WSLCB - Executive Management Team
(January 29, 2020)

Here are some observations from the Wednesday January 29th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team public meeting.

My top 3 takeaways:

• Director of Legislative Relations Chris Thompson provided an update on the agency’s three request bills, all of which were introduced less than a week before this meeting.
  • Thompson last reviewed legislative activity during the January 8th Executive Management Team meeting.
  • Thompson understated the atmosphere at the Capitol by saying there was “lots going on” before explaining that the following Friday was the first cutoff date for the legislative session. Bills must be passed by their house of origin’s policy committee by February 7th. Thompson said the final week’s hearing schedule would be announced the following day at noon and he expected some hearings for the agency request bills which had been introduced “all three of them, House and Senate companions” (audio - 8m).
  • The three WSLCB agency request bills are:
    • HB 2870 / SB 6604 - “Allowing additional marijuana retail licenses for social equity purposes.” Last discussed on January 21st.
    • HB 2871 / SB 6603 - “Establishing a retail privilege endorsement to a marijuana producer license.” Last mentioned December 17th.
    • HB 2826 / SB 6579 - “Clarifying the authority of the liquor and cannabis board to regulate marijuana vapor products.” Last discussed January 8th.
  • Thompson expected the House versions of the bills would be heard by the Commerce and Gaming Committee (WA House COG) but was less confident the Senate Labor and Commerce Committee (WA Senate LBRC) would take up the bills before the first cutoff as their schedule looked “pretty packed.” In that event, the Senate could only hear a bill if it was passed by the House. Still, Thompson said he received “an indication” from WA Senate LBRC Chair Karen Keiser suggesting hearings before cutoff were possible, with Thompson indicating SB 6604 was “a priority for us.”
    • Later that afternoon, WA House COG announced that all three WSLCB request bills would be heard on Monday February 3rd.
  • Thompson highlighted SB 6604’s six co-sponsors and claimed its companion, HB 2870, might have gotten more support if the Governor’s office had signed off on the agency’s proposal sooner. “In an ideal world I would have liked to have done it in October instead of late January,” he told the team. Thompson said his staff would "want to develop some supporting information should we get hearings” on any of the agency’s request bills.
  • Explaining that both WA Senate LBRC and WA House COG have heard several bills, Thompson went on to note “some that have generated a little bit more interest, a little bit more testimony, more public profile than others." He thought the highest profile bills were “industry proposals on non-resident ownership," “authorization for selling CBD products," and “cannabis industry workplace standards."
• Thompson led discussion on several other cannabis-related bills including a prevention-driven reformulation of cannabis concentrates, retail sales of CBD products, and industry workplace standards.
  • HB 2546 / SB 6332 - “Concerning the potency of marijuana products.” (audio - 2m)
    • This bill would limit the sale of any concentrate product with over 10% tetrahydrocannabinol (THC) to medical cannabis patients registered in a database maintained by the Department of Health (DOH). Widely called a “ban on concentrates,” a Change.org petition opposing the bill had gathered over 28,000 signatures at the time of publication.
    • Thompson said the “driver” of the bill was Representative Lauren Davis, whose “background is public health” and that “her concern is cannabis-induced psychosis." At the time of publication, Davis was the Executive Director of the Washington Recovery Alliance.
      • The legislation’s intent says, in part, “health professionals and researchers continue to find an association between the use of high potency marijuana and the occurrence of psychotic disorders. A 2019 study analyzed data from patients with first-episode psychosis and found that, compared with participants who reported never having used cannabis, "participants who used high-potency cannabis daily had four-times higher odds of psychosis in the whole sample."
    • Thompson anticipated “there's going to be a lot of concern about that bill" and that THC “vapor products would essentially be banned as we now understand them." A chief concern for WSLCB was the question of whether the proposal would “create an incentive to dilute the product with something we're not sure about its safety."
      • Dilution concerns were particularly fraught since the emergence of vapor associated lung injuries (VALI) that were largely attributed to the use of vitamin E acetate as a cutting agent in unregulated vapor products.
