WSLCB - Board Caucus
(July 6, 2021)

Here are some observations from the Tuesday July 6th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Director Rick Garza went over recent meetings with federal officials and mentioned participation in a cannabis trade group meeting.
  • Garza said WSLCB leaders spoke with Senator Patty Murray’s staff on July 1st while “awaiting a federal proposal to legalize cannabis” (audio - 3m).
    • The Cannabis Regulators Association (CANNRA) hosted a “spring meeting” on June 23rd that included representatives of several congressional delegations, Garza stated, and emphasized areas “we think are priorities.” Those priorities were described in a February 18th letter from CANNRA President Norman Birenbaum to the Speaker of the House of Representatives, the House Minority Leader, and the Majority and Minority leaders of the U.S. Senate.
    • Garza commented that the meeting with Murray’s staff also included Board Chair David Postman, Director of Legislative Relations Chris Thompson, and contractor Gillian Schauer, “our public health liaison with Sara” Cooley Broschart, the agency Public Health Education Liaison. The group advocated for federal policy that could “overlay" onto Washington’s current legal cannabis system, he said.
      • On February 10th, WSLCB contracted with Schauer, to work “at the direction” of Broschart and “interdependently with respective program leads as called upon” on THC policy questions. Schauer’s contract with the agency expired on June 30th, suggesting it may have been extended beyond that.
    • Representing Murray in the meeting were Chief of Staff Mindy Lindquist, U.S. Food and Drug Administration (FDA) Senior Counsel Katlin McKelvie Backfield, and U.S. Senate Committee on Health, Education, Labor and Pensions (US Senate HELP) Democratic Staff Director Evan Schatz. Garza noted that Murray was Chair of US Senate HELP and focused on public health issues. He said WSLCB representatives shared “our concern that...the states who have started...that the federal framework not conflict” with state laws.
    • Garza explained that he expected to see legislation brought by several U.S. Senators by “the end of this month, if not, maybe a little bit sooner.”
      • Garza had expected federal action on cannabis policy for several months, mentioning it on March 25th and telling lawmakers agency staff had formed a work group dedicated to the topic. He discussed it with the board on March 30th and April 14th. The possibility had also been raised by attorneys, state lawmakers, and Postman. 
      • Action on cannabis legalization in the U.S. Senate had been promised by Senate Majority Leader Chuck Schumer repeatedly in 2021. Since announcing meetings on the subject in February, Schumer had demurred on the timeline, promising a senate bill “soon” in March and April, then telling a podcaster legislation would be introduced “shortly” in May.
      • Meanwhile, in the U.S. House, several representatives re-introduced the Marijuana Opportunity Reinvestment and Expungement (MORE) Act on May 28th. The chamber passed the MORE Act in a bipartisan vote of 228 to 164 in 2020.
    • Postman promised to closely scrutinize any federal legalization proposal “to make sure there’s nothing in it that we feel conflicts with any piece of Washington’s system that’s important to us.” He was interested in how federal authorities would handle “the states’ rights issue of the existing cannabis markets out there.” Postman expected both Murray and Maria Cantwell, the junior Senator from Washington state, would be “great allies in helping us...protect what we have” (audio - 1m).
  • Garza mentioned attending the spring meeting of the Washington CannaBusiness Association (WACA) and participating on a panel that also included Director of Enforcement and Education Chandra Brady, Policy and Rules Manager Kathy Hoffman, and Sheri Sawyer, a Senior Policy Advisor to Governor Jay Inslee (audio - 3m).
    • He said he discussed enforcement reform at WSLCB while Hoffman provided a rules update that “included discussions of...the advisory with respect to delta-8[-tetrahydrocannabinol]” (delta-8-THC) to attendees along with “the discussions and concerns that are occurring with respect to delta-9 that’s entered into the marketplace.” Sawyer offered thoughts on “the governor and the cannabis industry,” he remarked.
    • Garza mentioned that the meeting included a legislative panel with members of the Washington State House Commerce and Gaming Committee (WA House COG) and Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA). Garza indicated this conversation centered on “what’s the future going to look like,” and he had mentioned a need to work with CANNRA and cannabis stakeholders on federal legalization which he predicted would occur in the “next two, to four, to five years.”

