WSLCB - Executive Management Team
(August 10, 2022)

Here are some observations from the Wednesday August 10th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 4 takeaways:

• Director of Legislative Affairs Chris Thompson introduced the agency process for advancing request legislation ahead of the 2023 session (audio - 2m, WSLCB video, TVW video).
  • Thompson discussed the system by which state agencies receive approval for request legislation in June 2021. On August 2nd, Director Rick Garza indicated agency staff would use the “typical process” for sharing their concepts with stakeholders for feedback.
  • During the meeting, Thompson noted that the draft text and summaries for three request bills were emailed to stakeholders on August 4th and he’d begun “to get some response and feedback from stakeholders.”
    • He noted “detailed feedback” from “Seattle King County Public Health” and that he had set aside “time to talk” about the proposals with Washington State Department of Agriculture (WSDA) staff the following week.
    • Stakeholders were encouraged to submit comments by August 25th, something Thompson said “compress[ed] the timeline a little bit from what we originally sketched out” but gave time for outside input and potential changes while meeting “a September 14 target date for submission, hopefully we’ll be able to work through that.” He credited Garza with wanting to “give stakeholders three weeks” to review and provide a response, instead of the single week initially offered for input on the WSLCB 2022 request bills, which precipitated complaints and an extended comment period.
    • Proposed request bills from state agencies will be entered into the Washington State Office of Financial Management (WA OFM) Bill Enrollment and Agency Request System (BEARS), through which the Governor’s office and WA OFM staff can analyze and approve them to be offered for sponsorship in the Washington State Legislature (WA Legislature).

• A tetrahydrocannabinol (THC) regulation proposal was the board’s sophomore effort at controlling access to cannabinoid products without mentioning whether the compounds were “impairing,” a divisive distinction that bedeviled their previous effort (audio - 2m, WSLCB video, TVW video, Draft Agency Request Legislation).
  • In 2021, regulation of cannabinoid products besides those with delta-9-tetrahydrocannabinol (delta-9-THC)---most prominently synthesized delta-8-tetrahydrocannabinol (delta-8-THC) created from hemp-derived cannabidiol (CBD)—was a top priority of agency leaders and some cannabis stakeholders ahead of the 2022 legislative session. In June and July 2021, WSLCB officials hosted deliberative dialogues on cannabis plant chemistry to interrogate impairment as a way to develop rules and potential legislation. 
    • After giving stakeholders short notice in September 2021 to consider the resulting agency request legislation which was introduced as HB 1668, the bill was criticized for leaving what constituted impairing cannabinoids up to WSLCB rulemaking. Later in the session, other bills pertaining to cannabinoid regulation ran into this same objection.
    • Following the session, staff hosted dialogues focused on cannabis impairment on April 27th, May 31st, and June 21st. During the May dialogue, Policy and Rules Manager Kathy Hoffman acknowledged staff still had the goal of “understanding of how we might determine and define what THC compounds are, and are not, impairing.”
  • Thompson described "a new approach" which centered on “regulating products with THC” by “establishing a threshold above which the agency would regulate products, and below which they’d be available in an open market.”
    • The threshold in the bill draft would be “one milligram THC per unit, or three miligrams of THC per packaged product,” he told the group; anything above that point could only be produced and sold by WSLCB licensees “and all that that entails.”
      • These thresholds were included under a new definition for ‘hemp consumable,’ “a product that is not a cannabis product, as defined in RCW 69.50.101, and is intended to be consumed or absorbed inside the body by any means including, inhalation, ingestion or insertion that is sold or provided to another person.”
      • Learn more from a 2021 Above The Law article: The 'THC In Milligrams' Limit: A New Approach To Regulating Hemp Products.
    • The inclusion of synthetically derived cannabinoids would have to be disclosed on labeling specifying “how much and a description of that,” he stated, along with other revisions “required as scaffolding to support this proposal, particularly definitions in the Controlled Substances Act, and for hemp.” 
      • Cannabis would be redefined as “all parts of the plant Cannabis sativa L with a THC concentration greater than 0.3 percent on a dry weight basis during the growing cycle through harvest, and usable cannabis as defined in (yy); the term does not include hemp or industrial hemp as defined in RCW 15.140.020, or seeds used for licensed hemp production under chapter 15.140 RCW.”
    • Thompson described how the law would be expanded for WSLCB to regulate cannabinoids beyond delta-9-THC and regarding “the problem with measuring that on a dry weight basis, we fixed that by introducing this new standard” for cannabinoids in products.
      • Cannabis products, currently “useable cannabis, cannabis concentrates, and cannabis-infused products,” would also have an additional meaning under the bill “including any product intended to be consumed or absorbed inside the body by any means including, inhalation, ingestion, or insertion, with a THC concentration of more” than the thresholds mentioned by Thompson.
      • The summary indicated THC would be defined to include "any form" of the cannabinoid, with 'cannabis' and 'hemp' definitions changed to "accurately reflect the differing ways of measuring THC during plant production and post-harvest products." It also asserted the bill offered “clarity for local law enforcement for addressing illegal manufacturing, sales, and distribution." 
    • “The goal is to get the products of concern, like delta-8 gummies and such, out of the market,” added Thompson before moving on as he felt board members were “aware of what we have on the table.”
  • The approach in the draft request bill has some similarities to the regulatory track taken by officials in Oregon. In July 2021, the Oregon State Legislature adopted HB 3000 which enabled further regulation of hemp cannabinoids in order to strengthen “enforcement against illegal cannabis growers and increase multi-agency efforts to support Oregon's legal hemp growers,” according to an Oregon Department of Agriculture email. That bill focused on illicit production, whereas the WSLCB request bill proposal is more concerned with illicit sales.
    • The Oregon Liquor and Cannabis Commission (OLCC) adopted more rules in December 2021 which included changes to cannabis regulations and hemp standards.
    • An official told Washington lawmakers on May 10th the law had made it easier for their enforcement staff to “look at illegal cannabis grows, not marijuana grows, but those things that were from outside of the state program.”
    • Find out more opinions about the impact of HB 3000 from:
      • Cultiva Law - What House Bill 3000 Means for Oregon’s Hemp Industry (2021)
      • Green Light Law Group - How Did One Bill Reshape Oregon’s Hemp Industry? (2022)

