WSLCB - Board Caucus
(December 17, 2019)

Here are some observations from the Tuesday December 17th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• A new rulemaking project on “Incremental Expansion of Tier 1 Canopy” will take shape in 2020 after the long-planned withdrawal of a dormant CR-101.
  • The Cannabis Production and Canopy rulemaking project (WSR 18-01-058) was initiated at the end of 2017. In January of this year, WSLCB Policy and Rules Coordinator Kathy Hoffman revised it to include elements of a denied citizen petition regarding overproduction of cannabis before placing the rule “on hold” in April.
  • Hoffman announced her intention to withdraw the project on October 1st in favor of a new approach “considering whether or not we would allow tier 1 producers to incrementally increase canopy capacity assuming that they’re operating at a certain percentage of capacity.” She confirmed the move at the following day’s board meeting.
  • On Tuesday (audio - 1m), Hoffman informed the Board that withdrawing the CR-101 on Cannabis Production and Canopy would be her first request at the following day’s special board meeting. “That opens up the ability for us to file a new CR-101 regarding [WAC] 314-55-075 and that is to consider allowing tier 1 expansion under certain circumstances.” She said staff had discussed the concept on “several occasions” and would now have the ability to “consider rules around this” and solicit stakeholder feedback. She credited Brett Cain, WSLCB’s Policy Analyst and Tribal Liaison, with drafting assistance.
• Final changes to the latest Packaging and Labeling (PAL) rulemaking project came into focus and would conclude with rescission of six PAL-related board interim policies.
  • The PAL rulemaking project (WSR 19-12-029) can be said to have begun with an abrupt change in rule interpretation in October 2018 which briefly united the cannabis industry before dividing it, and precipitated numerous interim policies. A CR-101 was filed on May 29th to incorporate industry petitions and new legislation. The Board approved the CR-102 encompassing proposed rules on October 30th. A public hearing on the proposal occurred on December 11th.
  • Hoffman planned to present the PAL CR-103 the following day at the Board’s final public meeting of 2019, drawing the rulemaking project to a close. She described the agency’s response to comments from the public hearing as falling into several themes (audio - 30m).
    • The most consistent comments raised opposition to a new requirement to define and label serving size or draw size for cannabis flower, mix, or concentrates. Hoffman said, “we heard that, we understand it, we took it out of the rules. It made sense given the arguments that we heard.” She believed the public comments against that change were “pretty compelling” and without better quantification of “draws” or concentrate serving size a sensible standard “was not doable at this point.” Asked why it had been included, Hoffman replied that the language was based on PAL guidance from Oregon and had been considered by a licensee focus group in August which hadn’t raised objections.
    • Commenters also raised concerns about a new requirement to specify source lot numbers on labels. Hoffman indicated the requirement had been part of SB 5298 and that staff had "found a way to put those two pieces of language together" so that lot numbers would mean a “unique identifier number generated by the board’s traceability system.” This was “one and the same” as the bill’s language, so the agency “compressed” the requirement.
    • Hoffman then said WSLCB “added additional language meant to clarify” permissible structure and function claims, tying it back to the U.S. Code of Federal Regulations as much as possible, which she noted was part of the intent of SB 5298. Hoffman asked that Licensing Program Specialist for Label Approval Susan Harrell comment on guidance she’d developed which would be released the following day to “help licensees understand what” the agency was looking for. Harrell said her documentation referenced U.S. Food and Drug Administration (FDA) guidelines and claims would have to include a “disclaimer that it hasn’t been reviewed by the state, that it’s not deemed to cure, prevent, any type of disease” and that licensees would need to have “validation” of their claims listed on product labels.
      • Board Member Russ Hauge had met with a “big processor" who talked about "this limitation" on claim making. “They're trying to get away from the indica/sativa denomination," Hauge said, instead favoring descriptive terms like “‘stimulating’ or ‘relaxing.’” He wanted to know if the rule set was “moving towards something more rational.” Harrell responded that businesses could talk about indications of use like "use in the evening" or psychoactive effects. However, structure/function claims would be limited to Department of Health (DOH) compliant products and require substantiating information.
