WSLCB - Board Caucus
(January 18, 2022)

Here are some observations from the Tuesday January 18th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 7 takeaways:

• Director of Legislative Relations Chris Thompson went over the status of the 2022 legislative session and the first deadline for bill activity (audio - 1m, video).
  • Thompson noted that the cutoff calendar would reach its first deadline for bills to be recommended by a house of origin policy committee “slightly earlier,” on February 3rd. He said the agency wasn’t dealing with the “volume of legislation we sometimes see,” but there was still “big stuff” on their legislative agenda.

• Amendments had been proposed for the agency request legislation HB 1668 and SB 5547, “Expanding regulatory authority over cannabinoids that may be impairing and providing for enhanced product safety and consumer information disclosure about marijuana products,” while one trade group sought more restrictive language (audio - 3m, video).
  • Thompson reported that the policy committee hearing for HB 1668 occurred on January 13th and an executive session was scheduled for Friday January 21st.
  • He commented that the first hearing for the senate companion legislation, SB 5547, was set for Thursday January 20th in the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA).
  • Thompson indicated that two amendments had been published:
    • Amendment S-3514.1 - “Requires the department of health, in conjunction with the liquor and cannabis board, to adopt rules that may prohibit marijuana products containing synthetically derived cannabinoids from being sold or provided at no charge to qualifying patients or designated providers at a retail outlet holding a medical marijuana endorsement.”
    • Amendment S-3515.2 - “Provides that the bill's limited authorization regarding the production, processing, and sale of synthetically derived cannabinoids is distinguished from the unfair or deceptive practice regarding synthetic cannabinoids under the Washington consumer protection act. Provides that the authorized production, processing, and sale of synthetically derived cannabinoids is not an unfair or deceptive practice under the Washington consumer protection act.”
      • Proposed by WSLCB staff, Thompson remarked that the change was meant to distinguish the existing definition for “Synthetic cannabinoids” in RCW 69.50.455 from a proposed definition in the bill for “Synthetically derived cannabinoids.”
    • Thompson mentioned a “request for another minor technical correction” had been made to the committee chairs and bill sponsors.
  • Additionally, he brought up changes to the legislation requested by Washington Sun and Craft Growers Association (WSCA) Board Member Micah Sherman that would “essentially prohibit any synthetically-derived cannabinoids." Thompson said that idea had been "extensively reviewed and discussed internally as well as with stakeholders, and that was not the position we took." He acknowledged that WSCA members would likely continue lobbying for that change and committee leaders were interested in “knowing what the outcome of a discussion about this might involve.” Thompson believed staff, including Director Rick Garza, planned to meet with WSCA representatives to resume talks on a topic officials had “previously discussed with them.”

• Multi-agency request legislation HB 1859 and SB 5699, “Concerning quality standards for laboratories conducting cannabis analysis,” had a successful initial hearing and Thompson anticipated a warm reception in the senate (audio - 1m, video). 
  • Thompson told the board that HB 1859 had a “pretty quick hearing” with "nothing but support for the bill" on January 18th.
  • SB 5699 was scheduled to be heard on Thursday January 20th by WA Senate LCTA where Thompson was "planning the same approach" of offering appreciation for “the collaborative partnership” on a “fairly unusual multi-agency shared project.”

• With a hearing set for SB 5671, “Modifying the composition of the Washington state liquor and cannabis board,” officials discussed potential testimony (audio - <1m, video). 
  • The policy committee hearing in WA Senate LCTA was scheduled for Wednesday January 19th, but Thompson said he "still need[ed] to have some further discussions about our approaches on that" in an “ongoing” internal conversation.
    • Changes to the composition of the board were previously proposed in SB 5296 in 2019, and SB 6003 in 1999.

