WSLCB - Board Caucus
(December 7, 2021)

Here are some observations from the Tuesday December 7th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Board Member Russ Hauge alluded to an announcement sent out later that day announcing his early retirement from the board, and Board Chair David Postman promised to “bring that up tomorrow for sure” (audio - 1m).
  • The subsequent announcement came from Postman, stating that Hauge had submitted his resignation to Governor Jay Inslee effective January 31st, 2022, leaving “approximately two years remaining on his six-year term.” The longest-serving active member of the board, Hauge was reappointed by Inslee in February 2017.
  • Before coming to WSLCB, Hauge had a “long and distinguished legal career, including five terms as the Kitsap County Prosecutor.” Postman stated that the board “regularly benefited from his legal analysis and guidance on the issues we face,” finding that “Russ’s legacy on the Board will be his passion for fighting for the concerns of small businesses, particularly members of the cannabis industry...Further, he strongly advocated for equity within the cannabis marketplace so that the Board delivered on the expectations of the voters who approved legalization in 2012” in addition to leading in “the Board’s efforts to protect the licensed marketplace by ensuring chemically-derived, unregulated Delta-8 THC was prohibited for purchase or sale in Washington.”
    • Hauge had also been a target of criticism for the agency, particularly during the 2019 legislative session when he was accused of being part of a heavy-handed regulatory culture within WSLCB.
    • Hauge was also formerly the chair of the Washington State Sentencing Guidelines Commission (SGC).
  • Postman shared that Hauge had expressed a hope that “colleagues and agency staff believe they were well served by my contributions as it was delivered with sincerity, fairness, and dedication to justice. I am proud of our work together and for having had the opportunity to serve.” Postman’s announcement concluded with gratitude to Hauge “for his dedicated service and wish him all the best in his retirement.”

• Policy and Rules staff reviewed upcoming activity on the tetrahydrocannabinol (THC) and quality control (QC) testing rulemaking projects scheduled for the following day’s board meeting.
  • THC (Rulemaking Project, audio - 1m)
    • Policy and Rules Manager Kathy Hoffman reported that the Wednesday December 8th Board Meeting would include a public hearing on proposed rule revisions which were approved for filing by the board on October 13th. “To date, we still have not received any written comments,” she mentioned, “and just the one oral comment from a stakeholder who’s appreciative of the work and the way that the rules were set up.”
  • QC Testing and Product Requirements (Rulemaking Project, audio - 2m)  
    • Policy and Rules Coordinator Jeff Kildahl told board members he would seek approval to file a new CR-102 with revised rule language during the December 8th meeting, noting the changes impacted WACs 314-55-101, 314-55-102, and 314-55-1025 “regarding cannabis quality control testing.” He said the new rules would: 
      • “Require marijuana producers and processors to test all marijuana products produced and sold in Washington for pesticides in addition to” existing testing requirements.
      • “Allow the board to conduct randomized or investigation-driven testing for heavy metals in marijuana products.”
      • He anticipated an effect of “these rules will be to promote the goal of the WSLCB to protect public health and safety,” as well as ensuring “that all marijuana products sold within the [Initiative-]502 market are safe for all consumers.”
    • Kildahl added that owing to “a recent increase in hemp-derived delta-8, delta-9, and other unregulated products entering the I-502 market it is important at this time to require the additional pesticide testing and allow the random or investigation-driven heavy metal testing.” Board Chair David Postman indicated the board was “ready for that one.”
    • Hoffman brought up the small business economic impact statement (SBEIS) to note “there’s an executive summary that’s kind of a two-pager built into” the SBEIS with “the highlights of the analysis that was done.” She added there was “lots of material there to absorb” (audio - 1m).
    • The executive summary read, in part:
      • “Any licensed business producing marijuana flower and/or intermediate products for which existing regulations require testing would incur costs under the proposed rule. As of July 2021, there were 1,306 licensed marijuana producers and processers...99.3 percent are considered small.”
      • “This analysis considers whether the costs of the rule would result in more than minor costs to small businesses, defined as costs exceeding 0.3 percent of annual revenues...on average, this rule is likely to impose more than minor costs on all three types of businesses in the industry. A significant majority...would experience more than minor costs as a result of the proposed rule.”
      • “It is important to note that the rule provision that provides the ability for license holders to test larger amounts of flower with a single panel of 502 tests and a single pesticide test would reduce these estimated costs. Given that the regulated businesses in this industry are small, the rule is found to disproportionately impact small businesses.” 

• Looking at their remaining events scheduled for 2021, staff and the board confirmed several meeting cancellations before the new year (audio - 3m).
  • After the Wednesday December 8th board meeting, the last event for 2021 would be the December 14th Board Caucus. No agency meetings would be hosted during the weeks of December 20th and 27th, and the group would reconvene on January 4th, 2022.
  • Executive Assistant Dustin Dickson made clear that there would be reduced board staff available during the last weeks of the year.