WSLCB - Special Board Meeting
(December 18, 2019)

• Due to the holidays, the agency moved the following week’s regularly scheduled Board Meeting to this Wednesday.
• In late November, WSLCB Policy and Rules Coordinator Kathy Hoffman expected to propose rules for Quality Assurance (QA) Testing and Product Requirements by this date, progressing that rulemaking project to the CR-102 stage.
• Although less likely, given the limited scope of comments during the public hearing for the Packaging and Labeling (PAL) rulemaking project at the December 11th Board Meeting, a CR-103 may be presented for adoption.

Here are some observations from the Wednesday December 18th Washington State Liquor and Cannabis Board (WSLCB) Special Board Meeting. This was the agency’s last public meeting of the calendar year.

My top 4 takeaways:

• The Board voted to approve new packaging and labeling rules following an extended rulemaking project, shuttered half a dozen interim policies, and enabled retail sell-down throughout 2020.
  • 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. 
  • WSLCB Policy and Rules Coordinator Kathy Hoffman presented the PAL CR-103 to the Board bringing the rulemaking project to a close (audio - 8m, video). She thanked “industry partners; prevention and public health partners; and members of our community” who contributed to the project, saying their involvement was reflective of how collaborative the process had been.
  • Hoffman believed the revised rules showed "a balance of the many interests represented" and reviewed the background of the rule project which impacted WAC 314-55-077(8) and (9) and WAC 314-55-105. The rule set’s scope covered a trio of agency efforts:
    • A pair of rulemaking petitions from the Cannabis Alliance on packaging waste the Board received in April, one on packaging thickness and another allowing “hash marks” to suffice as “an external measuring device” for beverages with multiple servings
    • Consideration of board interim policies (BIP) regarding PAL adopted in January and August which Hoffman previously said “largely are not going to be” added to permanent rules
    • Implementation of SB 5298’s legislative directives passed in May
  • Hoffman elaborated on the timeline of the PAL rulemaking process, saying the CR-101 had been posted by the Office of the Code Reviser (OCR) on June 12th. Then the agency held two focus groups:
    • One with cannabis industry representatives on August 12th
    • Another with prevention advocates on September 17th
  • After the public hearing on December 11th, staff revised the rules before finalization. When outlining those revisions during the board caucus on December 17th, Hoffman indicated an opinion from the Office of the Attorney General (OAG) had influenced her final changes:
    • Added a “reference to federal regulation, the definition of ‘structure and function’ to provide clarity and guidance” as well as a second reference around the use of “false and misleading” labeling
    • The removal of language requiring listing a serving/draw size for cannabis concentrates, and usable or mixed cannabis flower
    • Combined “language that formerly appeared as separate labeling requirements regarding lot number and unique identifiers”
    • Lastly, Hoffman noted they had changed wording about the inclusion of measuring devices from “may” to “must,” ensuring that all multi-serving containers have measurement information. It was her understanding that packaging designs with hash marks had already been submitted to the agency.
  • Hoffman added that the CR-103 memorandum detailed all the final revisions and an implementation plan for the new rules. She also noted the inclusion of six specific steps the agency would take to monitor and “evaluate the effectiveness of these rules.”
  • The Board voted to adopt the CR-103. Hoffman said she’d file it with OCR that day with an expedited effective date of January 1st, 2020.
  • Hoffman then asked the Board to rescind six PAL BIPs, explaining that they had been “superseded” by the CR-103 “or have been addressed by way of [SB] 5298” and were “no longer needed.” The Board approved the rescission of the following BIPs without comment (audio - 2m, video):
    • 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
  • In a final PAL move, Hoffman requested the Board approve a new BIP regarding retailer "phase-in and sell-down periods" for cannabis products in non-compliant packaging. She asserted the BIP would seek to "increase compliance success and mitigate compliance cost" as retailers could no longer accept products packaged under the previous rules starting July 1st, 2020, but could sell through such products until December 31st, 2020. “After that time retailers may return those products to licensed processors consistent with WAC 314-55-077” or dispose of them “consistent with WAC 314-55-079(13) and 314-55-097.” The Board approved the new policy (audio - 2m, video).
• The agency “refocused” its efforts on canopy with a new rulemaking project for tier 1 producers.
