WSLCB - Board Meeting
(February 2, 2022)

Here are some observations from the Wednesday February 2nd Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• The long road for the Quality Control (QC) Testing and Product Requirements rulemaking project was outlined by staff at the beginning of the hearing.
  • Originally opened in August 2018, the QC Testing and Product Requirements rulemaking project intended to require pesticide and heavy metal testing of cannabis products. At publication time, Washington state was the only adult-use cannabis state not to do so, although medically compliant cannabis items were tested to that degree. 
    • The effort included two listen and learn sessions in April and August 2019.
    • The first CR-102 with proposed changes was filed in January 2020, but the board withdrew the document in March and refiled it in May of that year due to the onset of the COVID pandemic. Following the expiration of the CR-102, new draft rules were proposed in September, but the hearing in November 2020 was mostly negative following a defensive presentation by Policy and Rules staff.
    • In early 2021, agency staff hosted a series of deliberative dialogues with specific stakeholder groups.
      • January: Consumers
      • February: Licensees twice and Labs
      • March: Labs
    • In the summer of 2021, the agency contracted with Industrial Economics, Incorporated after hearing criticism that the original small business economic impact statement (SBEIS) produced by staff insufficiently considered impacts on cannabis producers. That firm surveyed producer/processor licensees in August and September 2021. There was an additional listen and learn forum on the project in October 2021. The latest version of proposed rules was released in December 2021, and featured a new SBEIS and significant legislative rule analysis.
    • The lengthiness of the project was raised in legislative hearings as a reason not to give WSLCB more rulemaking authority for the regulation of cannabinoids.
  • Policy and Rules Manager Kathy Hoffman provided some thoughts and clarifications on the project (audio - 2m, video). 
    • She emphasized that rule development by agency officials had been separate from the Cannabis Science Task Force (CSTF), whose work was “essentially done.” The project was also distinct from “House Bill 1859, [which concerned] testing lab standards,” she indicated. 
    • Hoffman described how there were “five certified labs that can test for pesticides and, of these, three also test for heavy metals.”
    • Hoffman pointed out that the proposed rules didn’t “require any producer to test up to 50 pound lot sizes. The rules set minimum and maximum standards and sample sizes up to 50 pounds.”
    • Board Chair David Postman thanked her for the clarification about HB 1859 as that bill would place regulators in “a better place” with regards to “lab certification,” whereas the rulemaking project dealt with “mandatory [product] testing” (audio - 1m, video).
  • Policy and Rules Coordinator Jeff Kildahl went through the memorandum on the CR-102, outlining the impact of the proposed revisions (audio - 3m, video).
    • The changes “would require all marijuana products produced and sold in Washington State to be tested for pesticides in addition to the currently required” product testing, he said. Kildahl noted the length of time the agency had engaged on the topic, including “exhaustive stakeholder engagement and multiple rule proposals.”
    • The rule changes would allow for agency staff to “conduct randomized or investigation-driven testing for heavy metals in marijuana products,” Kildahl told the board. It also revised WAC 314-55-101 regarding sample size protocols, he mentioned, “increasing the maximum amount of cannabis flower that may be represented by a single [Initiative-]502 panel of tests and revising the number of one gram flower samples required for testing.” Kildahl commented that the revisions would preclude “the ability of certified labs to return unused portions of samples to licensees,” and included new “guidance to labs regarding when to reject or fail a sample.” There would be new “information regarding testing levels for water activity, potency analysis, foreign matter inspection, microbial screening, mycotoxin screening, and residual solvent screening,” he reported.
    • Another reform he identified was new “rule language regarding product testing, remediation of failed lots, the expiration of certificates of analysis, and the referencing of samples, and finally, this change would update reporting requirements for lab proficiency testing” in WAC 314-55-1025.
    • Kildahl said the expected effects of the changes would “promote the overarching goal of the board to protect public health and safety and to help ensure that all marijuana products sold within the I-502 system are safe for all consumers.” He suggested, without explanation, that the changes might be especially impactful on the occurrence of chemically-converted cannabinoids in the legal market. Kildahl noted that staff had “received approximately 40 separate comments on the proposed rules.”
