WSLCB - Board Caucus
(December 14, 2021)

Here are some observations from the Tuesday December 14th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Board Chair David Postman spoke about his ride-along with Enforcement Officer Percy Williams to visit several cannabis licensees in the south Puget Sound area (audio - 3m, video).
  • Since joining the board in March, Postman said he hadn’t joined Enforcement and Education division personnel in their travels to licensed cannabis premises, but he had participated in an “alcohol ride-along.” On Monday December 13th, he joined Williams to visit “a producer/processor...a large grower, and a retail store.”
  • Calling Williams a “consummate professional,” Postman said he found both types of licensees “are glad when [Williams] walks through the door” and the officer fielded several questions. Postman believed, “in these examples, it sure seems to be working well” to have compliance consultants and enforcement officers engaging businesses and he felt licensees were genuinely interested in engaging “so they can comply.”
    • In May 2020, Williams attended the Voluntary Compliance Program listen and learn forum, a rulemaking project ultimately renamed the Consultation and Education Program.
  • However, Postman told the group the licensees noted “they had a little bit of struggles with the new” reporting software, the Cannabis Central Reporting System (CCRS), even though one of the visited businesses used “a third-party integrator.” Postman found the licensees “all were really understanding” and “welcome the change,” but wanted the CCRS to reach “maintenance level” quickly. He’d heard that “business is really slow out there right now,” and retailers “aren’t buying a lot at this point and so everybody slows down.”
  • Postman explained that the producer/processor held a tier 1 and tier 2 license and maintained a “processing facility.” The company was investing in “new equipment, this sort of incredible high tech stuff,” according to Postman, who appreciated seeing commercial cannabis production up close: “it was something, I’ll tell ya.”