    • Another change was made at the request of substance abuse prevention advocates regarding measuring devices on infused beverages containing more than one serving. The agency’s proposed rules said products "may" include measuring devices like external measuring cups or droppers, but Hoffman asserted the intention of the original petition was that such products still “must” include measuring devices while bottle “hashmarks” would suffice for compliance. This led to a lengthy---and at times tense---exchange between Hauge and Hoffman over what the agency had already said it would do during the public hearing. “It’s different than what I thought we were going to do,” he said, adding that he expected the measuring cups to be done away with entirely. Board Member Ollie Garrett concurred that she believed the agency’s message had been one of doing away with external cups. Board Chair Jane Rushford said the public impression of the change was “slightly skewed” from what was put forward. Hoffman said prevention advocates had been broadly opposed to multiple serving beverages, leading staff to offer the hashmarks option as a compromise. The Board felt that diverged from their intent for opening the rulemaking project, regardless of the original petitioner’s intentions. Hoffman claimed changing the already revised final rules back would require a supplemental CR-102 and a new hearing. Garrett and Hauge wondered why a new public hearing would be needed if the language would again be identical to the proposed rules in the CR-102. Hoffman offered the opinion of Assistant Attorneys General who’d told her the may/must distinction was a “substantive change” necessitating a supplemental CR-102. She offered to revise the concise explanatory statement, the prepared memorandum, and responses to prevention advocates but cautioned it might not be done in time for the next day’s meeting. After further consideration, the board members changed course and instructed Hoffman to move forward with the revised language that matched the original petition for rulemaking: infused beverages containing multiple servings “must” include a measuring device and hashmarks on the label or bottle would achieve compliance.
  • Hoffman let the Board know that she also planned to ask them to rescind six board interim policies (BIPs) on PAL following approval of the CR-103 and “that [WSLCB] approve a new board interim policy that allows for a phase-in and sell-down period” where retailers can sell products with formerly-approved PAL through December 31st, 2020. Harrell explained that producers and processors would be expected to be in compliance with new PAL rules by July 1st, 2020 (audio - 2m). The rescinded BIPs are:
    • BIP 05-2019 regarding cannabis packaging and labeling rules implementation
    • BIP 07-2019 regarding false and misleading clarification
    • BIP 08-2019 regarding curative and therapeutic effects
    • BIP 09-2019 regarding marijuana infused edible (MIE) colors and homogenization
    • BIP 10-2019 regarding marijuana infused edible (MIE) colors
    • BIP 14-2019 regarding retail sell-down
• Representatives of the Nisqually Indian Tribe planned to attend a ceremony at Wednesday’s special board meeting to sign the State of Washington’s 13th cannabis compact with a tribal nation.
  • Sovereign tribal nations can choose to enter into marijuana compacts with the State of Washington “concerning the commercial production, processing, and sale of marijuana.” The most recent compact entered into was with the Quinault Indian Nation on October 29th.
  • Cain said the compact was on track to be signed by board members on behalf of the State the following day. He told the Board the Nisqually Indian Tribe planned to send their attorney, David Wolff, and at least two members of their tribal council. Rushford acknowledged the opportunity to organize a photo of the signing with the tribal representatives and reviewed protocols for the ceremony (audio - 3m).
  • Later, Hauge noted that he’d be visiting the Puyallup Tribe of Indians with Cain on Friday to talk about co-chairing WSLCB’s tribal outreach efforts. “The idea is to create a position for a tribal member that would be co-equal” with Hauge in the ability to call meetings or set agendas (audio - 1m).
    • In late November, Hauge indicated the agency had begun considering a “better vehicle” to convene with sovereign Indian Tribes than the public Tribal Advisory Council.