  • Earlier during the same meeting, a new rulemaking project was initiated on pesticide action levels to “update rule language regarding remediation of marijuana that has failed quality assurance testing, and update rule language to change the term ‘quality assurance testing’ to ‘quality control testing’.” The project seemed narrowly tailored to accommodate proposed changes in the QC rulemaking project.

• Four speakers weren’t fully satisfied with the proposed rules but advised the agency to adopt them in anticipation of further revision in the future.
  • Caitlein Ryan, The Cannabis Alliance Interim Executive Director and Board President (audio - 3m, video) 
    • Ryan thanked the staff and stakeholders for “brokering an agreement on a comprehensive rule set,” acknowledging there wouldn’t be “full agreement today.” She commented that many of the producers in her organization had signed on to Washington Sun and Craft Growers Association (WSCA) written comments requesting changes to the CR-102 and proposed rule revisions.
    • Asserting that medical cannabis patients “continue to abandon the regulated market for more reliable product grown by their known, legacy market sources due to low confidence in the safety of I-502 cannabis,” Ryan perceived “significant areas for improvement in this proposed rule set.” She suggested the agency set up “a task force to proactively evaluate the impact of these rules during the first year of implementation” as an “acknowledgement that there will need to be adjustments as the impact of this significant and important shift is implemented.” Beyond digging into specific concerns, Ryan saw the prospective group as “a powerful advisory tool for stakeholder input and agency transparency, should the interagency collaborative team be established later this year.”
    • Ryan urged adoption of the rulemaking project to “come into alignment with all other adult-use states and live up to our medical legacy by implementing pesticide testing in Washington state.”
  • John Kingsbury, Cannabis Alliance Patient Caucus Chair (audio - 4m, video) 
    • Mindful of the concerns voiced by those in the industry, Kingsbury approached the topic “as a consumer" and thanked agency officials for their effort “even where I disagree with some of it.” He’d hoped the project would serve as a way to “get us to a place where the quality assurance standards for recreational products would meet the standards for medical product,” but didn’t feel what staff put forward would “get us there.” Suggesting he’d petition for further rulemaking by the agency and the Washington State Department of Health (DOH), his concerns meant the proposed rules “would not personally bring me into the regulated market but there is a lot of good in here.”
    • Kingsbury approved of the separate rulemaking effort to update action limits for pesticides in the proposed rules, “at-will heavy metals testing, for now,” and the “creative approach” to sample sizes.
    • Kingsbury complained that “self-sampling is an obvious flaw” and public funding of cannabis testing should be acceptable, “but I also recognize that would require legislative action, and I don’t think that we should wait to implement some rules.” He remained concerned about a lack of testing for “total molds.”
    • Kingsbury noticed end product testing for cannabis concentrates was only “for cannabinoid levels” based on an assumption that “intermediate product” used to create it would’ve been tested. “I think it would be terribly naive to assume that the intermediate product will necessarily be known,” Kingsbury claimed, and advocated for pesticide testing of concentrate end products.
    • “The presence of Azadirachtin and other neem oil derivatives is, understandably, a deal breaker for many patients,” said Kingsbury, who wanted the compounds prohibited, but he was prepared to “settle for labeling.”
    • Ultimately, he felt it was important for the cannabis sector to “get rules into place” for pesticides and not “let the perfect be the enemy of the good.”
  • Vicki Christophersen, Washington CannaBusiness Association (WACA) Executive Director and Lobbyist (audio - 2m, video)
    • Christophersen thought that “after four years…concerns have been heard, evaluated, and reflect input from all stakeholders" so the board should adopt the rule revisions. “There has been an ever changing target for testing and safety,” she believed, saying that safe products should be a “fundamental tenet” of the industry, and a way to “prove we mean what we say” about consumer safety. 
