WSLCB - Executive Management Team
(February 9, 2022)

Here are some observations from the Wednesday February 9th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) public meeting.

My top 3 takeaways:

• The transition to a Cannabis Central Reporting System (CCRS) from traceability software provider MJ Freeway had been pursued consistently for over six months.
  • The software previously responsible for tracking the state’s legal cannabis, Leaf Data Systems, and the vendor providing it, MJ Freeway, had been blamed for numerous problems.
  • The move to CCRS was announced publicly in August 2021 during staff discussion about a communications plan to accompany the system launch. Data reporting would be conducted via comma-separated value (CSV) files, in addition to a separate required transportation manifest form behind a CAPTCHA precluding automated submissions.
  • The internal WSLCB CCRS Steering Committee made the decision to move ahead on November 16th and CCRS went live on December 6th, 2021. Communications indicated “Leaf will be shut off and no longer available to licensees after 8 a.m. on Dec. 18.”
  • Review CCRS updates to the board from October, November, and December 2021, and some initial public comments during the transition.

• Chief Financial Officer (CFO) Jim Morgan, executive sponsor for the project, brought the board up to speed on the next phase for the reporting system which would focus on revising the manifest system and fixes for tribal licensee reporting errors (audio - 7m, video).
  • Morgan asserted the reporting system was “moving right along and still making great progress” as staff moved to wrap up “the original scope of work.”
    • He claimed the team’s work mostly focused on “technical fixes” affecting the agency rather than licensees. Morgan stated that the “first batch of reports, the most important reports, have been completed and are commencing the user testing phase.”
    • According to Morgan, “86% of licensees have accessed the system” while Enforcement and Education staff were making plans to engage with “the remaining 14%...either by phone or in person.” They aimed to ensure those businesses knew about the system, how to access help, and “use the system as required,” he said, through a “series of contacts with each licensee for the next month and a half, or so.”
    • In April, by the time remaining licenses had been contacted “more than once,” Morgan reported that WSLCB Enforcement and Compliance Officers would assume “more of an enforcement posture on that.”
  • The CCRS transition had informed staff about “new things” that either they or industry members wanted to change, said Morgan, leading them to set up “phase two of that implementation.” This new phase would be an attempt to do a lot “in one fell swoop,” Morgan told the board, as officials realized there was “a big enough body of work left” to constitute “a second project” including the hiring “of a contract project manager to lead that.”
    • He described how the second phase of work would cover “inefficiencies with the manifest process.” The agency planned outreach to selected stakeholders to gather feedback on March 1st, and hoped to incorporate improved handling of “all of the different change requests” and other issues “that have not been addressed.” A full “scope of work for phase two” was still being created, Morgan added. While WSLCB Information Technology (IT) staff had handled things to this point, he indicated that “we’re prepared to bring in other contract resources as necessary to support that process.”
    • The second phase would also feature a solution for some “unique issues for tribes” operating cannabis licenses, commented Morgan, whose cannabis reporting requirements differed from most licensees the agency regulated. He said tribal businesses weren’t “required to report as many things to us as licensees are. Their reporting focuses primarily on transactions between the tribe and licensees.” Morgan noted that licensees were required to report “a total snapshot of their inventory, the tribes aren’t required to send that,” and as CCRS had been built “for the…1,800 licensees,” it was failing during “error checking for their upload, [for] a report that’s not there because they’re not required to submit it.” He remarked that he was scheduled to meet the following day with “technical folks” for the Suquamish Tribe “that brought this to our attention.”
      • The marijuana compact with the Suquamish Tribe was finalized in September 2015 and hailed as the first in the state and the first in the nation. Their government entered into a revised cannabis compact in May 2020, though a dispute resolution process around tax collection took several months longer.
      • The Suquamish Tribe also hosted the last formal meeting of WSLCB’s Tribal Advisory Council in April 2019.
  • Morgan summarized the CCRS transition as “going well,” assuring the board improvements would continue.

• Board Chair David Postman posed some questions to Morgan around cannabis manifests and the upcoming expectation of licensee compliance with CCRS.
  • Postman first inquired about “inefficenc[ies]” in generating transportation manifests to confirm whether that would be remedied during phase two. Morgan said it was planned to be “one of the major efforts for phase two” which he felt agency leadership should “dedicate resources to” (audio - 1m, video). 
  • Then Postman asked how the approach of the Enforcement and Education Division would “adjust” moving forward on CCRS. He felt if aspects of the system were “working well, we can have…a pretty strong expectation that…licensees are doing it, right?” Morgan was in full agreement, calling the Enforcement expectation of compliance as CCRS proved stable “a really reasonable approach.” However, “at some point, if people still aren’t responding in the way that’s expected,” he commented that WSLCB officers would “take appropriate steps from there.” Postman wanted licensees to know “that we’re not looking to try to enforce something” which was “still a work in progress.” He was hopeful that the number of licensees who hadn’t yet used CCRS continued to decline, so that “if they have the problems, at least then we know what they are” (audio - 2m, video).