WSLCB - Board Meeting
(August 3, 2022)

Here are some observations from the Wednesday August 3rd Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 2 takeaways:

• Policy and Rules Manager Kathy Hoffman reviewed proposed rules around implementation of the social equity retail licensing program, and details around disproportionately impacted areas (DIAs), applicant points for having run a medical dispensary, and proof of eligibility came to light as board members asked questions.
  • Hoffman and the board went over background and changes in the rulemaking proposal during the August 2nd board caucus.
    • The board also adopted revisions to criminal history background checks in July 2021, in part to move “towards creation of socially equitable conditions” for eventual social equity applicants.
  • Presenting the CR-102 to board members, Hoffman briefed from the background in the extensive memorandum on the project. Noting the “procedural history” of the rulemaking, she explained it had followed “two tracks, the first was revisions and updates to existing cannabis licensing rules” as well as “making the rules more readable.” The second track had been “creation of the actual social equity program” in the “proposed WAC 314-55-570” (audio - 4m, WSLCB video, TVW video, Rulemaking Project).
    • Hoffman mentioned receiving “quite a bit of feedback” during the March 23rd listen and learn forum on the conceptual rules, which helped encourage staff to subsequently withdraw the first CR-102 on May 11th. She then noted attachment H of the memorandum, a table which compared changes between the draft of rules and the newly proposed rule language.
    • One change was to better clarify who counted as an applicant’s “family member,” stated Hoffman, in addition to distinguishing “between a social equity licensee, and a social equity program applicant.”
    • Board Chair David Postman delved into the distinction between applicants and licensees under the program. Hoffman conveyed that a "social equity program applicant" (SEPA) was a person who was “applying to become eligible to apply for a social equity license.” This process of showing eligibility for a social equity retail license was necessary before an applicant could outright “apply for a cannabis retail license under our licensing rules,” she said (audio - 1m, WSLCB video, TVW video).
  • Hoffman turned to the definition of a cannabis retail title certificate holder—licenses barred from operating due to jurisdictional bans and moratoriums—remarking that if they “meet the requirements” of a SEPA as verified by a “social equity contractor” the certificate holder could become an equity licensee (audio - 7m, WSLCB video, TVW video). 
    • Postman inquired if title certificate holders would be permitted in-county license mobility as an equity licensee, which Hoffman confirmed and stated the certificates were previously limited to the jurisdiction where they were assigned (audio - <1m, WSLCB video, TVW video). 
    • WSLCB staff collected licensee demographic information in January 2020 and released a Retail Title Certificate Holders Racial Identity Evaluation Workbook that identified 13 title certificates as being held by majority non-White owners. As licensee race isn’t being included as a scoring factor, it’s unknown how many of those title certificate holders could, or would want to, convert them into social equity licenses. However, the choice to do so could result in more equity retail allotments around Washington.
    • Angela Swanson, a retail title certificate holder, pushed for the inclusion of certificate holders like herself as equity licensees while a member of the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) Licensing Work Group. In 2020, she lobbied the board to move her retail title certificate into a different jurisdiction and convert it into a license. 
  • The eligibility qualifications for SEPAs would be more strict than non-equity application windows, Hoffman explained. Previously, SEPAs would have needed to provide documentation of having lived in a Washington state DIA for a minimum of six months—the same residency duration expected of all licensees—but now she stated they would be expected to prove a total of five years in an identified DIA “between 1980 and 2010.” Additionally, she said applicants’ “household income in the year prior to submitting the application [would need to be] less than the median income in the state.”
  • Hoffman reported that a social equity contractor would take responsibility for reviewing and verifying documentation provided by the applicant showing they met eligibility requirements, such as “school records, rental agreements, utility bills” along with arrest records or “tax returns.” She also reviewed the changes to points awarded in the scoring rubric, indicating the rule proposal "doubled the majority of them,” and that applicants would now have to demonstrate they “own[ed] or operat[ed]” a former medical cannabis dispensary or a collective garden “between 1998 and 2016,” rather than just having been a “member” of a dispensary.
    • Postman sought an estimation on how many applications staff were anticipating receiving, “and specifically, about the dispensary piece, what’s the universe there?” Hoffman wasn’t sure there was a way to know, but “we’re soon to find out” if rules were implemented (audio - 1m, WSLCB video, TVW video). 
    • Then Postman wanted to know more about proof of eligibility, and “why we landed where we did.” Hoffman said officials aimed at “capturing…for lack of a better word,” applicants that had lived in DIAs and who could “demonstrate that to” a contractor, as this residency implicitly showed an applicant was “disproportionately impacted by the war on drugs in the way that [HB] 2870 intended.” She said staff perspective was that this approach “helped us realize that ultimate goal, and the intent” of the legislation that “those most impacted by the war on drugs were able to benefit from operating these businesses” (audio - 1m, WSLCB video, TVW video). 