• Members discussed possible legislation to restructure the board and make legislators a permanent fixture of agency leadership which had been floated by the Washington CannaBusiness Association (WACA) for the 2022 legislative session.
  • Postman noted conversations from the “two legislative committees that oversee us” around a possible bill “we’ve heard bits and pieces about.” He reported it sought to change “the board of the LCB, and rather than just the three of us, would expand it” to a total of five board members, “and then, three or four legislators as ex officio members” (audio - 5m, video).
    • While not knowing the group’s intent, “the effect of that is to dilute any power or authority the three of us have and puts the legislature in a very hands-on role.” Postman indicated that this arrangement was similar to the composition of the Washington State Gambling Commission but, unlike the Commission, the WSLCB board typically met multiple times a week. He noted there was “no place in state government that I know of” that had that level of legislator participation.
    • Postman’s understanding was that WACA leaders had drafted the bill, “and we’ve had staff reach out to their director,” Vicki Christophersen, for details but only received “those numbers of...how many people would be added” from the group.
    • In outreach to the Washington State Office of the Governor (WA Governor) and legislators “who have been contacted by WACA,” Postman said, “the reasoning we were told, it, it kind of varied.” He relayed how one person had heard the bill was created because “the three of us needed help,” as the state Open Public Meetings Act (OPMA) meant any two board members meeting together created a quorum and therefore had to be open to the public. By that reasoning, Postman said, “adding people would allow board members to have conversations outside of a public meeting.” He offered his personal view that “we don’t need that, we do our business in public and it seems to work really well.”
    • He’d also heard a suggestion that the bill would “help us, because our workload had grown so much since cannabis was legalized.” While receptive to increased staffing support “in lots of ways,” a larger board didn’t seem like a high priority to Postman.
    • Additionally, a “key legislator” told Postman that “our enforcement regime still is too aggressive on the cannabis side,” with “too many...severe penalties.” Postman claimed his review of WSLCB enforcement statistics “show just the opposite,” and he felt reforms were “working really well.”
      • Senator Derek Stanford, Vice Chair of the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA), offered this issue as his top priority for the 2022 session in an engagement with WACA on November 3rd, noting “we still have some struggles there.”
      • Christophersen said she was “pleased to see the agency has begun” enforcement reforms during a WACA update to legislators on October 21st, but made no mention of interest in altering the makeup of WSLCB.
      • Director of Enforcement and Education Chandra Brady provided updates during executive management team meetings on November 10th and December 8th.
    • Postman was left without a clear sense of “what really is motivating it,” adding that no legislators had seen the idea “in writing yet.” His understanding was that WACA leaders were looking for a sponsor, leaving agency staff to respond to lawmaker inquiries as best they could. Postman found the potential bill unnecessary, but was committed to “open conversation about it.” He questioned the motivations behind the concept, doubting it was a wish “to help the three of us,” as he observed, “if anybody is trying to help us they haven’t asked me how to do it, [and] they haven’t asked our director how to do it.”
  • Board Member Ollie Garrett agreed that if the intention was to help the board, “nobody asked us.” She stated she’d only learned about the potential bill the week before (audio - <1m, video). 
  • Board Member Russ Hauge confirmed that no board member had yet been approached about this topic, nor was he aware of any division of the agency receiving such inquiries, wondering aloud if “perhaps the concern is that we’re doing too much work.” His “second hand” information led him to think “some people want to change, fundamentally, how the market in Washington works - and this is a step down that road, I believe.” Hauge, preparing to retire in 2022 before his term expires, speculated on an intent to “cut out the farmers, so that we can use delta-9[-tetrahydrocannabinol] from hemp to supplant the hard work of the people we granted licenses to as producers and processors. And I think it’s pretty transparent” (audio - 1m, video).
  • Postman said he didn’t like “to address motive,” but he also wasn’t getting direct answers “to the question of why” WACA members would put forward a bill on the matter. He ventured, “the association that is promoting this dilution of the board’s power is the one pushing for more...converted product,” an issue being addressed by WSLCB request legislation on cannabinoid regulation. Postman believed that the work of agency officials to “find the right path in that legislation was not easy” but had been achieved. In conversations with legislators, he was trying not to sound dismissive of their hypothetical involvement in oversight of the WSLCB and its regulated communities, “but that changes our dynamic...this is a work-a-day kind of board.” Postman requested that Hauge and Garrett apprise WSLCB Director Rick Garza if they heard anything more on the proposal as “he’s keeping an eye on this” (audio - 2m, video). 
  • Emails between WACA and WSLCB leadership, as well as staff at the governor’s office, reveal more of the conversation around the agency request bill and the sentiment of trade group leadership about changes at the agency:
    • On May 12th, Christophersen offered remarks to the board and written comments where she said WACA members were “disappointed, on many fronts, in our interactions with the LCB.” Her grievances included “a confusing, and frankly inaccurate, policy statement” on delta-8-tetrahydrocannabinol (delta-8-THC). Christophersen asked WSLCB representatives to approach “issues with diligence, professionalism, respect” and “partner” with WACA leaders to share “good information with stakeholders.”
    • Postman and Garza sent a lengthy reply on June 10th referring to “the degraded professional relationship between you and [WSLCB]. We continue to have a productive working relationship with many members” of WACA, “but remain concerned about the long list of complaints and allegations of ill-motives on our part you have delivered on behalf of the organization.” After addressing various concerns and topics, including delta-8-THC, they concluded that the “Board and LCB staff are together committed to transparency and working with stakeholders on our issues of mutual interest. However, a positive working relationship is a two-way street. WACA is a valued stakeholder. Your organization, its individual members and the LCB have worked together through many emerging and challenging issues. Going forward, it is our hope that we can regain civil conversation and begin to restore a professional relationship based on courtesy, trust, and respect.”
    • Days after an interpretive statement on synthesizing cannabinoids was released on July 22nd, Andy Brassington, WACA Board of Trustees Vice President and President of Evergreen Herbal, sent a reply critical of the statement wherein he asserted that WACA members “publicly, with legislators, the media and others been appreciative and complimentary of the current process save this interpretation.” Brassington’s conclusion included that the group’s leaders “and members very much would like to improve upon a collaborative, productive working relationship with the WSLCB.”
    • On September 3rd, Atlas Hemp Company Partner and WACA Founder Emeritus Peter Saladino emailed WSLCB Director of Legislative Relations Chris Thompson and other legislative and agency leaders to convey his “disappointment” in the draft request bill from the agency on regulation of cannabinoids. He believed the bill would “not place the state of Washington in a position of leadership as we get closer to national legalization” and also “suppresses new industry innovation.” Calling out the short notice provided for selected stakeholders to comment on the bill, Saladino concluded that this was “not an action that matches collaboration. It seems that stakeholder collaboration and input is simply lip service and not something the agency actually wants to have.”
      • At this time, Saladino was listed as the sole governor of Unicorn Brands, LLC, a subsidiary of Atlas Group and Atlas Technologies. Unicorn Brands issued a letter defending the legality of using synthesized cannabinoids as an ingredient in response to the WSLCB policy statement on delta-8-THC, and shared a company fact sheet.
      • Subsequently, Thompson sent another email extending the feedback period and agency staff scheduled a webinar dedicated to the request bill on September 27th. His office continued accepting stakeholder input through October, telling lawmakers on November 15th the final version of the draft would become available “shortly.” On November 22nd, Thompson shared public feedback on the draft request bill with staff of the governor’s office, cc’ing WACA leadership. Read the summary of the last draft’s provisions, and a one pager. At publication time, the bill had not yet been approved by the governor’s staff and the Washington State Office of Financial Management (WA OFM), a requirement before it could be offered as request legislation from the agency.
  • Learn more about WACA member goals from the organization’s 2021 Fall Policy Conference hosted on November 3rd, which included presentations and discussion with Garza, WSLCB staff, and lawmakers.

• Board Member Russ Hauge brought up a report of an agency officer engaging in “collateral enforcement” during an attempted theft of an unmarked WSLCB vehicle (audio - 2m, video).
  • Hauge said he’d been contacted by Brady the prior week about an Enforcement Sergeant, Alex Everson, who’d been “a witness to a carjacking attempt, or several carjacking attempts” including the officer’s “government car.” It was his understanding that Everson “displayed remarkable professionalism and restraint, refraining from a violent intervention.” He’d been able to frighten off the suspect through use of “his emergency equipment” and pursued the individual, aiding “the relevant law enforcement agency in apprehending him.”
  • Hauge offered his gratitude for Brady proactively informing board members of the incident and praised “the actions of the officer as described to me.” Everson’s act of “professional police work” was a credit to the Enforcement and Education division, he said.
  • Postman indicated he’d done a previous ride-along with Everson, whom he called a “great guy,” and commended his “super quick thinking” in an “out of control situation.”