WSLCB - Executive Management Team
(August 11, 2021)

Here are some observations from the Wednesday August 11th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 3 takeaways:

• WSLCB staff had been interested in moving away from seed-to-sale tracking of the movement of cannabis products in Washington state to a less stringent compliance reporting regime ever since the state entered into a contract with software vendor MJ Freeway.
  • In late 2017, the transition from traceability vendor BioTrackTHC to MJ Freeway---which subsequently became a subsidiary of Akerna---resulted in an interim period where the agency itself was responsible for gathering data about transactions within the state cannabis marketplace. A so-called “Contingency Reporting System” (CRS) was put into operation when MJ Freeway missed initial and subsequent launch dates. That system, with subsequent modifications to incorporate feedback, was the basis on which the CCRS was built.
  • Eventually somewhat operational in early 2018, MJ Freeway Leaf Data Systems---the software responsible for tracking the state’s legal cannabis---was not meaningfully updated after problems with release 1.37.5 in July 2019. As the State’s relationship with the technology vendor deteriorated and numerous problems were identified, planned development was halted in favor of maintaining a comparatively stable system.
  • Chief Information Officer (CIO) Mary Mueller---who departed the agency at the end of March 2021---led implementation of technology projects at the agency including traceability from late 2015 until her departure. She co-led the Traceability 2.0 work group, organized to help the agency chart a path away from its reliance on MJ Freeway towards a more rational and less onerous approach to ensuring compliance and public safety. At the most recent meeting on March 2nd, participants reviewed the agency’s findings and explored a minimal Cannabis Traceability Requirement Repository.
  • In May 2021, Mueller was succeeded as CIO by George Williams, previously the Senior Information Technology (IT) Manager. Prior to leaving, Mueller secured board approval on a road map towards ending the contractual relationship with MJ Freeway by June 2022.

• During the EMT meeting, Chief Financial Officer (CFO) Jim Morgan, executive sponsor of the CCRS project, provided an update to agency leadership (audio - 4m, video).
  • Morgan mentioned a CCRS “communication plan” he’d sent to the board but did not describe its contents beyond stating that his presentation was “our first step in the process.” The goal of his briefing was to explain “what we’re doing and how we’re doing.”
  • Morgan said board members had last been “briefed [in] April or May, sometime around that time frame” and the agency was moving ahead on CCRS with a “fully constituted project team, efforts are...in full steam, and we’re...on track to, to deliver” a revised system “it looks like, in December.” He described how the communications plan for the project was “designed to...connect with all of the stakeholders,” whether they were “subject matter experts,” government staff, representatives of the cannabis industry, or elected officials - including “a particular focus with the integrators.” Morgan remarked that integrators---third-party software developers who provided more convenient and usable interfaces to Leaf Data Systems---were emphasized as they “provide systems to our licensees” and were “responsible for sending the information to us for us to collect in our database.”
    • In June 2021, WSLCB staff announced the cancellation of the Integrator Work Sessions, a monthly event which brought together third-party software providers, WSLCB staff, and occasionally MJ Freeway representatives. The last work session was hosted in February, prior to the agency’s commitment to transition away from MJ Freeway. At publication time, Cannabis Observer was not aware of any direct communications to software integrators regarding the pending transition away from the established traceability regime in Washington state.
  • The communications plan included a “calendar of, of events,” said Morgan, describing “who we’re communicating with and on what time frame,” as well as talking points for those groups. He relayed that while CRS was first “considered as a, a contingency system,” the revised program minimized requested reporting to the “bare necessities, what do we need as an agency...to be able to do our jobs” as regulators. Morgan added that the next steps would be an “all agency communication” he would be sending out as “the project sponsor” and then stakeholder engagement.
  • Board Chair David Postman, in reviewing the calendar provided by Morgan, noted that the project was “on track,” but believed that another board update following execution of the communications plan around “September to November” was warranted. “It does look good,” he observed, “but I’d just be really curious what you’re hearing out there and whether it gives us any new tasks between now and December.” Morgan assured Postman he’d arrange for a follow up presentation, and Postman wished him “good luck” on the project (audio - 1m, video).

