WSLCB - Board Caucus
(June 25, 2019)

Here are some observations from the Tuesday June 25th WSLCB Board Caucus.

My top 3 takeaways:

• Director Rick Garza informed the Board of his conversations with industry representatives about the Packaging and Labeling rulemaking project (audio – 7m).
  • Packaging and Labeling (PAL) has been a high-profile topic since the agency abruptly re-interpreted rules on marijuana infused edibles (MIEs) last fall, leading to significant industry engagement and a pause by the agency. The Board then adopted several interim PAL and MIE policies at the beginning of this year. More recently, another round of PAL rulemaking was initiated by the Board. Policy and Rules Coordinator Kathy Hoffman provided an update on progress earlier this month.
  • After becoming aware of a letter to the WSLCB from the Washington CannaBusiness Association (WACA) requesting an extension of the PAL rules deadline, Garza reached out to the Cannabis Alliance for additional perspective. He met with representatives from the Alliance on Monday June 24th and reported the conversation primarily focused on the limited palette of usable colors.
    • The palette had been quietly increased to 24 approved colors from the original 16 using the agency’s change request process, although not all requests have been approved.
  • He conceded the group “raised some issues that we want to take a look at.” Garza sounded an optimistic note, saying he intended to meet with WACA and the Alliance separately before bringing any suggested “adjustments” to color rules back to the Board. 
  • Board Chair Jane Rushford asked for stats on how many MIE labels had been rejected. Hoffman replied that of 146 submissions from 46 processors, 87% “required revisions.” Garza said that Susan Harrell, WSLCB’s Licensing Program Specialist for Label Approval, explained to him that licensees were not meeting requirements outlined on the MIE checklist. Both Garza and Harrell were reviewing the checklist to address the high rejection rate.
  • Hoffman noted that “revitalizing” licensee education on the label approval process with webinars or short videos could help shift WSLCB’s emphasis on “what we don’t want you to do to what we do want you to do.”
• Garza talked about the agency’s request legislation process for the 2020 session (audio – 20m).
  • At the June 11th Board Caucus, Chair Rushford mentioned the agency’s development of a framework to guide decision making towards agency legislative goals. At the June 12th Executive Management Team meeting, Director of Legislative Relations Chris Thompson briefed agency leadership on the framework (audio – 15m) and shared a request legislation timeline, a policy analysis matrix tool, and criteria for analyzing proposals acquired by Cannabis Observer via public records request.
  • Garza and Thompson agreed there would be less room to negotiate large or costly statutory changes due to the short 2020 legislative session and the finalized biennium budget. Therefore, the agency has narrowed its legislative ambitions to three areas:
    • Social Equity. Garza mentioned looking through a completed white paper on equity in the cannabis industry by Tribal Liaison Brett Cain which agency leadership previewed at the beginning of May. Garza felt it was becoming time for the Board to declare how they want to proceed on social equity. Cain was scheduled to lead a staff meeting on July 11th to explore recommendations described in the paper.
    • Medical Cannabis. Thompson worked with Rushford and Garza to understand WSLCB “policy and rule considerations” which the Board could undertake unilaterally to help cannabis patients, and what needs legislative action.
    • Small Business. Thompson had also explored the bounds of regulatory and legislative help for smaller operators separate from Russ Hauge’s focus, which the board member had discussed earlier in the meeting (audio – 5m). Garza asked Hoffman to help coordinate the legislative conversation within the agency while Thompson was away on vacation.
  • The agency planned to seek a round of feedback from stakeholders once potential legislative goals were identified. Hoffman said her staff would look at open rulemaking projects to see if recommended changes could be incorporated.
  • Garza told the group about another letter from WACA “reiterating a position they took two or three years ago” regarding consolidation of production tiering and reconfiguring canopy allotments. He said WACA’s suggestion to expand the smallest tier from 2,000 to 15,000 feet of canopy seemed “too high” when faced with potential overproduction in the state. Hauge called the suggestion a “non-starter” and claimed small producer problems were “more subtle.” Garza posited the Board’s more holistic look at tier size and canopy allotments might be “divisive” for WACA members. Hauge urged the agency to continue taking a wider view of smaller producer needs inclusive of topics like capital investment and the sharing of facilities or equipment.
• Policy and Rules Coordinator Kathy Hoffman provided an update on open cannabis rulemaking projects (audio – 9m).
  • Hoffman’s last update was at the June 12th Board Meeting. 
  • Cannabis Penalties (WSR 18-22-099). Hoffman said her staff was “pretty close to releasing” a draft of the new penalties to stakeholders. “The penalty matrices are very detailed,” she explained, with “five or six different categories” along with “equalization across the categories” where some penalties had been differentiated by tier to ensure “standardization” with how they’re applied. Hoffman expected a draft release at the end of July or early August.
  • True Party of Interest (TPI, WSR 18-22-054). Hoffman indicated draft rules were ready to move forward. A definition for “control” was adapted from Colorado law to comport to Washington statute with the approval of the Attorney General’s Office. Hoffman expected draft rules would be ready for stakeholders at the same time as the Cannabis Penalties rulemaking project which she was working “in tandem.”
    • Learn more about Colorado’s newly adopted law on cannabis business investment and ownership.
  • Consultation Program. Hoffman expected to file the CR-101 on July 17th as part of the “enforcement remodeling project” necessitated by SB 5318.
    • See Cannabis Observer’s coverage of SB 5318’s passage.
  • Quality Assurance Testing and Product Requirements (WSR 18-17-041). Hoffman anticipated having to postpone a scheduled listen and learn forum on the rulemaking project due to “technical difficulties” and maintenance issues at the aging agency headquarters. However, she reported receiving a final preliminary Small Business Economic Impact Statement (SBEIS) which made one thing clear: were the agency to implement the draft rules to require pesticide and heavy metal testing of all cannabis products without making any other changes it would triple costs on the regulated community (“at least,” Hoffman added). The SBEIS also found a lack of “empirical data” common in other commercial sectors to fairly determine proper pesticide testing levels. “We have a lot of work to do,” Hoffman allowed. Garza noted the SBEIS was built on several assumptions which could be modified such as lot sizes or to “substantially increase” random testing. Hoffman shared an observation from Enforcement Commander Jennifer Dzubay which indicated the number of complaint driven tests were decreasing which could allow for more random testing.
  • Packaging and Labeling (PAL, WSR 19-12-029). An internal team at WSLCB had met twice and was looking at “restructuring” the rules based on product type due to industry feedback that current PAL rules were confusing. Hoffman was beginning “significant [legislative] analysis” of the rules and had met with the Washington Healthy Youth (WHY) coalition to recruit their participation in future listen and learn sessions to ensure a “robust dialogue.”
  • Vapor Product Rules (WSR 19-13-036). Rulemaking was “on track” with an internal meeting expected in July.