WSLCB - World Cafe - Canopy
(October 4, 2022)

Here are some observations from the Tuesday October 4th Washington State Liquor and Cannabis Board (WSLCB) World Café on the Canopy Rulemaking Project.

My top 5 takeaways:

• Agency leaders outlined three questions for world café attendees to discuss in smaller breakout sessions with staff, who would then share the highlights of their cohort's responses.
  • A new canopy measurement protocol was alluded to in January in a post by WSLCB Communications staff and a document on “Measuring Plant Canopy For Washington State Cannabis Producers” was published in April. After concerns were raised that some Enforcement and Education staff weren’t consistently applying cannabis canopy measurement protocols for licensed cannabis producers, a dedicated canopy project was mentioned on July 12th by Policy and Rules Manager Kathy Hoffman. She went over the need for a rulemaking effort on August 2nd, and the Canopy Rulemaking Project was opened by board members on August 31st.
  • At the start of the event, Director of Policy and External Affairs Justin Nordhorn reviewed three questions WSLCB officials wanted participant input on:
    • "How should we treat floor space that is not in production?" (audio - 1m)
      • Nordhorn qualified, “One of the things that's going to ring true for all three of these questions is we want to make sure that people are focused on moving forward and not necessarily on something that may have happened in the past.” Staff intended for the café to resemble a “brainstorming session, if you will, to be able to to capture what this should look like,” he said.
      • The initial question involved locations not being utilized in production of plants, he added, and “how should those areas in the floor space be treated?”
    • "How can we update the tier system?" (audio - 1m)
      • Nordhorn asked participants to presume that agency representatives had decided “we need to do some updating” of licensed production tiers and hoped to hear from breakout groups “what would it look like.” 
    • "How should we measure canopy?” (audio - 2m)
      • “From your opinion and your experience…what should this look like?”
      • Nordhorn hoped participants would stay mindful that “when all these rules were created…we weren't necessarily having the foundational piece of the equity lens in the forefront” of agency policy consideration. He mentioned that breakout sessions could ask, “How do we remove barriers? How do we address this as an equitable issue?”
      • Aside from the canopy issue, Nordhorn communicated that since “we're coming up on our ten year anniversary of legalization…we need to revisit a number of different areas.”
  • In her introduction to the first attempt of agency staff to deploy a new meeting structure for pre-proposal idea gathering, Hoffman talked about how the world café format offered a method that “differs from what we've done with listen and learn and deliberative dialogue in that we're engaging with all of you in a much more deliberate way…so we're not focusing on a panel, we're listening to what you have to say about a particular topic.” In this instance, participants would interrogate the definition of ‘plant canopy’ along with production tier and canopy rules. She hoped to hear “concepts” about the questions raised by the agency and would also welcome proposed rule language changes. Hoffman shared values of the world café approach which she wanted staff and participants to keep in mind (audio - 5m, video, presentation):
    • “Focus on what matters;
    • Contribute your thinking;
    • Speak your mind and heart;
    • Listen to understand;
    • Link and connect ideas; and
    • Listen together for insights and deeper questions.”
  • After Hoffman outlined additional protocols, Nordhorn stated that each breakout group would have a WSLCB employee facilitating it.
    • Room 1 - Jeff Kildahl, Policy and Rules Coordinator
    • Room 2 - Justin Nordhorn
    • Room 3 - Robert DeSpain, Policy and Rules Coordinator
    • Room 4 - Nick Poolman, Chemist
    • Room 5 - Jessica Dang, Policy and Performance Manager
  • Nordhorn indicated each question would be given a 15 minute breakout session discussion followed by a ‘harvest’ of ideas observed by the facilitators (audio - 2m, video). 

