criminals by regulators. He hoped to revive “functioning medical attributes in this state under the regulated system.”
    • MacRae vaguely hinted that “when corruption is actually pointed out at the agency, and when it has an evidentiary base, I really do hope that you will act...on the things that will be revealed in the not too distant future.”
    • Mentioning the “notion of equitable treatment,” MacRae commented it was “not just a race-based thing.” He suggested WSLCB officials “acted in a...negative, discriminatory fashion towards cannabis, relative to how it has regulated tobacco and alcohol,” calling it “blatantly obvious in some cases.”
    • MacRae was also concerned when the board exercised “attorney-client privilege.” As the Washington State Office of the Attorney General (WA OAG) was “the attorney of the people of the state of Washington,” he said, “the notion of attorney-client privilege in your operations, litigation notwithstanding, is somewhat offensive to me.”
    • MacRae offered comments at prior board meetings, including on July 7th, June 9th, May 26th, April 28th, and April 14th.