    • Postman was also curious about proof of owning or operating a dispensary “in a legitimate way.” Hoffman answered that they were looking for a local business license, but there were “a number of ways” for agency officials to determine that. Director of Licensing Becky Smith said the “first time around” they had “accepted all different types” of information, as it was “difficult to operate” openly as a cannabis business, “so we saw different types of businesses” which may have obscured their relationship to medical cannabis patients and the plant. At times, they’d collected information from social media posts or photos. Hoffman chimed in to say dispensaries sometimes had “very different pseudonyms” and staff would do “what we could to thoroughly research” a dispensary’s “legitimacy” (audio - 2m, WSLCB video, TVW video). 
  • Hoffman concluded her remarks by saying with the approval of the board she’d file the CR-102, and a public hearing would be set for September 14th. The “soonest that we can consider adoption” would be on September 28th, she indicated, and take effect “shortly thereafter” because the rulemaking related to a legislative mandate. Hoffman was candid that it "will take some time to implement these rules” and expected an application window in "very late fall, or early winter" as there was still more staff would need to complete “behind the scenes” (audio - 1m, WSLCB video, TVW video). 
  • Postman’s last question involved DIAs, including how they’d be determined and the timeline to get them released publicly. Hoffman commented that WSLCB staff had been “working with” UW officials on mapping them but had no updates since July 12th, when the board was told information had been delayed because researchers needed clarification from WA SECTF, whose members wouldn’t meet again “until late August.” Smith made clear that lawmakers required WA SECTF “to provide us with the…formula” to set DIAs, and that the task force had partnered with UW to do so. Her understanding was that there’d been “changes” to the formula, and she cautioned that her staff “will not be able to issue any licenses without that" (audio - 1m, WSLCB video, TVW video). 
    • Strictly speaking, the statutory definition of DIAs in RCW 69.50.335(6)(a) does not require the task force to specify how DIAs are determined.  Rather, it provides high-level criteria and states DIAs “may be further defined in rule by the board after consultation with the commission on African American affairs and other agencies, commissions, and community members as determined by the board.” Postman had suggested in 2021 that the board welcomed all input on equity policy which task force members offered them.
    • In December 2019, WSLCB staff identified University of Washington (UW) Professor of Sociology Alexes Harris and UW graduate student Michele Cadigan as researchers utilizing “Washington Administrative Court data” as a way of “looking at disproportionality in arrests and convictions, [along with] also fees and penalties paid” to show how much money “communities of color in Washington have put into our system.” 
    • WA SECTF first discussed DIAs in October 2020, at which time Harris and Cadigan were said to have assessed “cannabis-related convictions data and have offered to assist this task force with mapping convictions and other criteria” in order to “identify and define communities disproportionately harmed.” The task force set up the Disproportionately Impacted Communities Work Group which first convened in February 2021 and included Cadigan and Harris as members. In a subsequent meeting, a plan emerged to combine Washington state census tract data with court arrest records and other data points in order to define DIAs for mapping. By the May 2021 work group meeting, a consensus was building around recommending spatial mapping for DIAs at the census tract level. 
      • Cadigan had a WSLCB contract for a maximum of 35 hours of work between March and June 2021.
    • In July 2021, the full task force was shown a “very preliminary” DIA map by Cadigan that she acknowledged needed additional data points added into it. The final Disproportionately Impacted Communities Work Group meeting the following month included no significant mention of the map.
    • In September 2021, Cadigan reviewed an algorithm intended to give “a DIA score for each census tract,” with a scoring rubric that a then-task force member concluded helped “determine eligibility” and could “help us prioritize applicants.” The task force voted to adopt the formula where the “top 20%” of census tracts in the state identified would be declared DIAs. But the following month, communication about the DIA map had dropped off, as we noted in October 2021:
      • The Disproportionately Impacted Communities Work Group had been “curiously quiet since the last full task force meeting. Their recommendations needed additional work, but the group had not subsequently met after their August 17th gathering. That group was relying on the work of two University of Washington researchers, paid by WSLCB, who were utilizing data previously provided by the Washington State Administrative Office of the Courts (WA AOC). A few months prior, WA AOC staff noted the authorization to use that data had expired and the researchers had subsequently struggled to obtain clearance to use the old data or be provided with new data.”
      • “We communicated with WA SECTF Manager Anzhane Slaughter, who provided the following perspective: ‘Although the DIA workgroup has not been meeting, the workgroup co-leads have been meeting on a weekly basis to finalize the proposals made on the workgroup level in preparation for the full Task Force meeting on Oct 28. The DIA workgroup is planning to make recommendations to LCB and the legislature around a Social Equity Scoring Rubric and Application process.’”
    • Both work group co-leads would leave the task force by the beginning of 2022, by which time WSLCB Licensing staff would offer a significantly different scoring rubric than the one proposed by WA SECTF.
  • Board Member Jim Vollendroff considered social equity to be a necessity in order to “reach our highest potential" as a state because “everyone is not at the same starting point.” He pointed to the King County Equity and Social Justice Strategic Plan as a model of local government responsibility “in assuring that there are equitable opportunities.” He thanked those who’d moved the rules this far (audio - 1m, WSLCB video, TVW video).