• “How should we treat floor space that is not in production?” was asked first, and staff reported methods of production and flexibility were important.
  • Breakout Room 2 participants contrasted counting plants with square footage while being wary of unintended consequences.
    • David Otto, Greenbank Ventures CEO and Founder of Otto Capital  (audio - 2m, video)
      • Not seeing reason to “include floor space in any calculation…for plant canopy,” Otto argued to exclude it from consideration. Nordhorn asked whether “as the plants are growing [they would] have different volume” and if that could “come into play.” Otto considered this part of the “planning stage” of plant production, whereas canopy size and “the exercise around monitoring that production” wasn’t useful in his estimation. “Ultimately, you're talking about a number of plants,” preferable to “managing the production output,” he remarked. Nordhorn agreed regulating production based on plant count “may be a future conversation as well.”
    • Gregory Foster, Cannabis Observer Founder (audio - 3m, video)
      • Foster understood that as “part of the [existing] licensing process, you have to specify in your floor plans where you're going to be growing plants.” He was left “wondering how that would play out in practice, if you were only counting…particular square footage that is actively growing plants.” He figured the interest in this approach varied among “producers who have a lot of space compared to producers who have just the amount that is within their canopy.” Foster, although not a cannabis cultivator, thought a “change [in] that dynamic in terms of how quickly you could transition to bring…a different room up into production” may differentially impact “producers who have a lot of space to spare versus ones who are on a pretty tight budget”
      • Nordhorn sought additional context of how that would impact regulators or licensees. Foster replied that he had seen agency staff be “very careful about, kind of, unintended consequences of particular approaches to rules,” and encouraged those “folks in the room who actually have experience with the growing process” to speak to possible consequences.
    • Tim Betts, Sunnco CEO (audio - 3m, video)
      • Betts felt Foster raised “a great question,” relaying that he was a tier 3 outdoor producer in eastern Washington, where “many of the, the pens are quite large” so they could reconfigure the grows from year to year” for crop rotation. Betts said that for his large outdoor facility, they’d previously told WSLCB officials “we intend to grow 30,000 square feet somewhere within this pen, but we're not going to stay on our site plan exactly…because it's going to change from year to year.” This flexibility was “something that both licensing and enforcement has allowed us to do, but I know that everybody's experiences have been different throughout the state,” he acknowledged, “which…is a larger issue.” Nonetheless, Betts wanted that flexibility of planting area available to all producers, as it was a “very standard practice in outdoor farming of any crop to do crop rotations.”
  • Returning to the main webinar, WSLCB facilitators provided a summary of their breakout group’s feedback on Question 1.
    • Room 1 (audio - 2m, video)
      • The producers’ growing cycles could be the main factor defining canopy, commented Kildahl, as his group felt space should only count as canopy while it's being used and plant nurseries were not always in use by some producers.
      • The second issue participants impressed upon him was that “floor space that is used for pathways or roadways should not count because…it's actual physical space that's not ever used in production.” He added, “if there's no plants being produced…in any spot, then it shouldn't count as canopy.”
    • Room 2 (audio - 4m, video)
      • Although he hadn’t heard anything in his room that challenged the issues presented by Kildahl, Nordhorn expounded on “how some of the facilities are set up.” Some licensees rented space and had limited ability to change where plants were grown, which led to a desire for “flexibility” and a “greater amount of overall space, not necessarily the production space.” He’d heard the rules “seem to make sense” in this area, “although we have heard differing accounts.”
      • Additionally, he said there had been sentiment from some breakout participants that counting plants rather than calculating canopy was a better approach. He hypothesized an emphasis on restricting usable space could lead to “overpopulating a particular area” which “could increase negative impacts to those plants requiring [their growers] to use additional pesticides or something else.”
    • Room 3 (audio - 2m, video)
      • Agreeing that floor space not used for plant cultivation shouldn’t count as canopy, DeSpain’s participants believed that “anything for crop rotation” or “that encourages sustainable ecological growth” should be permitted.
      • They further wanted “in production” better defined, he explained, as well as “having definitions for outdoor versus indoor growth…how you would look at floor space” in each instance.
      • DeSpain conveyed that rules were “only as good as the enforcement,” which needed to be evenly applied to be “equitable to all licensees.”
      • He added that “necessary walkways, the required paths, and lanes and sizes” were important to define in partnership with the Washington State Department of Labor and Industries (WA LNI).
    • Room 4(audio - 1m, video)
      • Canopy rules needed to be flexible for “how you like to grow,” Poolman stated, including year round farming, as he’d heard how “plans were sent to licensing and approved in most cases” for what the individual licensee described as their canopy. He relayed how there ought to be “more recognition that these measurements were done by the licensee, at least in theory.” Poolman was told that the production area in Oregon was “just measuring an entire area like fence to fence, or an entire room. If you want to measure down to the aisle way, they require an actual surveyor to do those measurements and submit it.”
        • Oregon cannabis rules noted this survey must be conducted by a Professional Land Surveyor licensed by Oregon State Board of Examiners for Engineering and Land Surveying.
    • Room 5 (audio - 1m, video)
      • Dang claimed participants in her room were “a little hung up on some of the definitions and the questions,” but they’d concurred that “different definitions or approach[es] for canopy, one for indoor, one for outdoor” and that “aisleways not being counted as production space was brought up.” Also, “areas not in production should be under surveillance, but not considered canopy.”