    • Christophersen mused, “when we say we’re worried about the development of products and processes we don’t understand, we have the ability to address this concern by requiring testing.” She cautioned that “products claiming to be cannabis are appearing outside the regulated market”---an allusion to synthesized cannabinoids being produced by those without cannabis processor licenses, in addition to several within 502—but she remained confident agency rules could “guarantee a safe, regulated alternative.” She added, “With testing, we can erase the mystery and fear, or we can identify a problem, and address it to protect consumer safety.”
      • Christophersen failed to mention that consumer safety can only be guaranteed through analytical testing if one knows what potentially problematic things to test for. As transparency is a better means of erasing mystery and fear, consider this report from WSLCB Chemist Nick Poolman about his site visit to licensed processors Unicorn Brands and immediately adjacent Atlas Global Technologies—both WACA members—which described the specific processes used to convert CBD into synthesized THC using allegedly unregulated solvents dichloromethane (DCM) and methanol (MeOH) via equipment and intellectual property leased from cleen:tech - also a WACA member.
    • After years of development “these rules now say that heavy metals testing is optional,” observed Christophersen, “in other words, the longer we go on, the more we drift away from the consumer, which is who should be centered in this conversation.”
  • Tania Sasaki, Confidence Analytics Chief Science Officer (audio - 3m, video) 
    • Sasaki noted her involvement in CSTF work groups “to help outline the standards for the testing methods.” Pointing to the long history of the rulemaking project, she called upon the board to pass it “as-is.” 
    • Sasaki noted her lab had tested for pesticides “for about six years,” a sign that they “believe in pesticide testing.” Responding to concerns raised by “smaller craft producer/processors about testing costs,” she remarked that those licensees made up the “majority of our clientele” who would “never” produce lot sizes over 50 pounds. However, the rule changes in the proposal were “long overdue.”
    • Sasaki mentioned that third-party sampling and the “ability for labs to obtain clean material from their clients in a bulk manner” were “parking lot” issues the CSTF had not addressed.
    • Postman asked about costs, particularly “if we go to this 50 pound [limit], that labs would just have a 50 pound” fee. Sasaki replied that “the cost is not gonna scale to lot size,” as the cost of conducting the testing was “generally the same” (audio - 1m, video). 

• The majority of testifiers agreed with the need for pesticide and heavy metal testing, but forecast expensive complications resulting from the proposed rules and encouraged WSLCB leaders to continue refining.
  • Lukas Hunter, Harmony Farms Director of Compliance (audio - 5m, video) 
    • Hunter saw the challenge as “balancing public health and safety [with] economic survivability for businesses and labs.” He expressed opposition to a 50 pound lot size, saying his business preferred five pound lots, whereas the proposal would be “disproportionately affecting smaller businesses.” Hunter wanted “to take a representative sample from the harvest” and then “apply a charge for pesticide test at the harvest level,” which he thought would “even taxation” for cannabis producers.
    • He noted the rule proposal featured an “inability to retest in the form of remediating a product further” once a sample had passed the state standard even if it didn’t “meet standards for a company.” Hunter asked for licensees to have the right to “autonomously be able re-test” any area “except for potency” as a method of greater quality assurance. This would “allow for licensees to not have to pay for non-mandatory tests to preventively see if their product meets quality standards,” he said.
    • Hunter referenced Colorado sampling procedures as a potential guide towards a “more robust system” that allowed sampling to be handled on “the industry side to allow for more rapid turnaround.”
  • Shawn DeNae Wagenseller, Washington Bud Company Co-Owner and WSCA Board Member (audio - 5m, video, WSCA written comments)
    • Wagenseller cited the protracted history of the rulemaking project, and how her focus had been divided between considering the proposed changes, and other tasks like the legislative session. She explained that was why feedback on the CR-102 “came in kind of late, and hot, and heavy.”
    • “What if we separate the pesticide testing from the regular” quality assurance (QA) testing, asked Wagenseller. She also wondered about expanding “third–party collection that the LCB is currently doing in sending tests to” the Washington State Department of Agriculture (WSDA). Self-selecting samples was "a huge loophole," she commented, because there were those in the cannabis sector who “cannot be trusted.” Wagenseller saw the proposed rules as lacking “robust, final end product” testing collected “by third-party” and tested at the WSDA lab. She said the new rules would rely on “that sort of system for heavy metals” testing, and should be trusted for pesticides. 
