WSLCB - Board Caucus
(June 22, 2021)

Here are some observations from the Tuesday June 22nd Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Policy and Rules Coordinator Jeff Kildahl provided a status update on rulemaking concerning THC Compounds other than Delta-9 and a board member asked about including synthesized delta-9 tetrahydrocannabinol (THC) within the scope of the project.
  • THC (Rulemaking Project, audio - 1m) 
    • Kildahl reported that two comments had been received along with remarks from the June 3rd deliberate dialogue focusing on the chemistry of the cannabis plant. He repeated prior comments about taking a fact and data-driven approach to the project and four pending planning meetings.
    • Board Chair David Postman was curious when the public comment period for the rulemaking ended. Kildahl answered that a “formal” comment period would begin when a CR-102 with proposed rules was presented to the board. Policy and Rules Manager Kathy Hoffman clarified comments were accepted for at least 30 days once a CR-101 was filed at the Washington State Office of the Code Reviser (WA OCR). Postman expected the agency would end up with “more than two comments by the time we’re done.” Hoffman agreed, “quite often we do receive comments after...the formal period that’s described in statute” and staff put those comments “in the file” (audio - 2m).
    • Board Member Russ Hauge brought up the scope of the rulemaking and asked if it was Hoffman and Kildahl’s “opinion that that is a broad enough filing for us to consider the questions that have been raised” about synthesized delta-9-THC converted from “non-Washington cannabis sources.” Hoffman replied that she had already taken that possibility up with counsel from the Washington State Office of the Attorney General (WA OAG), adding, “I think it may be broad enough.” She said that it had been drafted “largely” to reflect the agency policy statement on delta-8-THC which “did not preclude delta-9 from hemp-derived sources” and had “statements in there that spoke to delta-9 from hemp and other sources. I just want to make sure that our CR-101 is that broad as well.” Hauge wanted staff to be specific, saying between the statement and clarifying bulletin, “the only isomer specifically referenced is delta-8.” His view was that “right now that is a separate issue from delta-9 being introduced into our system from non-cannabis sources.” Hoffman read part of the policy statement which indicated delta-9-THC was considered and agreed that “we need to take a second look at our CR-101 and make sure that it's expansive enough” (audio - 3m).
      • On June 16th, Director Rick Garza suggested that concerns about synthesized delta-9-THC could be addressed through the project.

• Board members talked about the inclusion of synthesized delta-9-THC in cannabis products and the compound’s legal status, debating whether some staff were “unable or unwilling to proceed” with enforcement measures.
  • Board Member Ollie Garrett brought up the June 16th special caucus, remarking on comments of concern she’d been emailed. She said people considered it a “serious” problem in part due to “not knowing the health impacts" and asked “where do we think we should be on that subject at this point?” (audio - 9m)
    • Hauge told Garrett, "as of this moment, status quo. We have staff saying that they are unable or unwilling to proceed with any enforcement kind of action." He planned to meet with WA OAG counsel later that week “to discuss the legalities of this” and his “position that [cannabidiol] CBD from outside the regulated system may be used to enhance CBD content and that’s all.” Following that meeting, Hauge expected he would “continue trying to either get staff to look at this as a serious issue and take action or bring it back before the board in a public meeting.” He’d already been advised “that to discuss the different legalities here is something that cannot be done in a closed session.” After hearing from the attorneys, Hauge promised to return to the board “as soon as is reasonably possible after that,” expecting he’d have more to offer fellow board members at their regularly scheduled caucus on Tuesday June 29th.
      • At the June 16th meeting, the board had been advised and agreed to meet in a closed executive session to talk about the issue. See RCW 42.30.110 for criteria which must be met to host executive sessions.
