WSLCB - Board Caucus
(June 18, 2019)

Here are some observations from the Tuesday June 18th WSLCB Board Caucus.

My top 3 takeaways:

• Board Member Russ Hauge spoke about his continuing efforts to define and support “craft cannabis” businesses (audio – 6m).
  • For some time, Hauge has voiced an interest in helping smaller licensees and treating cannabis similar to Washington’s craft wineries or breweries which allow direct-sale and on-site tasting of their products.
  • During the caucus, Hauge talked about meeting with Policy and Rules Coordinator Kathy Hoffman and Matthew Harper from the Marijuana Examiner’s office to “identify the population of our license holders” that could be regarded as a “craft producer that would warrant some other support from the Board.”
  • The group initially considered Tier 1 licensure as qualifying criteria but felt that was too limiting. At the other extreme, “over 90% of our license holders” qualify under Washington’s statutory definition of “small business,” RCW 39.26.010(22), so that criteria would entail “addressing the whole market.” Upon creation of a craft cannabis definition, Hauge wants to place it before the Cannabis Advisory Council (CAC) to “put that out to the industry and have them get back to us.”
  • After his introduction to licensees such as Tier 1 grower Mark Ambler and others, Hauge aimed to develop a craft cannabis definition on an “accelerated basis” on a “parallel track” to CAC deliberations to “provide regulatory relief” and inform the state legislature what “they need to do to provide meaningful support for the smaller growers and processors.” Hinting at the complexity around definitions, Hauge added: “Basically, the ones who don’t want to become great big companies.”
  • Hauge said WSLCB Director Rick Garza had suggested “whatever proposal we take to the legislature really shouldn’t be an LCB proposal. It should come from the industry.” Hauge and the Board agreed it should be clear to lawmakers the agency is supporting, but not imposing, craft cannabis or other small business reforms. Garrett said the agency could help the industry effectively and consistently articulate and advocate proposals to the legislature.
• Board Member Ollie Garrett provided her initial thoughts on a meeting she’d just had on representation of cannabis patient perspectives (audio – 6m).
  • Garrett met with cannabis patients Karie Ann Taylor, Don Skakie, and myself in my capacity as the CAC consumer representative and member of Washington NORML.
  • We met about changing the roster of CAC members, and particularly the addition of a patient representative. We met with Garrett as the executive sponsor of the council, which she said was formed at her urging upon joining the Board after she found stakeholder engagement inconsistent.
  • I shared a letter with Garrett which said that I’ve become “greatly concerned about the ability of the CAC to address needs besides those of licensees and WSLCB.” Beyond patients, I encouraged the creation of seats on the CAC for: a lab representative, an employee representing non-licensee views within the industry, a civil liberties or social justice expert, and an at-large representative impacted by the industry.
  • I recommended Garrett and the Board issue a formal statement outlining the CAC’s purpose and how membership would be determined going forward. When new cannabis organizations form or become inactive, when valid stakeholder groups are left out, I believe good policy, and the public, suffer. The Board can declare intent and how the group is to be composed for future members of the Board and those learning from Washington’s experiment in legalization.
  • After looking at CAC membership, we discussed:
    • The state’s stagnant patient registry participation
    • Poor access to medicinal cultivars and their genetics
    • Other state agencies which haven’t been invited to the Cannabis 2.0 project (C2.0), but whose jurisdiction impacts medical cannabis patients such as the Behavioral Health Administration, Office of Superintendent of Public Instruction, and Child Protective Services
    • A need for the state’s patient community to coordinate and organize better
    • Dedicating WSLCB policy staff to medical cannabis issues on a regular basis. Later during caucus, Garrett mentioned this idea and the Board was generally receptive.
  • Garrett wanted to consider what she’d heard before rendering a final opinion but agreed that patient representation on the CAC alone would not address these needs: “it’s not just the [CAC] seat and discussion. It needs to be very focused” so the Board could figure out the next steps for helping patients across state agencies.
• Garrett and the Board discussed Portland, Oregon’s investment in license equity and its impact on that city’s legal market (audio – 8m).
  • Garrett talked about Portland’s equity program last month after she’d been put in contact with Tory Campbell, Prosper Portland’s Manager of Entrepreneurship and Community Economic Development Teams. Campbell and Garrett recently spoke about that city’s cannabis social equity grants program, one model for increasing minority ownership of cannabis licenses which Garrett is considering.
  • Portland allocated $150,000 from revenue generated by a cannabis surtax for the NuLeaf Project to provide “technical assistance” to small, minority-owned startups.
  • Garrett shared details of the program’s results and next steps.
    • Two businesses were awarded $30,000 grants and “increased monthly sales by 143% in four months, they lowered their cost margins by 58% and they improved their ranking” in Portland’s legal market.
    • One company “increased customer count by 5.5 customers per day, representing a 13% sales increase” and paid off banking fees.
    • One retailer went from purchasing cannabis totally on consignment to being “able to go to a direct-purchasing inventory.” Hauge commented that Oregon’s consignment and wholesale policies weren’t comparable to Washington’s.
    • Garrett noted that Portland is considering allocating more funding for the program.
  • Garrett said Campbell might be available to call in for the upcoming July 9th Board Caucus and had offered “some of his staff people that worked on their program to work with our people” to develop the Board’s position. Hauge asked if a conversation with Campbell and his team was something to “sponsor at a Board Meeting” for an in-person presentation. Ollie said a short call with Campbell would allow the Board to determine if a Board Meeting presentation was warranted. Rushford encouraged the call and said Tribal Liaison Brett Cain, Legislative Relations Director Chris Thompson, and Licensing Director Becky Smith should sit in.
  • Garrett added that Portland was considering a new “umbrella license” for their startup incubation program wherein a new business is allowed to operate a brand under an existing business’s license. “They’re being very creative,” Garrett said of the city’s minority inclusion efforts.