• Another request bill sought to expand the number of available social equity retail licenses, make them mobile to any jurisdiction in Washington allowing additional retail, waive licensing fees for equity businesses, add restrictions on sale of social equity licenses for the first five years, as well as other changes (audio - 1m, WSLCB video, TVW video, Draft Agency Request Legislation).
  • HB 2870, 2020 WSLCB request legislation, established the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF), a social equity retail license program, and a technical assistance grant program. The statute was expanded through a 2021 law. The task force adopted recommendations in 2021, such as additional equity licenses with mobility throughout the state, which informed HB 2022, legislation to implement some of the recommendations which was not successful.
    • Task force members were set to consider adoption of recommendations on other mandated topics at their August 23rd meeting.
  • Thompson said the draft bill language, if encoded as law, would enable WSLCB officials to “increase the number of social equity retail store licenses based on population,” “detether those licenses” from a specific city or county, and “waive the license fee for those licensees, and a number of other provisions.”
    • The bill summary noted that the measure would:
      • Formalize use of a third-party vendor "to identify and score social equity applicants" under a scoring rubric "developed by the board."
      • Equity licenses could only be sold, also known as license assumption, to qualified equity applicants "for a period of at least 5 years." 
      • Definitions around disproportionately impacted areas (DIAs) and social equity applicants would be changed.
      • Social equity plans, which had been a requirement only for equity licenses, would become required for all cannabis businesses when renewing a license starting in 2024.
    • Under WAC 314-55-079, the board declared their intent to set a maximum number of cannabis stores per county based on “estimated consumption data and population data obtained” from WA OFM, but had not done so since the completion of the 2020 census results.