    • Postman had "a different sense than Member Hauge." He thought staff were willing and able to act, but "a gray area in that statute" had been identified as noted by Policy Affairs and Outreach Director Justin Nordhorn at the special board caucus. Postman considered the legal opinions Hauge would be given would help in deciding any next step by the board, confirming that he knew there were attorneys “preparing for your meeting.” He concurred that a subsequent public discussion of the legalities was appropriate so long as no specific parties or accusations were aired. “Staff’s taking this very seriously,” he insisted. Postman was confident that policy changes on "synthetic delta-9” could be included in open rulemaking if needed while warning “we can't really do this from a board-down way.” He and others at WSLCB had agreed and publicly stated “we need to move beyond just a discussion about delta-8, cause there’s going to be something else tomorrow.” Agency staff couldn’t get into the practice of “rulemaking to a specific compound," he added.
    • Garrett was mindful of “the big picture" as well as the need to follow the rulemaking process at WSLCB, but recalled times when staff were “going through the policy process” while recommending emergency rulemaking. After reading “what the industry is saying to us,” she again asked how board members felt "not understanding the health impact on people that are consuming this product." Acknowledging there would be a need for responsive rules and policies, Garrett still wondered about the issue of synthesized delta-9-THC and “what are we willing to do...on this today?"
      • Public comment on the issue had been a regular occurrence at board meetings, with individuals weighing in for and against the practice on April 14th, May 26th, and June 9th.
  • Hauge looked for “some clarification...is staff still waffling on whether" synthesized delta-9-THC was being introduced into the legal cannabis market? (audio - 4m)
    • Although Postman hadn’t had “that conversation” specifically, he hadn’t perceived “waffling” from agency officials, whereas he had heard “different things from different parts” of the cannabis sector. He felt that calls to look into the practice of synthesizing cannabinoids were being answered.
    • Hauge conveyed his sense that WSLCB staff preferred “to do nothing" and pointedly asked Postman, “are you saying I should not meet legal counsel and in the meantime we should accept the legal opinion of our policy director, who is not a lawyer?” Postman responded that he was not saying that, “what I’d said was ‘I hope we can do it in public’ because I think there’s a great public interest in this issue.” He also didn’t believe the subject warranted or met a standard for exemption from the Open Public Meetings Act (OPMA) provided there wasn’t discussion of “a specific licensee.” Postman reiterated that he didn’t interpret the actions of staff on the issue to be obstructionist and welcomed a “clear analysis” from assistant attorneys general (AAG). 
    • Hauge was uneasy about the prospect of “an argument between our lawyers...and our staff, who are not lawyers.” He claimed agency staff told him, “I talked to a license holder’s lawyer and the license holder’s lawyer told me it was ok, so I can’t do anything.” Postman said that the anecdote wasn’t reflective of the staff he’d interacted with at WSLCB, whom he felt were being “more methodical, perhaps, than you would like."

• The board continued discussing feedback and potential near term action regarding synthesized delta-9-THC, as well as accusations of “regulatory capture” by some industry stakeholders.
  • Hauge stated that it was most likely that the board would hear from those “being damaged economically by allowing synthetic delta-9 into the system.” He said this damage was “real and immediate” and that those not concerned with it “are the people making money” from the practice (audio - 4m).
    • Postman felt that kind of input was “understood and expected” at regulatory agencies, but wondered if the situation met the “high bar” for public health and safety risks necessary for emergency rulemaking. He said he was talking with staff and people in the industry to understand the health risks posed by synthesized cannabinoids. “I don’t think you could use emergency rulemaking for market disruption,” Postman added, “but you would know better.”
    • Garrett shared a goal of being “proactive and not reactive" in relation to public health risks to avoid having WSLCB leaders be accused after something bad happened. Postman noted potential health issues had been raised by a member of the Cannabis Alliance, commenting, “if there’s evidence of that we should see that evidence...and if there is we should act on it.” Though he still had “questions about this process, I am not on one side here trying to stop action against” synthesized delta-9-THC, and had engaged with staff to have “quick, thorough thought on this to see how we go forward.”