• On July 16th---after a 10 hour Leaf Data Systems outage on July 9th---Cannabis Observer Founder Gregory Foster reached out and spoke with Morgan and WSLCB CIO George Williams about the CCRS.
  • The Contingency Reporting System, the progenitor to the CCRS, was a minimal system for data intake which did not require a particular data format. As a result, information was provided in a variety of formats without rigorous accountability. Those lessons were taken to heart, and the CCRS would accept comma-separated value (CSV) text files in a specified format.
  • Users would be expected to upload CSV files to a specified location on a defined schedule. Server routines would attempt to pull that data into a database while applying validation rules. Should that intake process fail, licensees and/or their software integrators would receive an email notification.
  • The required data would be minimized to information necessary to ensure compliance and meet the needs of the Enforcement and Education division as well as the Marijuana Examiners unit housed in the Director’s Office. Morgan and Williams described the required data as “a snapshot in time of inventory, and what happened to it” and expected uploads would not be requested more than once a day. Subsequent analysis and reports would be run on the target database separately from the CCRS system.
  • The projected date for completion of the CCRS development project of December 2021 corresponded with the start date of January 2022 for the final authorized contract extension with MJ Freeway. Morgan and Williams indicated neither WSLCB nor MJ Freeway had any interest in extending their business relationship beyond a potential final contract amendment which would expire in June 2022. The December 2021 date could be a goal for the earliest transition away from MJ Freeway, but any transition must occur by June 2022.
  • Foster shared several concerns with Morgan and Williams which had been expressed during the Traceability 2.0 Work Group meetings, as neither WSLCB staffer directly participated in those events.
    • Foster asked that cannabis testing laboratories and licensees who chose not to use software integrators be included in WSLCB planning.
      • Labs were often forgotten in traceability deliberations but operated their own laboratory information management systems (LIMS)---sometimes developed in-house---which integrated with MJ Freeway.
      • Licensees without dedicated software integrators relied upon the “free” MJ Freeway Leaf Data Systems web interface to ensure compliance and participate in the 502 marketplace. Morgan and Williams said the agency would likely provide a spreadsheet template for those licensees.
    • Foster asked about the provision of transportation manifests under the CCRS.
      • While manifests were produced by MJ Freeway Leaf Data Systems, licensees under CCRS would be provided with a description of required data and be responsible for generating their own manifests to document the movement of cannabis or cannabis products.
      • During the Traceability 2.0 conversations, manifests were a point of contention because they were one of the few data points which the agency insisted it needed in near real-time, thwarting attempts to move towards a less synchronous reporting regime. During the BioTrackTHC era, that vendor’s platform provided a live feed to the Washington State Patrol (WSP) to relay manifests and ensure State Troopers had verified information about cannabis products in transit in the event of a traffic stop. It was conveyed that this synchronous reporting would need to continue.
      • However, Morgan upended this requirement by admitting that MJ Freeway never implemented a connector with the WSP. No manifests had been relayed to the WSP by WSLCB since late 2017, and the WSP never indicated this was a high-priority concern. Paper manifests carried by transporters would remain the primary documents relied upon by State Troopers in the event of a stop.
    • Foster raised his biggest concern: the business-to-business (B2B) transactional layer provided by all centralized state traceability systems would no longer exist when moving to the CCRS.
      • As all licensees and integrators were required to communicate with one another through MJ Freeway, the system provided a protocol for authentication and information sharing between licensees. In the absence of this implicitly agreed upon method for communicating with one another, licensees and integrators would be required to develop their own protocols for information exchange - a B2B transactional layer (or layers) between their systems.
      • During the Traceability 2.0 conversations, advocates and agency staff agreed that the State should aim to get its system out of the middle of B2B transactions. Other sectors facilitated their own transactions among participants, and subsequently provided any required compliance reporting. The challenge in this circumstance was no agreed upon cannabis industry-driven B2B transactional layer existed. The transition to the CCRS would force service providers in the cannabis sector to collaboratively build a B2B transactional layer - or multiple layers among allied participants.
      • Morgan indicated the move would place the cannabis industry more on par with the liquor sector, which utilized point-of-sale (POS) systems of all shapes and sizes. Liquor rules required licensees and distributors to track records of all transactions. In the event of an audit, agency staff sought records from both parties to any transaction to perform a kind of double-entry accounting.
      • Williams insisted the agency would stick to this requirement and would not allow scope creep.
    • Finally, Foster asked about public data transparency.
      • Morgan indicated the first phase of reports would likely include comparable public records produced at a comparable cadence to the current creation of a monthly snapshot of parts of the MJ Freeway database.
      • At the end of July, the WSLCB shut down its own data portal, but was actively exploring integration and output of public data to the State data portal. It was unclear if this connector would be implemented at launch of the CCRS.
      • Either way, all CSV files submitted to the State become public records which could be requested from WSLCB public records officials.
        • Learn more from the Washington State Office of the Attorney General (WA OAG) informational page on obtaining public records.
  • Given uncertainty at the federal level and the agency’s previous experience with traceability vendors, Morgan and Williams concluded that it was likely that the CCRS, once launched, would remain the agency’s primary means for cannabis industry compliance reporting for the foreseeable future. While much effort went into the productive Traceability 2.0 conversations, it appeared unlikely that WSLCB leaders would pursue acquisition or development of a more sophisticated seed-to-sale traceability system in the future.