• A third request bill would create subpoena authority for WSLCB cannabis investigations, which Thompson highlighted as potentially useful in financial investigations (audio - 1m, WSLCB video, TVW video, Draft Agency Request Legislation).
  • The draft request bill would allow for use of subpoena authority “in the context of a cannabis investigation.” Thompson reported, “we already have that authority related to liquor, tobacco, and vapor” products. He emphasized their possible utility in “financial records investigations around true party of interest (TPI), or hidden ownership concerns that come up” and regulators didn’t “have that tool, today.”
    • The summary for the proposal described the use of subpoenas in “administrative investigations” and “in the investigation of underground economy activity.”
  • At time of publication, WSLCB had been granted subpoena powers under two statutes:
    • RCW 66.24.010(3)(f), dealing with conditions and restrictions around temporary alcohol licenses, addresses “disobedience of any person to comply with the order of the board or a subpoena issued by the board, or any of its members, or administrative law judges.”
    • RCW 66.08.145, covers their subpoena powers around tobacco and vapor products “in connection with any investigation, hearing, or proceeding for the production of books, records, and documents held…relating to the transportation or possession of cigarettes, vapor products, or other tobacco products.”
    • Additional statues on subpoena powers:
      • RCW 7.04A.170 within the Uniform Arbitration Act addresses the subpoena power of state arbitration.
      • RCW 34.05.446 in the Administrative Procedures Act also addresses general rules around subpoenas, legal discovery, and protective orders.
  • Learn more about how state subpoena powers and how they function outside of Washington state:
    • National Association of Attorneys General - Subpoenaing Out-of-State Witnesses in Criminal Proceedings: A Step-by-Step Guide (2021)
    • Lane Powell - Drafting and Issuing Discovery Subpoenas: Washington (2019)
    • AgileLaw - How to subpoena evidence from a third party in another state

Here are some observations from the Wednesday August 10th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 3 takeaways:

• Staff provided a briefing on several social equity changes in rules, disproportionately impacted areas (DIAs), training opportunities, prioritization of applications, and media engagements.
  • Director of Licensing Becky Smith referred to the social equity rulemaking project as “just a start” towards what her division was doing on the subject (audio - 7m, WSLCB video, TVW video).
    • They had partnered with staff at the Washington State Department of Commerce (WA Commerce) on a program covering “technical assistance model courses" that were on track to “go live in September.” The department would also begin accepting applications for their mentor roster, she explained, and a list of accepted mentors was planned for release in January 2023. WA Commerce staff would also be able to assist applicants with the required social equity plan, reported Smith, and regular meetings between the agencies continued. 
      • A technical assistance grant program was included in the law establishing the social equity retail program at WSLCB along with the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF).
      • WA Commerce representatives briefed a work group on the program in June 2021, and a new appointee responded to questions at a full task force meeting on June 28th.
    • Speaking about the creation of maps of disproportionately impacted areas (DIAs) by researchers at the University of Washington (UW), Smith discussed meeting with task force members and UW staff on August 4th. Researchers informed the group they were missing “conviction data” from King County, she relayed, and wanted to make changes to the formula. Smith attributed delayed completion of DIA maps to these issues, suggesting staff were “crossing our fingers” that task force members would agree after a UW briefing to WA SECTF on August 23rd. If that group didn’t approve changes, “we will be moving forward with the recommendations from licensing division on making those changes, it will open up more areas” as DIAs, something she called “the best path forward” without explaining whether/how licensing recommendations differed from the changes sought by UW representatives.
      • DIAs are loosely defined by high-level criteria set in statute that UW researchers used to create a more specific formula to produce the maps. The researchers were also responsible for obtaining the data needed to operationalize the formula.
      • The statute does permit DIAs to “be further defined in rule by the board after consultation with the commission on African American affairs and other agencies, commissions, and community members.”
      • An updated agenda for the August 23rd WA SECTF meeting removed the DIA briefing and possible action.
    • Smith’s team was also planning for equity applicant training by way “of live workshops” conducted virtually “and recorded videos." She said they’d be reaching out to potential facilitators to run the trainings, and would communicate with community stakeholders and WA Commerce officials about why trainings shouldn’t be run by WSLCB staff.
    • A request for proposals (RFP) for a third-party vendor to prioritize social equity applicants was released the previous week, Smith noted, with additional distribution through the Washington State Office of Minority & Women's Business Enterprises (OMWBE) and the Washington State Procurement Technical Assistance Center (WA PTAC). The RFP contained an anticipated contract start date of September 30th and Smith reported that they’d conducted a “pre-proposal conference” which drew three participants. Bids from vendors would be due by August 26th, she continued, and staff would determine an “apparent successful bidder” on September 9th.
    • Staff were drafting a “how to guide for those 40 applicants who are selected to go through” the equity application window, stated Smith, and it would be posted online to help applicants “understand the next steps in the licensing process.”
    • Board Chair David Postman looked for clarification on the difference between the WA Commerce and WSLCB training, which Smith distinguished as a "how to develop your business" course from Commerce, while WSLCB training was on "how do you apply for a license" covering “working with the local authorities,” paperwork, leases, and other details. Postman thought that training sounded “robust” (audio - 2m, WSLCB video, TVW video).
  • Director of Communications Brian Smith said Board Member Ollie Garrett would be sitting for an interview on social equity with a “Seattle TV station…in the next two weeks or so.” Rule language revisions due to HB 1210—changing mentions of ‘marijuana’ to ‘cannabis’---resulted in rulemaking to implement that bill adopted on July 6th which Smith felt had been comprehensive. He remarked that staff were updating wording across the agency website, but wouldn’t alter previous press releases “for legacy reasons, for historical reasons” after WSLCB was given authority for cannabis through Initiative 502. Smith added that a few rule sections hadn’t been changed, but was told by Policy and Rules Manager Kathy Hoffman that the reason was “because we have an open rulemaking” that precluded other edits to those sections until a rulemaking project was complete. Equity information on the agency website was continuing to be updated, he concluded, and would continue as his “top priority” as they prepared for an application licensing window (audio - 5m, WSLCB video, TVW video).
    • Hoffman addressed the challenge of overlapping rulemaking projects on August 16th.
  • Director of Policy and External Affairs Justin Nordhorn brought up his involvement in the WA SECTF work group on production regulation, acknowledging reservations about some of the group’s potential recommendations on “general business type of impacts.” He also made a passing mention of WSLCB social equity request legislation (audio - 1m, WSLCB video, TVW video).