  • The Cannabis Production and Canopy rulemaking project (WSR 18-01-058) was initiated at the end of 2017. In January of this year, Hoffman revised it to include elements of a denied citizen petition regarding overproduction of cannabis before placing the rule “on hold” in April.
  • Hoffman spelled out 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 and prepared the Board during the December 17th caucus.
  • Hoffman first asked the Board to withdraw the CR-101 on Cannabis Production and Canopy. She confirmed the agency was committed to a "sustainable and vibrant cannabis production system" which included “business viability” for every production tier. The Board withdrew the pre-proposal statement of inquiry without questions (audio - 2m, video).
  • Hoffman next presented a replacement CR-101 reframed to address the needs of "segments of the industry" and patient access to Department of Health (DOH) medically compliant products. She argued that the move was consistent with the agency’s 2019-2024 Strategic Plan goal to develop medical cannabis accessibility and legislation integrating medical cannabis into the recreational system in 2015, SB 5052. Furthermore, Hoffman stated many small producers had reported doubts on the overall viability of tier 1 licenses at their current canopy limit. A new CR-101 regarding [WAC] 314-55-075 to “consider allowing tier 1 expansion under certain circumstances” would help WSLCB “harmonize and address concerns” of access from patients and of viability from Tier 1 businesses (audio - 3m, video).
  • Reviewing differences between the CR-101s, Cannabis Observer noted several changes:
    • The original scope opened the entire WAC 314-55 chapter for edits, whereas the new scope is restricted to the “Marijuana Producer License” in WAC 314-55-075.
    • The original suggested developing a more general system to adjust canopy, whereas the new CR-101 specifically focuses on tier 1 producer viability and access to medical cannabis.
    • The new pre-proposal statement of inquiry allows for clarifying and technical changes to rules within scope along the way.
    • The original made no mention of other agencies, whereas the new CR-101 indicates the Board “will coordinate with other Washington State agencies as necessary,” specifically mentioning WSDA, DOH, DOE, and DOR.
    • Perhaps most significantly, the rule process was changed from "Agency study" to "Other: Collaborative Rulemaking."
  • Hoffman then projected a timeline for the rulemaking project:
    • After being filed that day, the CR-101 notice would be published by OCR on January 2nd, 2020 with a public comment period ending February 2nd.
    • Following “stakeholder engagement” and a listen and learn session, a CR-102 would be ready on June 24th, 2020, “if not sooner.” The CR-102 notice would be published around July 15th.
    • A public hearing would be scheduled for August 5th, 2020, followed by CR-103 on September 2nd which would go into effect “on or about October 3rd.” 
  • Having no questions or concerns, board members approved the new rulemaking project.
• Policy and Rules Coordinator Kathy Hoffman kept the remainder of her rule briefing brief, calling attention to projects expected in the next year and monitoring of the evolving situation around vapor products.
  • The last rulemaking update covered by Cannabis Observer was on December 10th.
  • Cannabis Penalties (WSR 18-22-099, audio - <1m, video). Hoffman said a public hearing on the redesigned rules was on track for January 8th, 2020 and had yet to elicit any public comments.
  • Quality Control (WSR 18-17-041, audio - <1m, video). Formerly referred to as the ‘Quality Assurance (QA) Testing and Product Requirements’ rulemaking project, Hoffman expected to present the CR-102’s proposed rules to the Board on January 8th.
  • Voluntary Compliance Program (WSR 19-15-074, audio - <1m, video). Hoffman anticipated another internal work group meeting the following day, and hoped to “take the best of that and move it forward.”
  • True Party of Interest (TPI, WSR 18-22-054, audio - <1m, video). Internal work group efforts also continued for this rulemaking project, with “refinement around spousal vetting requirements.” A “workable and agreed-upon definition of ‘control’” and “employee” were remaining hurdles.
  • Looking ahead, Hoffman envisioned other rule projects, specifically for advertising and to implement 2020 legislation impacting the agency (audio - <1m, video).
  • Hoffman added that she would continue to monitor emergency rules on vapor products to ensure “that [WSLCB] doesn’t miss any deadlines and also to make sure that we’re still in alignment on vaping associated lung injuries” (VALI, audio - <1m, video). 
    • Federal and state health investigations into VALI causes have continued as the State cracked down, banning flavored vape items and the additive vitamin E acetate. The new prohibitions adopted by the State Board of Health (SBOH) were implemented in part by WSLCB emergency rulemaking in October.
