WSLCB - Board Caucus
(July 12, 2022)

Here are some observations from the Tuesday July 12th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Board members were briefed on the Social Equity rulemaking project and continued work of staff and outside experts to revise proposed rules in order to open a social equity retail license application window.
  • The project was withdrawn on May 11th at which point WSLCB leaders indicated the effort could benefit from additional staff time honing the language.
    • At a Washington CannaBusiness Association (WACA) spring meeting on June 15th, Board Chair David Postman offered his insights on the project pause and Policy and Rules Manager Kathy Hoffman estimated a timeframe for proposed rules to become public.
    • On July 6th, several members of the public criticized the board for the protracted delay in progress. Postman responded that they’d hear more about the rulemaking project “very soon” though the board was “a month behind where we thought we were going to be six months ago” and were aiming for an application window in “maybe late fall, maybe winter.” He stressed that the delay reflected an effort to “make it better” and ensure it was a “meaningful, legally sustainable, equitable program.”
  • On Tuesday, Hoffman reported that Colette Holt, Colette Holt and Associates Principal and American Contract Compliance Association General Counsel, would attend the board caucus on July 19th and speak to "best practices" on implementing social equity programs as she was "a nationally recognized expert in designing and implementing similar programs." Hoffman expected an “updated rule proposal” would be presented “to the board in August,” with a public hearing sometime “in early September” and adoption of a CR-103 possibly by the end of that month (audio - 2m, video).
    • Holt’s firm had an extensive history of providing disparity studies to municipal and state governments and agencies. More than 20 studies by her company were identified in a January 19th U.S. Department of Justice report, The Compelling Interest to Remedy the Effects of Discrimination in Federal Contracting: A Survey of Recent Evidence. The majority of those studies were in Illinois, Missouri, Texas, and several in Washington state:
      • State of Washington 2017 Disparity Study (Presentation)
      • State of Washington Disparity Study 2019
      • Port of Seattle - Disparity Study 2019
      • State of Washington Department of Transportation 
        • Washington State Airports - Disparity Study 2019
        • 2021 Disadvantaged Business Enterprise Program Disparity Study (SOQ Packet A/Packet B)
  • Director of Licensing and Regulation Becky Smith explained that staff were looking for “a third party vendor” to handle prioritization of social equity applicants (SEAs) and would be “getting out” a request for proposals (RFP) for that contract (audio - 2m, video). 
    • Licensing staff were also working on presentations to keep stakeholders as well as work groups of the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) aware of their work.
      • Smith presented to Seattle City Council members on April 6th.
    • Smith said two staffers had been hired who could help implement the program:
      • Program Specialist Sarah Davis would assist SEAs and eventual equity licensees.
      • Licensing Specialist Tyrone Jordan-Oliver would help “process applications.” She added that he was the Co-Chair of Blacks United in Leadership and Diversity (BUILD) Washington, “a business resource group for members of the Black Community ​and their allies in Washington State service,” and could bring “great representation and experience to our group.”
    • The RFP to contract with a firm to prioritize SEAs was mentioned by Smith on April 13th.
  • Postman shared his appreciation for their work, encouraged speedy action, and promised the board would be “flexible” to help in any way they needed including scheduling special meetings (audio - 1m, video). Board Member Jim Vollendroff agreed, noting the “sense of urgency around this conversation” while advancing the project in a “thoughtful” way to reach goals “we’re all trying to achieve here” (audio - <1m, video).
  • Postman first asked “when does the public get to see what we have?” Hoffman underscored that her response was “hypothetical,” but if they were ready by the August 3rd board meeting, the CR-102 with draft rule text could be made available as early as the preceding Friday, July 29th. Hoffman said her team aimed to have it to the board, and then public, “as soon as possible” (audio - 2m, video).
  • Postman then wanted to know how quickly the board could host a public hearing on the rulemaking project (audio - 3m, video).
    • Presuming board approval on August 3rd, Hoffman said the Washington State Office of the Code Reviser (WA OCR) would then publish the proposed rule on August 17th, meaning “the soonest we can hold a hearing after that publication date” would be 20 days later, or September 6th. This allowed for a formal public comment period leading up to the public hearing, she indicated, following processes mandated under the Administrative Procedures Act. Hoffman remarked that the 6th was a Tuesday when the board was in caucus, but a board meeting was scheduled for September 7th. She recognized there were a “lot of variables there,” centered around how many public comments would be received which they had to formally respond to as part of the rules package, incorporating new ideas or “tweaks” if they made sense.
  • Postman also wanted to know more about the RFP for a contractor. Smith relayed that staff had been waiting on information about disproportionately impacted areas (DIAs) from researchers at the University of Washington (UW). Receipt of the information was delayed as the researchers needed clarification from WA SECTF whose members wouldn’t meet again “until late August.” The hope was that the DIA information could become available not just to prioritize SEAs, but for WSLCB officials to host training sessions in those areas. She said staff had been “waiting since May" for that data and Postman was satisfied that, at the very least, “no one's waiting on us" (audio - 2m, video).
  • A final query from Postman involved Holt’s presentation and if agency staff would “respond if…questions come up.” Hoffman and Smith promised to attend, with Hoffman commenting that she was “looking forward to it (audio - 1m, video).