    • Thompson predicted “passionate support and opposition” would be on display during the bill’s hearing the following day, Thursday January 30th. He didn’t anticipate declaring an agency position on the bill.
      • Later that afternoon, WA Senate LBRC announced the bill’s companion, SB 6332, had been scheduled for a public hearing on Monday February 3rd.
  • HB 2300 / SB 6269 - “Authorizing marijuana retailers to sell cannabidiol (CBD) products.” (audio - 8m)
    • Board Member Russ Hauge asked about the proposal for retail sales of CBD products and wondered “where's the CBD gonna come from?" While the agency had been supportive during the WA House COG and WA Senate LBRC hearings, Hauge expressed concerns about retailers being able to stock and sell “unregulated” CBD products. Thompson felt that while the language was sometimes “vague or unclear,” they seemed to be talking about CBD source from either the 502 system, the state’s newer hemp market, or “legally-sourced from another place.” Thompson expected more clarity if the bill moved ahead. Hauge was concerned that as vapor products were, in his estimation, under regulated, the addition of CBD begged the question of “what [is WLSCB] going to be doing?”
    • The discussion turned to cannabis health and beauty aids (CHABA) which were legalized through RCW 69.50.575. Director of Licensing Becky Smith acknowledged that 502 stores were permitted to sell CHABA products under RCW 69.50.378, but she didn’t know how many, if any, actually carried the products.
    • When Board Chair Jane Rushford asked Thompson to explain how he’d framed his support of HB 2300 he responded that staff had seen the bill as “a logical progression" and sought statutory clarification around RCW 69.50.378 while conceding the bill “does some of that but not as much as we’re hoping for.” A final consideration for Thompson would be WSLCB’s role in rulemaking for the bill. He indicated Assistant Attorney General (AAG) Bruce Turcott had further concerns as the intent of SB 5052, 2015 legislation allowing retailers to sell items with less than 0.3% THC, “was all about medical product.” Thompson hoped HB 2300 could address “layers of ambiguity and problematic interpretation around” CBD products and WSLCB’s rulemaking authority around them.
  • HB 2361 / SB 6393 - “Concerning cannabis industry workplace standards.” (audio - 2m)
    • HB 2361 was heard in WA House COG on January 16th and SB 6393 was heard in WA Senate LBRC on January 23rd. Thompson said staff were still analyzing the bill to understand “how would that work if it were to pass."
    • He argued it was “kind of a 2.0 issue,” in reference to the agency’s Cannabis 2.0 (C2.0) project to coordinate state agencies involved with cannabis to develop the next generation of regulations and policy. Under the bill, WSLCB would be expected “to determine that a licensee has, or doesn’t have, a workplace health and safety plan, or a community engagement plan, or a social equity plan” and Thompson felt the agency would "need some help from some sister agencies" to reach those determinations. Overall, parts of the bill “cry out for partnership and collaboration.”
    • Thompson did not mention that he testified in support of the bill in the Senate - and was excoriated for doing so by Ranking Member Curtis King who found the WSLCB’s position “totally appalling.” He called out Thompson, whom he had witnessed testify “other” on many “controversial bills,” as well as the agency: “Not only do you have oversight of these industries, but you’re supposed to be somewhat protective of these industries, and make sure that they’re able to survive” (audio – 1m, video).
  • HB 2726 - “Regarding marijuana-infused edible products.” (audio - 3m)
    • Thompson termed the legislation “a bill of some controversy” as it would allow a new “product line for marijuana infused products that might be what we would call ‘high risk’ or ‘shelf unstable’” as they required refrigeration or were “pasteurized.”
    • The “short, simple” bill would have WSLCB and the Washington State Department of Agriculture (WSDA) collaborate on rulemaking to address “involved questions of product safety, food safety, health issues." Thompson expressed concerns due to the fact that “food safety is not something we track even with respect to alcohol.” Rushford noted that food safety of infused cannabis products had been weighed by the agency several years earlier but "food safety was outside of what we perceive our role to be."