  • Board Member Ollie Garrett, the WSLCB appointee to WA SECTF, said social equity had been “the #1 priority of the agency since we introduced…HB 2870.” She credited the work of Smith and “the entire agency” for getting them to the point where “we can have this opportunity.” Even as “we still have a long way to go,” Garrett called the proposed rules “a great step” towards rectifying a “missed opportunity” during state cannabis legalization (audio - 1m, WSLCB video, TVW video). 
  • Postman thanked Garrett, Smith, Hoffman, and others for their efforts, feeling their withdrawal of the rulemaking project amounted to a voluntary "challenge" to themselves and the board “to do better” (audio - 5m, WSLCB video, TVW video). 
    • Without mentioning racism, Postman articulated a "burning, simmering outrage" in American society about "historic and institutional" prejudice that should be addressed even if they were “a little uncomfortable about it.” In his view, “the process has worked" and WSLCB was cultivating a “robust, progressive, and legally defensible system" which positioned them to return to the legislature for “the next big steps” on the issue.
    • Quoting a ruling having “to do with search and seizure” by Washington Supreme Court Justice Mary Yu, he noted that “in interactions with law enforcement, race and ethnicity matter.” Nonetheless, the board couldn’t render the same judgment and use race as a factor “in these sorts of programs,” he argued, mentioning the legal consultant they’d spoken to previously about the matter.
    • Postman believed that their rules would "withstand legal challenge if it comes” and get licenses out to people who had “been waiting for them for a long time.” He encouraged continued involvement in the public hearing by those inside and outside the cannabis sector.
  • The board voted to unanimously approve the CR-102 on social equity (audio - 1m, WSLCB video, TVW video). 

• Public comments, which had focused on social equity concerns for several weeks, were largely positive, though two speakers referenced ongoing concerns about transparency and bias in previous licensing.
  • Peter Manning, Black Excellence in Cannabis (BEC) member (audio - 1m, WSLCB video, TVW video)
    • Manning approved of the direction of social equity rulemaking, stating that the CR-102 “is to our liking as well.” He specifically thanked Garrett and suggested those criticizing her were still “benefiting from” the rule and her work.
  • Mike Asai, Emerald City Collective Gardens (ECCG) Co-Founder (audio - 3m, WSLCB video, TVW video) 
    • Asai reported being “completely against delta-8[-tetrahydrocannabinol]” as it was “a danger to the cannabis community” as well as youth.
    • Considering the CR-102 the board had just approved showed policy was “going in the right direction," he encouraged more action. He felt ECCG had closed because the "City of Seattle did not stand up for us" and that their closure was “unjust.” He considered “transparency from the LCB [to be] very important moving forward" and appreciated everything agency leaders had done. Asai felt that if WA SECTF “had not been manipulated, the draft rules and rubric would be what we see today.” He thanked elected officials who had supported social equity legislation, as well as Manning and other stakeholders “for bringing social equity in cannabis to Washington state.”
    • Both Asai and Manning spoke to the board on July 6th. In addition, they provided comments to the Seattle City Council Finance and Housing Committee on July 20th.
  • Christopher King (audio - 6m, WSLCB video, TVW video). 
    • Having last addressed the board on July 20th, King was under the impression that social equity had “started out as including reparations for those who’ve been harmed” but remarked the topic had “fallen by the wayside.”
      • Though not reparation-specific, the Washington State Department of Commerce (WA Commerce) was allotted a one-time $200 million community reinvestment grant in the 2022 supplemental operating budget. A smaller allotment intended to be an annual appropriation under HB 1827 was not passed by legislators.
    • He relayed an inquiry of former dispensary owner Kevin Shelton about Vincere's Compassion Club and Red Barn Trading Post, recently active medical cannabis clubs. He said Shelton had written to Director Rick Garza about the status of the clubs but had not received a reply.
    • Responding to Asai’s statements, King insisted he “wasn’t just a critic of Ollie Garrett…I criticize the entire board” due to transparency concerns he had over responses to 2020 public record requests related to Shelton. He asserted that legal counsel for WSLCB “fought off a subpoena when I filed for those documents.” He added that he’d seen Garrett take notes during a meeting only to be told “she doesn’t have any notes.”
    • Openly asking whether he’d “been rude to you this morning,” King wondered “have I asked you for anything that I’m not entitled to?” Postman said agency representatives had “sent you the notes you asked for” and that King had then requested them again while cc:ing “150 other people.” King asserted that he’d been “successfully suing for public records requests for years” and that he had yet to receive notes from Garrett.
    • “Looking forward to a new future,” King remarked that he appreciated progress on the scoring rubric even as he had questions about it. Bringing up his lawsuit against WSLCB, he alleged a recent brief by WSLCB counsel amounted to a “complete farce.”
      • See more documents relating to King’s suit against the agency in the case docket.
  • Kevin Shelton (audio - 2m, WSLCB video, TVW video)
    • A founder of Lifetree Collective, Shelton spoke about an email exchange with Garza over how businesses like Vincere's Compassion Club and Red Barn Trading Post were allowed to operate. He insisted they weren’t licensed by WSLCB and had started “after I was shut down in 2016…and they’re still there.” Postman told him they would “try to have someone get back to you.”