• A tribal compact signing ceremony was held and the agency heard the last public comments of 2019.
  • Sovereign tribal nations have the choice 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.
  • Board Chair Jane Rushford welcomed leaders from the Nisqually Indian Tribe before Policy Analyst and Tribal Liaison Brett Cain presented the compact to be signed and gave a brief background on the authority to enter into such agreements. Cain noted that Governor Jay Inslee would be presented with and sign the compact following the Board’s signatures. Cain recognized tribal council members David Iyall, Willie Frank III, and tribal attorney David Wolff’s work on the document, calling it “a great example of government-to-government coordination.” The Nisqually leaders joined the Board to view the signing and posed for a photograph commemorating the event (audio - 4m, video).
  • Lara Kaminsky (audio - 2m, video). The outgoing Executive Director of the Cannabis Alliance, Kaminsky praised the agency’s work on PAL and acknowledged “the Board's interest in sustainability within our rules for our industry.” She noted the adopted rules were “exactly where we hoped it would be,” particularly around the newly permitted practice of labeling hash marks. Kaminsky offered estimates based on data from Headset that “1.5 million dosing caps going into the landfills just in one year and 39 tons of less plastic will also be removed” and called it an “incredible realization” of industry sustainability. She concluded, “Hopefully, we will not need to revisit packaging and labeling for quite some time.”
  • Aaron Barfield, Black Excellence in Cannabis (BEC, audio - 4m, video). Barfield last addressed the Board on December 11th and called for “fair inclusion” of African Americans in the 502 market.
    • He told the members there was a "major crisis that’s going on, the African American community in Washington state, we are being completely excluded" from the legal cannabis industry. Barfield said that African American communities had been dissuaded against participating in the former medical dispensary system and given the impression “we’re gonna lock you up at four times the rate for being involved with cannabis.” 
    • Once cannabis was taxed and regulated, he argued that African American license applicants were “disqualified” and “locked-out” of a consumer market which African Americans in the state built “on our backs.” Instead, Barfield asserted that profits from the industry went to WSLCB, the State, and “concentrated into a very few hands, of millionaires who are monopolizing the industry.” He felt much of the cannabis market had been cultivated by African American distributors left with “very few options” to replace their “livelihood.”
    • Barfield said the agency was prioritizing other issues despite having presented the Board with a “Misconduct Report” a week earlier alleging discrimination by a licensing staffer at WSLCB. He wondered whether the agency would post it with the meeting’s documents, an uncommon practice for WSLCB.
    • Barfield concluded that his group would continue raising the issue around the agency. He called out Rushford for not responding to his request for a meeting and said his communications following meetings with agency Director Rick Garza and Director of Licensing Becky Smith had not been followed up on. BEC was “not going away” and would “be persistent.”
  • Don Skakie (audio - 6m, video 1, video 2). A patient advocate from Renton, Skakie most recently spoke to the Board on December 11th, challenging their intention to shorten the public comment period in 2020.
    • As Skakie approached, Rushford noted his last comments were “so well taken last week on the duration of time” that the Board had decided to change course and maintain the current four minute window for individual comments in public meetings. She thanked Skakie for “steering me in the right direction,” who replied that he was “happy to participate.”
    • Skakie expressed optimism at the “opening of the CR-101 on medical canopy” as well as the inclusion of Lukas Barfield as a patient representative on WSLCB’s Cannabis Advisory Council (CAC). He noted that he’d not applied for the position because he’d allowed his own medical cannabis authorization to expire, though he continued to “self-identify as a medical cannabis patient.” Even with an authorization, Skakie claimed he’d view participating in DOH’s patient authorization database as “intrusive and quite honestly insecure.” He was concerned the agency hadn’t done enough to contact patients who had previously communicated with WSLCB, but wished Lukas Barfield the best as Skakie believed he could "provoke more interaction between patients and the Board."
      • Though Skakie was unable to attend the December 17th CAC meeting, he noted that he’d be able to count on content from "our friends at Cannabis Observer" to learn what transpired.
    • Saying that cannabis “cultivars that patients desire and need” remained all or mostly absent from the 502 market, Skakie called that one reason patients chose to steer clear of the retail system. He called for a process to “bring in new cultivars into the system” to better serve cannabis patients and keep them from resorting to the unregulated market.