    • HB 2726 was scheduled for its public hearing in WA House COG on Thursday January 30th.
  • HB 1945 - “Concerning sales and sampling of marijuana.” (audio - 3m)
    • Responding to the Board’s interest in social consumption of cannabis expressed at the previous day’s caucus, Thompson acknowledged that HB 1945 “would allow for consumption lounges. It was introduced last session, it has not gotten a public hearing. It isn’t, at this point, scheduled for a public hearing.” He felt most of the interest in the topic came "from the stakeholder or advocate community" as opposed to “taking the form of legislators pushing bills.” Thompson allowed that social consumption had come up “in the context of social equity” but those conversations remained mostly outside of the legislature.
    • Rushford again noted states like Alaska and Illinois were moving ahead with social use policies, saying it would “be interesting to see how that goes.” Thompson was confident that “it's an issue that’ll be back."
    • See Cannabis Observer’s analysis of HB 1945 from 2019.
  • HB 2279 - “Improving the development of the marijuana market by enacting provisions specific to craft cannabis production.” (audio - 1m)
    • Licensee Micah Sherman brought the bill to the Board’s attention during the January 22nd Board Meeting and Hauge described himself as “generally supportive” of the measure during the January 28th Board Caucus.
    • Thompson briefly noted the legislation would “authorize tier 2 retailing of recreational product” and impacts “some of the issues in our request bill but goes well beyond the scope of that.” The proposal “hasn’t been scheduled for a hearing yet either.”
    • Later that day, HB 2279 was scheduled for a public hearing in WA House COG on Monday February 3rd.
  • SB 6089 - “Creating a task force on marijuana odor.” (audio - 6m)
    • The bill, sponsored by Senator Judy Warnick, would create a task force of individuals appointed by the governor representing state agencies, state associations of cities and counties, and an industry representative or licensee. The task force would be charged with reviewing the following: “The available and most appropriate ways or methods to mitigate, mask, conceal, or otherwise address marijuana odors and emissions and the potentially harmful impact of marijuana odors and emissions on people who live, work, or are located in close proximity to a marijuana production or processing facility, including but not limited to: (a) Filtering systems; (b) natural odor masking mechanisms or odor concealing mechanisms; (c) zoning and land use controls and regulations; and (d) changes to state laws and regulations including, but not limited to, laws and regulations related to nuisance and public health.” The task force would submit findings and recommendations to the legislature no later than the end of the year.
    • Thompson said WSLCB would be charged with “convening this task force and staffing it” in addition to “a report to the legislature.” He explained that he’d been contacted by staff at the Department of Ecology (DOE) about WSLCB’s role under the bill.
    • Thompson suggested that “there is a role” for regional air quality agencies. Hauge called the concept “a terrible thicket” for the agency to wade into given the established air quality entities in the state were “laid out in some mysterious fashion” with members that weren’t accountable to other political entities like city or county governments. Hauge said that in his legal career he’d found "the standards and levels of aggression varies considerably between these boards." Thompson responded that “it doesn’t surprise me to hear you say that” because from what he’d heard the cannabis industry had not had "uniformly positive" interactions with regional clean air authorities.
      • The Spokane Regional Clean Air Agency (SRCAA) voted to assess annual registration fees on licensed producers and processors within Spokane County in March 2019.
    • Thompson said both WSLCB and DOE needed to learn more about SB 6089 because "if this bill gets some traction, then, it's coming at us." He’d consider asking for changes in the bill. Rushford contributed that "on the science side, it's just not in our wheelhouse" and the law could leave the agency even more involved in “siting issues” for licensees. Hauge was similarly skeptical of the agency’s role in the issue, saying “I don't know that it's a problem that [WSLCB] can solve." Thompson suggested the issue lingered as he often heard from legislators conveying constituent complaints about cannabis smells. He believed local governments had a greater role to play “under the heading” of public nuisance, because addressing odor issues was “a local government prerogative.”