  • Garrett wondered if the agency had a role in “taking that product and having it tested," but Hauge snapped that would require admitting “there’s synthetic delta-9 into our system, and apparently staff is not willing to admit that” (audio - 3m). 
    • Postman took issue with the characterization, deeming it “a disservice to both the staff of the LCB and the three of us as well” as it played into “the suspicion and the cynicism around this.” He argued a policy development process was being followed and "it would never enter my mind to order an investigation" of a licensee. Hauge’s remarks had resulted in Postman’s “inbox...just filling up with people who are echoing those comments about essentially how corrupt we are.”
    • Postman asserted it was not a matter of one trade group trying to get an advantage over another, citing the Washington CannaBusiness Association (WACA), Washington SunGrowers Industry Association (WSIA), and the Cannabis Alliance specifically. Moreover, he added, “within those organizations I hear different voices,” making it incumbent on board members to be “on our toes about this and to really understand where people stand on it and what’s going on out there.” To imply that deliberate consideration meant staff didn’t “want to do something undermines the authority of this board,” Postman believed, “and plays into the hands of people who are filling our inboxes and calling me names and talking about ‘regulatory capture,’ which is just a fancy...Harvard Business Review way to say ‘corruption.’"
    • Mentioning a “parade of horribles” cited in public comment by WACA Executive Director Vicki Christophersen, Postman said many of the claims had been “exaggerated, false...and if nothing else, mean spirited.” The board had been called names, and Postman described working “very hard with staff to push back on every single thing that was said that was out of line.” He hadn’t witnessed evidence of WSLCB officials “playing favorites...and when it comes from a long-standing board member with a, a legal career like yours, I think that it’s, it is undermining our authority and our ability to do difficult rulemaking.”
  • Garrett again raised the issue of any near-term action they should be considering (audio - 7m).
    • Postman insisted the issue was being reviewed at the highest levels of WSLCB, but agency officials “will not act on anyone's opinion, that’s not what we do, it’s not a popularity contest." Postman lauded the cannabis chemistry deliberate dialogue, telling Hauge “that’s the approach we need to take”
    • Hauge said his position to staff had consistently been that he was “one board member” and it was “in that mode that I talked to the director, many times, and was told not to order an investigative action" to pursue evidence of a licensee selling synthesized delta-9-THC and instead to "share that with the Enforcement Director," Chandra Brady. He elaborated that he could “sense an alternative narrative here that somehow this is something that I’m disappointed that people aren't doing what I tell them to do.” He acknowledged “this agency has a very grave responsibility to regulate what is still a federally illegal activity and I want to make sure we follow our own rules.” However, Hauge asserted, “It’s really hard for me to see a way around the language of the statutes...and if I'm pushing too hard, I apologize, but I’m going to continue to push because...I think what we’re doing now is not enough.”
    • Postman said he didn’t consider Hauge to be “pushing too hard” but asked that he “do that in a way that doesn’t get to what I’ve complained about publicly...that industry lobbyists do. Don't attack character, don't question motive,” or make remarks diminishing the board’s decision making. “People questioning, people saying they need more information is not people saying ‘I don’t care,’” Postman said, agreeing that leadership meant being ready to “push hard.” However, “some of the language” used to push for action had consequences, he added, and “there’s a way to do it” while still giving criticism or advocating for policies or positions.
    • Postman acknowledged Hauge’s approaching AAG briefing and stated that he was amenable to Garza’s suggestion of a work session for the board to hear from staff and experts collectively and publicly. He expected board members could “debate the pieces” of the issue, not “debate whether there’s an investigation or not.” Postman observed he’d even heard from people “really angry” that he respected limitations under the OPMA on the board’s power to vote on unannounced potential actions at the June 16th special caucus as there hadn’t been prior public notice. “It’s insulting when people then suggest that that’s a sign of corruption,” he stated, before promising to “see everyone” at the Wednesday June 23rd Board Meeting.