WA House COG - Committee Meeting
(January 20, 2020)

Here are some observations from the Monday January 20th Washington State House Commerce and Gaming Committee (WA House COG) committee meeting.

My top 3 takeaways:

• Washington State Liquor and Cannabis Board (WSLCB) Director Rick Garza briefed the committee on the agency’s work and testified to changes underway which shift the WSLCB towards a less “heavy handed” approach.
  • As he introduced himself, Garza welcomed Strom Peterson, the new committee chair, and Alex Ramel, who occupied Kristine Reeves former seat on the committee. He also introduced Jane Rushford noting that her 2015 gubernatorial appointment as the Chair of the agency board through January 2021 had been confirmed by the Senate on Friday (audio - 12m, video).
  • Garza’s testimony focused on WSLCB’s recent enforcement restructuring, and drew several questions from lawmakers. Garza intoned, “last January, and even before that, we began to hear concerns with respect to our enforcement practices with our licensees, specifically our cannabis licensees.” He reviewed some of the state and federal history around cannabis legalization and reminded lawmakers of the “very strict requirements for licensure, very strict requirements for enforcement” that led to “pretty strict regulations in place for that enforcement.”
  • Alluding to SB 5318, which required enforcement reforms of WSLCB in 2019, Garza noted that it also provided for the contracting of Hillard Heintze to study the agency’s policing approach. Garza offered a letter outlining what the agency had learned from Hillard Heintze’s report on enforcement practices completed late last year. He touched on the recommendations and actions the agency would take as a result of the report on January 8th before WSLCB acknowledged the report and their plans for reforms via bulletin the following day.
  • Garza said that the agency planned to implement many of the report’s suggestions while insisting that some of the information on WSLCB Enforcement was “positive, and not just problematic.” He said three factors of Hillard Heintze’s findings drove the agency’s leadership to adopt changes “between the next zero to six months.”
    • “We heard licensees saying ‘I don’t understand how you make interpretations with respect to your agency decisions,’” Garza reported, adding that many policy interpretations had been called “inconsistent.” He explained that this impression had been communicated primarily by cannabis licensees and even some of the agency’s own staff. Garza said his agency had looked to a Department of Revenue (DOR) Interpretations and Technical Advice Division as a body of “legal experts and policy makers” established to help a state institution interpret and apply rules and policy consistently. “I’ll be creating a unit like that within my division” he told the committee, calling it a “central repository for agency interpretations and agency decisions.” Garza expressed confidence it would “streamline” the agency’s decision making for both licensees and staff.
    • Secondly, an attitude that the agency spent a disproportionate amount of effort on enforcement rather than educating licensees to achieve compliance. “We will create an outreach and education unit,” Garza promised legislators, saying it would utilize the agency’s “traceability, licensing, and enforcement” staff for cannabis. He cautioned that “this education and training appears to be more secondary than primary. This will be the primary work of the unit we create that will do outreach and education” for licensees and WSLCB staff. This would include revising the agency’s “position descriptions” for Enforcement staff to more clearly “balance” an expectation for educational training with their other duties. 
    • Garza also mentioned the voluntary compliance program included in SB 5318, and noted the agency’s ongoing rulemaking to make the program a reality. He then pointed to proposed changes to the agency’s violation and penalty structure as another aspect of WSLCB implementing the directives of the legislature.
      • The agency was scheduled to adopt the CR-103 final rules emerging from the Cannabis Penalties rulemaking project at the Board’s meeting on Wednesday January 22nd.
    • Lastly, Garza said that over the next “30 days” revisions to Enforcement uniform policies would lead to a “kinder, gentler” manner of dress by officers in the field and potential revisions to policies around Enforcement officers carrying firearms.
  • Garza summarized the process as a “rebooting, recalibrating” in pursuit of a “balanced approach towards enforcement” that made “sense to the Board, makes sense to the agency and, I think, the legislature and Governor.” He then fielded several committee questions.
    • Representative Bill Jenkin acknowledged Enforcement dress had come up in regards to an agency visit during a wine tasting held in his district, saying it had “looked pretty intimidating to the customers that were there.” He asked when WSLCB would “start that transition” and Garza replied the dress code would be changed “immediately” while reiterating that the agency continued to work with officers and their union on an updated “handgun policy” (audio - 2m, video).
    • Assistant Ranking Member Kelly Chambers inquired about licensee reports of inconsistent guidance from Enforcement staff and wanted to know if there was “progress being made, publishing decisions, so that those license holders can go online” and learn how to “make changes in their businesses.” Garza assured her this would be a central goal of the new policy unit in his office, while saying that he’d “heard that for 20 years, even before we got into the cannabis space” (audio - 1m, video).
    • Chambers followed up, wanting to know how licensees could prove to Enforcement staff that they’d been acting under direction or guidance of one of their officers. Garza responded that “happens today” and there would likely continue to be “one offs that occur like that” but that a commonly accessible repository of prior decisions would move WSLCB “closer to a better system than what we have today” (audio - 1m, video).
    • Chair Strom Peterson asked if the agency knew “how to track” complaints going forward to see if there was disproportionate “enforcement action” in particular regions or by specific officers. Garza replied that the Hillard Heintze report also recommended an improved “case management system” and that WSLCB would “continue contracting with” the consulting firm to improve the enforcement data they tracked (audio - 2m, video).
    • Peterson continued, noting that as Hillard Heintze was largely comprised of former law enforcement professionals, he asked if there was a way to get additional feedback on “the customer service side.” Garza answered that he believed the report from the consultants recognized that enforcement was a feature of WSLCB as a regulator, but that the agency shouldn’t utilize a “heavy hand” (audio - 2m, video).
      • Among many other stakeholder engagements, Hillard Heintze hosted an Enforcement Discussion at Green River College in Auburn on July 30th.
    • Peterson asked if there would be space within WSLCB for guidance not just on rules but “best practices” for licensees or applicants to succeed as a business. Garza said that looking at what information licensees and applicants needed would be a part of their outreach and education work (audio - 2m, video).