    • Wagenseller noted the revised SBEIS projected the rulemaking would “negatively impact 72% of us,” and found the parts-per-million limits proposed for butane/hexane to be too high. 
  • Scott Berka, Full Throttle Farms, BroCo LLC, and Aloha Botanics Owner; WSCA member (audio - 5m, video) 
  • Mark Ambler, Breeze Trees Owner (audio - 3m, video) 
  • Gregg Allen, Zoobees Doobees Operations Manager (audio - 3m, video) 
  • Micah Sherman, Raven Co-Owner and WSCA Board Member (audio - 5m, video, written comments) 
    • Sherman asked for “reevaluation” of the draft rules, saying he’d long advocated to separate out types of QA tests to “do those tests at the scale that they make the most sense,” whether that was lot, harvest, or “farm level.” He believed “testing that needs to be done for disallowed pesticides…has a completely different set of considerations than tests for allowable pesticides,” but wasn’t distinguished in the proposal. Sherman believed there was “quite a bit of work left” on the rulemaking project.
    • Sherman pushed for WSCA recommendations to be adopted, anticipating that the WSLCB proposal could “more than double my testing costs,” adding he didn’t produce “more than 50 pounds of hardly any strains” because his business model was founded on “small batch, craft cultivars.” He doubted his model would be viable if the agency moved ahead with the rules, especially breeding new varieties and his company’s ability to “innovate.”
    • “We need this rule set to apply equally in the compliance costs, whether you’re a giant” company, Sherman remarked, or a “small batch person” with “one-off lots.” He indicated it was “worth spending a little bit more time to get it right.”
  • Jessica Straight, Eagle Trees Farm Co-Owner (audio - 5m, video) 
    • Saying her “really small business” had already been financially hurt by WSLCB rules and compliance costs, Straight described revenue of “about 30% of the cost of our products” while the state reaped “about 47% of the retail cost of the product that we worked so hard to produce.” She asserted the mounting compliance costs were “ludicrous,” recommending potency testing on five pound lots, and pesticide and heavy metals testing “on a harvest or farm level.” Confident that her crop would be clean, she welcomed the chance for her “product to stand out in the marketplace.”
    • Straight asked for state-run end product testing paid for with cannabis taxes as a way to be certain there was “safe product for the consumers.” This avoided self-sampling, where she said “the bad actors are going to act badly.”
  • Jeremy Moberg, CannaSol Farms Owner and WSCA Board Member (audio - 5m, video, written comments) 
    • Moberg acknowledged the rulemaking project was “impactful,” and complimented work done on the SBEIS for having “dove into the impacts on small businesses,” which he expected would suffer “a disproportionate impact.” He was skeptical of proposed larger lot sizes as “a mitigation effort,” explaining that “large companies will utilize the 50 pound lot size, and that will…decrease overall testing that labs are conducting.” Moberg speculated this would lead to labs “increasing costs” for everyone due to the smaller overall quantity of tests performed.
    • Wanting pesticide testing “sooner [rather] than later,” Moberg asked for changes to the proposed draft “in a single extension of this rulemaking” to consider other changes coming to the system like those in HB 1859. He predicted there might be “more broad governance of this industry” in the near future with the involvement of WSDA or Washington State Department of Ecology experts.
      • In addition, the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) was tasked with developing a recommendation on moving cannabis production oversight to WSDA.
    • Moberg predicted that as there weren’t “very many labs that are able to do this testing right now, and effectively…we’re going to lose over half of our labs.” He expected he would stop using his current lab, True Northwest, as they’d have to subcontract for pesticide testing from another lab that might not “prioritize” his sample compared to their direct clients. He then brought up the possibility of a “pesticide batch system” for leftover portions of other lots or products to “go together and be tested.”