  • Billboards and Advertising (audio - 9m)
    • Thompson turned to “really non-controversial legislation on advertising and signage requirements."
      • HB 2350 / SB 6657 - “Preventing youth marijuana consumption by updating marijuana advertising requirements.”
      • HB 2321 / SB 6333 - “Reducing youth access to products intended for consumption only by adults age twenty-one and over.”
    • Enforcement Chief Justin Nordhorn asked if there had been amendments for HB 2350, the “billboard bill,” to which Thompson said there’d been "strong opposition as well as significant support" during the public hearing for both bills on January 21st. However, the hearing hadn’t resulted in a “roll-up-the-sleeves/work group" mentality or push “to find common ground that’s acceptable.”
    • Nordhorn said if HB 2350 moved ahead that Thompson should communicate changes to lawmakers as, in his opinion, “I’m not sure it was doing what the intent was” and could be a catalyst for “confusion and inconsistency” on the operational side. Nordhorn’s view was that if on-premises signage had no restrictions, as the bill proposed, then a retailer could put up a billboard on their premises, a loophole around HB 2350’s stated intent to ban billboards. “Nowhere in the bill did it ban billboards, it struck out the work ‘billboard’ but then it also raised the sign limitations,” Nordhorn observed. Thompson said he’d look into whether there was an applicable definition of “outdoor signage” while emphasizing advertising introduced “legally contentious issues, quite apart from cannabis.” He added that “cities and counties regulate signage” and could apply existing or new ordinances as they did for other business advertising. Nordhorn commented that if enforcement was the responsibility of local governments “then the confusion is not on our shoulders.”
    • Hauge spoke up to say the only way the advertising restrictions could be enforced was if the language specified signs must not be “especially” appealing to children: “it would be impossible to distinguish something that is just appealing period to something that is appealing for children. We need that ‘especially’ in there so that the focus is clear. Otherwise, we’ll be in a position where we have to ban everything. And that’s nutty.” Nordhorn concurred, claiming targeting of minors was particularly noticeable in online advertising. Hauge called it a “technical fix that we would really want to insist on because otherwise we don't really have any basis to make decisions.” Thompson noted that he wasn’t “confident the bill is moving” but would nonetheless “check into that.”
    • Later that day, WA Senate LBRC announced SB 6333 was scheduled for a public hearing on Monday February 3rd.
  • SB 6033 - “Concerning the safety and security of retail marijuana outlets.” (audio - 2m)
    • Later in the meeting, Thompson mentioned legislation intended to require reporting of retail robberies which had been heard in WA Senate LBRC on January 23rd. He mentioned “media attention” around industry thefts which came to the Board’s attention in August 2019. Thompson said he’d received several questions about what WSLCB knew about the crimes from the bill’s prime sponsor, Keiser, who noted during the hearing that her son worked as a budtender and had been subject to an attempted armed robbery.
    • Thompson said local law enforcement wasn’t keen on new reporting requirements in the bill where they were expected to communicate licensee robberies to the Washington State Patrol (WSP) who in turn would communicate with WSLCB. He anticipated “revisions along that line” if the legislation moved ahead in the Senate.
  • Thompson also noted several bills with uncertain futures, including the out-of-state ownership bill, HB 2263, whose “senate companion to that bill was scheduled for a hearing and then pulled off the agenda.” He also mentioned HB 2900 which would fund “prevention and education activities” (audio - 4m).
• Director of Communications Brian Smith noted communication efforts about the upcoming expiration of the State Board of Health (SBOH) emergency rule banning flavored vapor products.
  • Smith said his office had “rolled out the vapor communication about the State Board of Health rule last week in collaboration with the governor’s office,” SBOH, and DOH. Smith confirmed SBOH’s flavored vapor products ban would expire February 7th, while the vitamin E acetate ban remained in force at least until March 12th. He added that WSLCB had received no public response to the news which he considered good since “our intent was to get the word out and make sure people understood that this was going to happen.” He promised to update WSLCB’s vapor webpage by February 7th.