• Thompson and the board contemplated possible “adverse implications” of SB 5767, “Regulating hemp-derived cannabinoids,” a trade group’s alternative to the agency cannabinoid bill (audio - 2m, video). 
  • Thompson said a proposal spearheaded by the Washington CannaBusiness Association (WACA) was scheduled to be heard by lawmakers on Thursday January 20th which would “authorize, pretty broadly, hemp-derived cannabinoids to be included in marijuana products." Staff would be discussing the legislation internally to “understand all the implications of this bill," he noted, foreseeing “adverse implications for both of our agency request measures.”
    • Thompson emphasized how HB 5767 would migrate some WSLCB rules for lab accreditation from the Washington Administrative Code (WAC) to the Revised Code of Washington (RCW). He indicated “that would limit the agency’s ability to do anything on this, curtail our authority,” and, in effect, cause a “freeze on lab standards and rules in place…right now."
    • Thompson relayed that he’d been meeting with legislators but hadn’t discussed this bill with any of them. He planned to do so “once we have a good, solid understanding of the implications of that legislation” (audio - 1m, video).
    • WACA leaders and members repeatedly referenced HB 5767 as preferable during a public hearing for the agency request bill on cannabinoids on January 13th.
  • Board Member Russ Hauge asked if anyone at the legislature had “pointed out the connection between the bill to allow hemp into the regulated market" and SB 5671 which would “essentially do away with the board's enforcement authority?" Thompson answered that "there hasn't been public discussion that I'm aware of" comparing the allowances between the two bills but was open to hearing “what you might suggest in that regard” (audio - 2m, video). 
  • Chair David Postman asked if Policy and Rules Manager Kathy Hoffman had finished reviewing the bill. She replied that "there are some challenges" about the bill, particularly "how it might be implemented" (audio - 6m, video).
    • Establishing that the definition of marijuana in law wasn’t altered by SB 5767, Hoffman doubted it "expands our authority enough to be able to effectively respond to some of the concerns that we heard” about synthesized cannabinoids in products. Also, placing “testing standards in statute…removes our ability to be able to adjust if we need to," she said, and took proposed changes offered in the Quality Control (QC) Testing and Product Requirements rulemaking project “and puts them in statute” with “a few changes to them.” Once in law, further testing and product requirement changes would need “legislative action,” she said, instead of agency rulemaking.
      • At publication time, the proposed rules remained open for public comment and were scheduled to have a hearing hosted by WSLCB on February 2nd.
    • Thompson commented that he was “reluctant to say a lot more" before further analysis, but promised staff work would resume later in the day.
    • Postman continued to dig to identify the “main difference” between the agency request legislation and SB 5767, believing “their bill would allow for synthetically-derived” tetrahydrocannabinol (THC) to be sold in cannabis retail stores while “the agency's bill would not." Thompson replied the WSLCB proposed legislation didn’t “have a prohibition, it just has a really strict oversight regimen for reviewing and considering before allowing any synthetically-derived cannabinoids."
      • Oregon Liquor Control Commission (OLCC) leaders finalized administrative rules on artificially derived cannabinoids, which the Green Light Law Group (GLLG) described as allowing “for some artificially derived cannabinoids in limited circumstances to be produced and transferred by OLCC licensees and sold at OLCC dispensaries.” The rules identify “artificially derived cannabinoids” in the legal cannabis market “based on how they are produced,” defining them as “a chemical substance that is created by a chemical reaction that changes the molecular structure of any chemical substance derived from the plant Cannabis family Cannabaceae.” These cannabinoids can be allowed after a difficult three-step approval process likely gated by judgment on particular synthesized cannabinoids by the U.S. Food and Drug Administration.
    • Postman asked if the legislation included “synthetically-derived THC that’s impairing” or just other synthesized cannabinoids. Thompson responded that THC wasn’t permitted “if it comes from hemp,” though "cannabis processors could conceivably produce that compound and add it to a marijana product whereas hemp producers and processors would not" be granted that privilege. Thompson’s understanding of SB 5767 was that it allowed for hemp-derived THC to be used in cannabis items, whereas the agency request bill limited hemp growers to producing cannabidiol (CBD) distillate from their hemp “as an additive to marijuana products” along with “any other non-impairing additives.”
    • Postman saw “a lot of agreement" on “what we’re trying to do,” such as “stopping the unregulated market” of synthesized cannabinoids. He said public health and local governments saw this as a priority, but “where the divide comes is over turning hemp into impairing THC,” and his understanding was that SB 5767 wouldn’t stop that practice. Thompson observed that there were other aspects to the bills, but "you correctly described that."
  • Hauge asked Thompson for a “broad outline: the LCB in its request legislation is not attempting to change the status quo where CBD derived from hemp can be used as an additive, provided that CBD remains” a “non-impairing compound.” Thompson agreed, saying HB 1668 and SB 5547 extended existing law regarding use of CBD as an additive to allow for “not just CBD, but other non-impairing cannabinoids as well” (audio - 2m, video).
    • Hauge summarized the "essential difference" between the proposals being that "the WACA bill would essentially obviate the canopy" restrictions defined by WSLCB, leaving “no maximum limit on the amount of cannabis in our market." This would be because “hemp, from God knows where" could be introduced into the legal market, transformed into “a cannabis impairing product and pushed into the market as distillate where it would supplant the distillate products being made right now from licensed producers and processors.” Thompson agreed with that description.
  • Postman asked Hoffman if Hauge’s description of the lack of controls in SB 5767 was accurate. Hoffman emphasized that staff analysis was incomplete, but answered that "we haven't detected” other controls, adding that there were "no traceability standards" nor canopy restrictions (audio - 1m, video).
  • Thompson promised to “loop back” with Postman following a staff meeting on the bill later that day (audio - 1m, video). 

• Hearings for the Governor request companion bills HB 1827 and SB 5706, “Creating the community reinvestment account and community reinvestment program,” were fast approaching and a board member expected to testify in support (audio - 1m, video).
  • Thompson noted there would be public hearings for both bills on Wednesday January 19th. HB 1827 was scheduled to be heard by the Washington State House Community and Economic Development Committee (WA House CED) at nearly the same time that SB 5706 would receive a hearing by WA Senate LCTA.
  • Thompson remarked that he’d been working with Board Member Ollie Garrett, the agency appointee to the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF), on her testimony in support of the bills for both hearings. He observed that WSLCB staff had a part in developing the proposal, which would go towards areas “disproportionately adversely affected by the war on drugs and the enforcement of drug laws.”

• Thompson reported that staff were working with another state agency to help amend HB 1710, “Establishing a Washington state cannabis commission,” and aimed to move the bill forward (audio - 2m, video).
  • Thompson commented that the bill, which received a public hearing on January 11th, was set for an executive session on Friday January 21st. Agency representatives had been "very involved" with proponents from the Cannabis Alliance, he said, and “more recently with other agencies and the prime sponsor,” Representative Sharon Shewmake.
  • Following a meeting the previous week, Thompson explained that WSDA staffers took the lead on drafting an amendment to address agency concerns about “the purpose and role of the commission" to remove overlap in "education and training of licensees" that was the responsibility of WSLCB.
  • He also reported being “pleased that there’s been agreement to provide for full reimbursement of LCB costs in implementing this effort” in the language of the bill.