• The Committee hosted public hearings on two new cannabis bills beginning with HB 2296, “Concerning the regulation of hemp, including products derived from hemp.”
  • Committee Report
    • By Peter Clodfelter, WA House COG Committee Counsel (audio – 3m, video)
    • Bill Text (Jan 7, 2019)
    • House Bill Analysis (Jan 20, 2020)
    • Amendment COG-H4039.1 (Jan 20, 2020)
  • Drew MacEwen, the bill’s primary sponsor, offered introductory remarks (audio - 1m, video).
    • Cannabis Observer previously noted, “Representative MacEwen, the Ranking Minority Member on the committee and the Assistant Minority Floor Leader, will introduce his bill which appears to permit the use of cannabidiol (CBD) in food products, in potential contravention of current federal guidance from the Food and Drug Administration (FDA).”
    • Vice Chair Shelly Kloba had a question for MacEwen regarding “consumer reassurances” about the state’s developing CBD sector in contrast to the strict rules for legal cannabis products. MacEwen pledged to work with industry stakeholders to find an “amicable common ground to that” (audio - 2m, video).
  • Pro (4)
    • Jay Gordon, Gordon Farms (audio – 2m, video)
    • Brooke Davies, Washington CannaBusiness Association (WACA) Deputy Director (signed in)
    • Eric Gonzalez Alfaro, American Civil Liberties Union of Washington  (ACLU WA) Legislative Director (signed in)
    • Michael Moran, Confederated Tribes of the Colville Reservation (signed in)
  • Con (4)
    • Bonny Jo Peterson, Industrial Hemp Association of Washington (audio – 3m, video)
    • Stephen Rowland (audio – 1m, video)
    • Seth Dawson, Washington Association for Substance Abuse and Violence Prevention (WASAVP) Lobbyist (signed in)
    • Dylan Summers, Lazarus Naturals VP of Government Affairs (signed in)
  • Other (3)
    • Mark Ambler, Tier 1 Producers Association (T1PA) Founder (audio – 1m, video)
      • Breeze Trees Owner
    • Kelly McClain, Washington State Department of Agriculture (WSDA) Policy Advisor to the Director (audio – 2m, video)
      • The testimony from the panel of McLain and Gordon prompted questions from several committee members, first from Peterson, who asked about the U.S. Food and Drug Administration (FDA) policy on cannabidiol (CBD, audio - 3m, video) before asking about FDA inspections (audio - 1m, video).
      • Representative Jesse Young asked McLain if she was concerned the state may retrospectively consider the legislation a “missed opportunity” (audio – 2m, video).
      • MacEwen followed up to ask McClain to confirm that if “the feds” eventually found CBD was “generally recognized as safe (GRAS)” then WSDA would not have to write additional rules nor request legislation (audio – <1m, video).
    • Sean O’Sullivan, Velicahn, Inc. (Kushman’s) Contract Lobbyist (signed in)
      • Pacific Northwest Regional Strategies Managing Partner

• The Committee next heard testimony on HB 2300, “Authorizing marijuana retailers to sell cannabidiol products.”
  • Committee Report
    • By Kyle Raymond, WA House COG Committee Staff (audio – 1m, video).
    • Bill Text (Jan 7, 2019)
    • House Bill Analysis (Jan 20, 2020)
  • MacEwen, sponsoring this bill as well, gave introductory remarks calling CBD products a “natural fit” for 502 stores (audio - 1m, video).
    • Cannabis Observer previously noted, “Another bill authored by MacEwen would permit retailers to sell CBD products procured from manufacturers not licensed by WSLCB provided those products meet established marijuana product safety requirements. Following the requested withdrawal of the out-of-state investment and equity program bills, HB 2263 and SB 6085, passage of this bill became the top listed legislative priority of the Washington CannaBusiness Association (WACA).”
  • Pro (7)
    • Brooke Davies (audio – 3m, video)
    • Jay Gordon (audio – 1m, video)
    • Chris Thompson, WSLCB Director of Legislative Affairs (audio – 4m, video)
    • Eric Gonzalez Alfaro (signed in)
    • Michael Moran (signed in)
    • Sean O’Sullivan (signed in)
    • Alan Ralston, The Cannabis Alliance Contract Lobbyist (signed in)
  • Con (3)
    • Mark Ambler (audio – 3m, video)
    • Stephen Rowland (audio – 2m, video)
    • Seth Dawson (signed in)
  • Other (4)
    • Micah Sherman, Raven Owner (audio – 3m, video)
    • Bryan McConaughy, Washington SunGrowers Industry Association (WSIA) Lobbyist (audio – 2m, video)
    • Bonny Jo Peterson (signed in)
    • Dylan Summers (signed in)