• Cannabis use and access research from the University of Waterloo was mentioned by staff who promised more data analysis to determine what was applicable to Washington’s cannabis sector.
  • Brian Smith said that Public Health Education Liaison Mary Segawa had approached members of the management team to talk about findings of researchers at the university that involved data he called “insightful and some of the things that we haven’t had access to.” Director Rick Garza was working with Smith and Segawa to isolate “key analyses from that” which would be publicly released and dealt with “legalization overall, which I saw some very positive things” regarding “usage” as well as “where people access” cannabis. While as much as 90% of access was through the legal market, an unlicensed market “for people under the age of 21” remained viable. Smith remarked that the original market analysis from BOTEC in 2013 had “baked that in” (audio - 2m, WSLCB video, TVW video).
    • Read the complete research article “Perceived access to cannabis and ease of purchasing cannabis in retail stores in Canada immediately before and one year after legalization” published on February 14th in the The American Journal of Drug and Alcohol Abuse. The study focused on Canadian cannabis consumers, finding that most “consumers and non-consumers perceived access to cannabis as 'easy' before legalization and the percentage increased one year after legalization.”
    • Find out more about the university’s cannabis research, their long-term longitudinal study on Cannabis use, Obesity, Mental health, Physical activity, Alcohol use, Smoking, Sedentary behaviour (COMPASS), and other cannabis media reports and research in which the university was involved:
      • Tobacco Use in Canada: Cannabis supplement (2017)
      • Surge in cannabis use among youth preceded legalization in Canada (2019)
      • Trends in youth cannabis use across cannabis legalization: Data from the COMPASS prospective cohort study (2021)
      • Study says Canada can become the Napa Valley of cannabis tourism (2022)
      • Reasons for Purchasing Cannabis From Illegal Sources in Legal Markets: Findings Among Cannabis Consumers in Canada and U.S. States, 2019–2020 (2022)
  • Nordhorn commented that data “jumped out” at him, and they were reviewing gaps that would need to be explained if the information was going to be relevant for the agency or public (audio - <1m, WSLCB video, TVW video).
  • Board Member Jim Vollendroff complimented the work of Smith’s team (audio - <1m, WSLCB video, TVW video). Postman asked if he’d seen the University of Waterloo research, which covered “medical use as well,” and Vollendroff replied that he wasn’t certain but would seek out a copy (audio - <1m, WSLCB video, TVW video). Vollendroff believed that reviewing research and data was important, as there was “incredible work” happening at the local and university levels which could help “advance the work that we’re doing” (audio - 1m, WSLCB video, TVW video).
  • In September 2021, WSLCB arranged contract K1522, a sole source agreement with the University of Waterloo for data from Washington state, a research report, and additional analysis from the International Cannabis Policy Study (ICPS).
    • A 2020 research article on the impacts of legalization from the ICPS observed “substantial differences in cannabis use in jurisdictions with different regulatory frameworks for cannabis. Future waves of the study will examine changes over time in cannabis use and its effects associated with legalization in Canada and additional US states.”