• Policy and Rules Manager Kathy Hoffman talked about plans to withdraw a CR-101 on THC Compounds Other Than Delta-9 in favor of a more expansive rulemaking project and Board Member Russ Hauge confirmed receipt of a legal opinion from the Washington State Office of the Attorney General (WA OAG) on the matter.
  • Hoffman told the board that staff had been discussing “both concerns related to THC compounds and [engaging] all of our community members in discussions around those things.” She acknowledged stakeholders included cannabis licensees, representatives of the hemp industry, public health officials, prevention advocates, “and many others.” Noting the “strongly held positions from many involved,” Hoffman confirmed staff would “maintain our agency’s strategically planned and charted pathway forward with this work...leveraging limited rulemaking authority” (audio - 3m).
    • To this end, she announced that she would ask to withdraw the existing CR-101 on THC in order to “file a revised CR-101 that contemplates effectuating the full provisions of RCW 69.50[.342](1)(m).”
      • That law empowers the WSLCB to undertake “The prohibition of any type of device used in conjunction with a marijuana vapor product and the prohibition of the use of any type of additive, solvent, ingredient, or compound in the production and processing of marijuana products, including marijuana vapor products, when the board determines, following consultation with the department of health or any other authority the board deems appropriate, that the device, additive, solvent, ingredient, or compound may pose a risk to public health or youth access.”
    • Hoffman said the existing CR-101 “contemplates products other than delta-9,” and that when the board approved the rulemaking project on May 12th “it appeared that this was where we needed to concentrate our efforts.” However, since then concerns had been raised that synthesized delta-9-THC was supplanting licensed cannabis production, she observed, leading to calls to revise the CR-101 to expand the scope of the rulemaking project.
    • On July 20th, agency officials planned to reconvene the expert panel from the June 3rd deliberative dialogue to continue the discussion and “help us drill down even further into our understanding of cannabis plant chemistry.” She added that she hoped to have information on the event released “by the end of the week.”
    • Postman asked about how the original CR-101 and April 28th policy statement on synthesized cannabinoids compared to the revised CR-101. Hoffman described how the original had said “‘THC compounds other than delta-9’, and now we understand that we need to include...all THC compounds, including delta-9 that may or may not be derived from marijuana as defined in statute.” She concluded that the revised language let staff contemplate “the universe, as it were, of those compounds” (audio - 2m).
  • On June 29th, Hauge told the board about a meeting with counsel from the WA OAG to discuss the “hypothetical conversion of [cannabidiol] CBD into delta-9 and introducing it into our system.” He followed up to say he’d received an opinion from WA OAG staff "late last week," and he would be discussing it internally with Garza and other staff. Hauge still wanted “guidance from the AG as to how we can use this memorandum of opinion going forward in a public fashion” as he was concerned about waiving “any privilege that we have with the Attorney General’s office.” He assured fellow board members the topic “remains a priority issue” (audio - 1m).

• Policy and Rules staff briefed on other ongoing rulemaking projects and a board interim policy.
  • Tier 1 Expansion (audio - 1m, Rulemaking Project)
    • Hoffman reported that a CR-103 to adopt rule changes would be presented at the board meeting on July 7th. A “handful” of comments had been received, “half in support, half in opposition.” She found testimony during the June 9th public hearing “largely in support” of the proposed changes.
    • Policy and Rules Coordinator Jeff Kildahl explained that six written comments had been received by staff on the project, half in favor, half against changing tier sizes. The CR-103 had been delayed from the initial presentation date of June 23rd until July 7th “because some of the written comments were extensive and we were still in the process of transcribing the oral testimony,” he remarked. The extra time also allowed for better responses to submitted comments, Kildahl added (audio - 2m).
  • Retail Title Certificates (audio - 3m)
    • Hoffman announced that she’d be asking board members to rescind the board interim policy (BIP) creating Cannabis Retail Title Certificates, BIP 04-2018, and replace it with a Policy Statement carrying the same effect. She briefed on the background of the title certificates established in April 2018 to assist license holders with retail locations who were “prohibited from opening stores in jurisdictions where local ordinances prohibit cannabis sales.” Hoffman said as licensees had to “comply with all licensing requirements whether [they’re] able to open or not,” the board had acted to let licensees unable to open “apply for a title certificate instead,” which excused them from having to meet some requirements. 
    • Retail Title Certificate holders were expected to “reinstate their license within six months” if a local ban or moratorium was lifted where their store was located, Hoffman stated. Saying the original intent was for the BIP to be replaced with permanent rules, she relayed that staff had planned to “reevaluate the need for title certificates four years” after the BIP was adopted “by April of 2022.” Hoffman’s team determined that a policy statement “renews a lot of what that board interim policy contains...it streamlines the provisions quite a bit" and removed any deadline for board reconsideration.
      • In June 2020, Hoffman explained her decision to request the board withdraw the dormant CR-101 on Retail Title Certificate rules, forecasting she would review the policy in April 2021 to see “whether rulemaking will be necessary at that time.” The following month, staff talked about reasons for the withdrawal before the board agreed to close the rulemaking project.
    • Postman wanted to know if it was alright that agency leaders were not pursuing permanent rulemaking like the BIP had stated. Hoffman responded that she’d been communicating with the licensing division which was preparing to announce details following board approval of the policy statement and rescission of the BIP, confident it would offer more “flexibility” to certificate holders (audio - 2m).
  • Quality Control (QC) Testing and Product Requirements (audio - 1m, Rulemaking Project)
    • Kildahl informed the board that “two internal rule drafting sessions” had been held and that two more sessions would be convened that week. He said “only one bid” had been received for an economist “to help with drafting an updated small business economic impact statement” (SBEIS). Agency officials would meet with counterparts at the Governor’s Office for Regulatory Innovation and Assistance (ORIA) on July 8th “to review the bid.”
  • Criminal History (audio - 1m, Rulemaking Project) 
    • Kildahl mentioned the June 1st Listen and Learn Forum, commenting that staff collected “a small amount of feedback on the draft conceptual rules shared.” He said a CR-102 with proposed changes would be presented to the board for their consideration on July 7th.
  • Vitamin E Acetate (audio - 1m, Rulemaking Project) 
    • Permanent rules banning the compound in cannabis vapor products had yet to elicit any public comment, reported Kildahl, and the public hearing and CR-103 remained on track for July 7th and July 21st, respectively. “Under that timeline we will be able to allow the current emergency rules we have in place to expire...a few days after the effective date of these rules,” he predicted.