  • Joshua Rutherford, Dutch Blooms Owner (audio - 2m, video) 
    • Fully supportive of pesticide and heavy metals testing, Rutherford recommended “seasonal” testing for outdoor producers with a “soil or leaf sample,” while indoor and greenhouse licensees would be tested on a “per crop” basis. He agreed with Straight’s suggestion for “secret shopper” testing of end products, and held up the California program for hemp and cannabis through the state Department of Pesticide Regulation. 
  • Ryan Sevigny, Landrace Brands President, Cannabis Alliance Adjunct Board Member, and WSCA Board Member (audio - 4m, video) 
    • Sevigny echoed support for the “robust issue” and a wish for consumers to have “peace of mind” about the safety of cannabis products in the state market. But he indicated "there is a lot missing from this ruleset,” suggesting the SBEIS didn’t take into account “the economic impact on the labs.” As the majority of labs accredited through WSLCB weren’t capable of conducting pesticide testing, “consolidation” in the cannabis testing sector was likely.
    • Sevigny faulted the SBEIS for assumptions about lot sizes, saying he’d participated in the survey used to generate it and “50 pounds was not mentioned to me at all, it was all conducted in the context of five or ten pounds.”
    • Sevigny asked for a 30 day extension to create a new rule proposal to “uncouple the 502 testing panels” from pesticide testing, and to let pesticide testing be done “similar to heavy metals” with “third party sampling.” He believed this arrangement would keep small producers from undergoing “devastating effects” from the WSLCB rulemaking.
  • Bernard Kessler, Orange State Cannabis Co-Owner (audio - 3m, video) 
  • Jason Poll, Gorge Gold CEO and WSCA Member (audio - 1m, video) 
  • Bonny Jo Peterson, Industrial Hemp Association of Washington Executive Director (audio - 3m, video) 
    • Peterson noted cannabis concentrate testing as “a concern for the hemp industry if CBD and other cannabinoids are allowed” as they’d have to test for pesticides and heavy metals in order to be added to legal cannabis products. She asked to see “cost reduction, some incentives for the small growers,” and was open to state-facilitated testing programs. Peterson wanted a “fair and equitable end of things from farm level to end user” that would help the cannabis sector “evolve.”
  • Jim MacRae, Straight Line Analytics (audio - 5m, video) 
  • Dave Varshock, Full Throttle Farms General Manager and BroCo LLC Head Grower (audio - 4m, video) 
    • Varshock voiced criticism of the proposed rule revisions, saying one of his problems was that while “this has been a long, ongoing subject,” he felt the current version hadn’t “been around for very long.” He took issue with Peterson’s remarks, as he didn’t want “hemp being a part of our regulated market” owing to unknown byproducts and “untested substances in those things as a result of those conversions.”
    • Varshock was against the idea of the board adopting rule changes “if there’s questions and stuff that’s undiscovered or we don’t know then we need to take the time to figure it out before we pass something.” He stressed the impacts to producers weren’t an abstraction, “there’s people attached to those businesses.” He was grateful for the WSCA recommendations on “how we can move forward right now.”
    • Varshock joined the call for third-party sample collection, feeling the idea that every producer could be counted on to honestly collect their own samples was “ludicrous.”
  • Jeff Newton, Heritage Cannabis Owner (audio - 2m, video) 
    • Newton felt the lot size changes were “well intentioned to save money,” but, “I’m not sure how that's going to play out in the end.” He seconded calls for a “30-day reprieve” to look at the subject closer.
    • Newton liked Sasaki’s comment on the importance of labs having “access to clean product.” He said, “when it goes through one lab and it’s passed on to another, I don’t know that that’s clean product, and I don’t know if there’s any way to track and make sure” aside from using a third-party entity to collect and deliver samples directly.
  • Matthew Frigone, Lazy Bee Gardens Owner, and Gregg Harrison, Str8fire Farms President, requested to speak but were unavailable when called upon.
  • Adán Espino, Craft Cannabis Coalition Executive Director, submitted written comments in support of changes proposed by WSCA members.