• Officials reviewed other engagements by agency leaders to lobby for federal cannabis banking reforms, conduct outreach to medical cannabis patients, and special committee work with the Cannabis Regulators Association (CANNRA).
  • Brian Smith spoke about his work with U.S. Cannabis Council (USCC) members for advertising on the SAFE Banking Act, conveying that in May USCC staff visited WSLCB to help create talking points and film Director of Enforcement and Education Chandra Brady, who then attended a USCC-sponsored congressional briefing event in Washington, D.C. in July. That event focused on getting SAFE Banking Act language “passed before the August recess,” he commented, and included the father of Jordan Brown, a Tacoma budtender killed during a robbery in March, as well as retail store owners. Smith credited Brady with describing their efforts to reduce occurrence of the crimes and his own liaising with other state and federal officials (audio - 3m, WSLCB video, TVW video).
    • The Association for Cannabis Health Equity and Medicine, a USCC member, resigned from the group on August 17th, alleging “increasing influence of corporate cannabis priorities...that has continually overshadowed or siloed equity-focused recommendations." USCC released a statement that they were “disappointed” by the group’s decision, vowing to work to “bridge divides and unite the cannabis industry and reform movement” in pursuing federal reforms.
  • Nordhorn talked about "more outreach to the medical cannabis community" he’d engaged in “locally, and nationally” to see what was effective in other states’ medical cannabis systems and what patients in Washington thought of them. Compared with other programs, he recognized “we don't have a robust register in the state where a lot of” patients were participating, and estimated there were “around 13,000 people” in the Washington State Department of Health (DOH) registry. Nordhorn’s rough estimate for the total number of patients “based on population and comparable numbers that other states utilize” was that there would be between 80,000-85,000 patients in Washington. He claimed the registry had a “decrease of 7.8% use” between 2019 and 2020, and “another 5.4% decrease” between 2020 and 2021 and remarked that he was looking at partnering with DOH staff and lawmakers to make “some of these…systems meet the intended goals” of past legislation (audio - 2m, WSLCB video, TVW video). 
    • Postman endorsed Nordhorn’s work on “the medical piece” which had been a stated priority of the board for years, and part of the WSLCB Strategic Plan. He offered to help Nordhorn “advance it as best we can” (audio - 1m, WSLCB video, TVW video). 
  • Nordhorn also brought up CANNRA special committees, indicating he was part of a team “trying to put together an explainer” for the general purpose of “what does hemp look like in the current state, and what does it mean based on that 0.3% [tetrahydrocannabinol] THC on a dry weight basis.” Their intention, he said, was to find “what’s appropriate, and what’s not, for regulation,” which was why the drafted THC regulation request bill from WSLCB had “a cutoff similar to alcohol” for regulators to measure what products would be permitted. Nordhorn acknowledged studies staff had seen “talking about the lowest observable adverse effect levels, and the no observable adverse effect levels of THC” and felt their draft bill “fits right in there very nicely” (audio - 2m, WSLCB video, TVW video).
    • Written comments on the draft WSLCB request legislation can be submitted by email until August 25th.
    • On August 9th, it was announced that Andrew Brisbo, the executive director of the Michigan Cannabis Regulatory Agency and the President of CANNRA, would be leaving the agency. At publication time, Oregon Liquor and Cannabis Commission (OLCC) Executive Director Steven Marks had been identified as CANNRA President-elect.