• Policy and Rules Manager Kathy Hoffman discussed a rulemaking project on cannabis canopy she was aiming to introduce in August given the discrepancy in measurement practices acknowledged by WSLCB leaders (audio - 1m, video).
  • During the caucus, Hoffman reported her plan to introduce rulemaking by “the middle of August” based on the public “feedback we’ve received” in regards to measuring canopy.
  • Cannabis Observer reached out to Director of Enforcement and Education Chandra Brady who explained her staff had heard that canopy was not being measured consistently.
    • Canopy complaints from stakeholders were raised at the Washington CannaBusiness Association (WACA) Fall Conference in November 2021. At that time, Brady mentioned that a draft written protocol was already in the works. The protocol was subsequently approved by counsel for the agency from the Washington State Office of the Attorney General (WA OAG) before being released to undisclosed cannabis industry associations later that month.
    • Brady furnished the canopy measurement protocol to Cannabis Observer in December 2021. She suggested WSLCB officials had been looking into the issue since the fall of 2021 after finding out canopy measurement standards hadn’t been written in a formal document for staff or the regulated community.
    • Brady suggested enforcement staff were trained on the canopy measurement protocol by January 2022. The protocol was alluded to in a January Medium post by Director of Communications Brian Smith’s team but wasn’t accompanied by a press release from the board nor an announcement through the agency GovDelivery listserv.
    • A document on Measuring Plant Canopy For Washington State Cannabis Producers was published in April 2022 - the same month some licensees began complaining to agency staff.
    • On June 30th, agency staff broadcast an announcement titled “Pathways in Canopy Measurement” which declared officials were “pausing enforcement of that protocol.”
      • The message asserted that in “October 2021 the Liquor and Cannabis Board (LCB) communicated the Enforcement and Education Division’s protocol related to canopy enforcement." While that language is vague about whom the protocol was communicated to, Cannabis Observer was not able to identify an announcement to the regulated community on the topic from this time.
    • On July 5th, Director Rick Garza admitted to having heard repeated concerns about inconsistencies in plant canopy measurements from licensed producers, particularly on measuring pathways or walkways around plants. He stated that officials would “pause” canopy measurement activity pending better clarification to staff and licensees about the protocol.

• Hoffman also described a half dozen rulemaking petitions the agency had received since July 6th on “a broad range of topics" including canopy measurement (audio - 2m, video).
  • On July 5th, Garza and staff talked about recently received and anticipated petitions for rulemaking.
  • Hoffman conveyed that “since the 6th of July, we have received six rule petitions on cannabis rules,” an amount that was “unprecedented.” The petitions would involve significant time to respond to, she noted, since some “come to us with just a concept that staff needs to explore” and may require outside input or clarification.
  • Topics of the petitions she identified were:
    • “Asking for cloud services on the cannabis side”
    • “Adjusting our sampling rules, which haven’t been revised in quite some time”
    • “Asking that the board consider…a no longer vertically integrated system”
  • Policy and Rules Coordinators were responding to the petitions “so that we can have the capacity to do the things that we actually have on our agenda” like planned rulemaking on advertising, packaging and labeling, and a canopy project to be led by Coordinator Jeff Kildahl.
  • Postman recognized the increase in her team’s workload and how the board might share responsibility for “telling people ‘well, maybe …rulemaking’s the way to go on that.’” He was open to "triaging the agenda" to keep petitions and other rulemaking efforts moving ahead. He wanted the board to be informed if more staffing was needed, feeling that agency leaders would “find many allies among our regulated community to help us in the legislature if we need additional funding to handle” petitions and other topics before the agency so that the board could “maintain our agenda itself” (audio - 2m, video).