• “How can we update the tier system?” was next, and group participants suggested allowing more licenses per owner and potentially creating a “dormant tier” for inactive licenses.
  • Breakout Room 2 attendees felt years of legal market data could justify expanding all tiers then called for codifying craft cannabis production and better regulation of hemp-derived cannabinoids in adult use cannabis products.
    • Seconding a comment from Otto, Betts argued however canopy was defined, all the tiers should be allowed more (audio - 6m, video).
      • Betts then pointed out there was “a lot of data” on the effectiveness of the tier system, which had worked “remarkably well” as a “first guess or a rough draft.” However, Betts felt a “first guess probably isn't going to be the best answer,” and that canopy and sales data could be utilized to “make sure that the tier system provides enough production to support a healthy market.”
      • To anyone positing “a state of drastic overproduction,” he would say “it’s not that simple.” He believed that “cannabinoids coming in via hemp and the conversion of CBD [cannabidiol] distillate into THC [tetrahydrocannabinol] distillate” had impacted adult use cannabis prices more than overproduction. Betts pointed out that Unicorn Brands LLC, a processor which had engaged in the practice, reached a settlement regarding an administrative violation notice (AVN) from the agency. He asserted “a tremendous amount of hemp biomass was used to support the system for at least a year, and that likely had a dramatic impact,” displacing cannabis grown by licensees. He offered secondhand “speculation that there's product coming in from Oregon and California, particularly cannabinoids, distillate” which also muddled what tier sizes ought to be.
        • The board released an interpretive statement in July 2021 which banned the practice of converting CBD into other cannabinoids for inclusion in products.
      • Nordhorn returned to the tier system, and Betts repeated his desire to increase production caps. He was aware that during 2019 or 2020, Enforcement staff was “allowing a lot of growers…to expand, and get bigger, and maybe grow outside of the canopy. It certainly wasn't a public policy, but it seemed to be…Enforcement was allowing a lot of leeway with large grows back when there were shortages.” Betts feared that “the price is going to stay permanently lower but we're forced to stay growing small; we're really going to get squeezed.”
    • Micaela Wakefield, Double Delicious Managing Director (audio - 2m, video)
      • Noting Betts grew “for distillation,” Wakefield wanted to see tiers more reflective of having “a lot of craft growers within our industry and they're really small.” She agreed with Betts’ concern about cannabinoids from outside the licensed system hurting producers’ business.
      • Wakefield also found that with the Cannabis Central Reporting System (CCRS) there wasn’t a “way to enforce being able to, you know, follow what's going on with the cannabinoids and the biomass, and where it's going.”
    • Southslope Consulting (audio - 2m, video).
      • They argued, “the original justification for the tier system was to cap state production and everybody always acknowledged it was a messy way to do that.” Sales data could be used “if you're gonna apply the tier system in the way that I think it was envisioned…a tier system would be reflected on terms of how much weight you can produce and not how much area you can farm.”
      • In the event of national legalization or “interstate commerce,” they wanted to contemplate a system for automatically increasing production limits “that allowed folks to scale up so that they could stay competitive.”
      • At time of publication, Southslope Consulting was noted in the National Cannabis Industry Association speakers archive as a California business entity of David Rice. Rice was the owner of San Juan Sungrown, a Washington producer that closed abruptly in 2015 following legal challenges over land use regulations, reported to have been settled in December 2016. Cannabis Observer was not able to confirm if Rice was the speaker.
    • Foster appreciated hearing comments around measuring by weight and plant count, aware they came with challenges. He asked “whether the tiering system needs to consider differences between growing techniques. So, indoor, outdoor, greenhouse, hoop house—and any combination thereof—and…output that you can get from those facilities” (audio - 2m, video). 
  • Facilitators summarized their breakout group’s feedback on Question 2.
    • Room 1 (audio - 2m, video).
      • The room’s participants advocated for different tiers based on indoor and outdoor production, Kildahl reported. All outdoor cultivation could be granted a large, “uniform tier size” for what was often “one major harvest per year.”
    • Room 2 (audio - 1m, video).
      • Nordhorn expressed the interest among his participants of raising production limits due to “economies of scale…biomass production” or “potential Federal legalization and being behind the curve.” He described the group feedback on recognizing “some variability between indoor and outdoor…there should be some consideration around” regulating based on volume of cannabis production.
    • Room 3 (audio - 2m, video).
      • DeSpain relayed the idea that tier 1 and 2 growers that “keep hitting max canopy” should be able to apply for tier 3 licenses, and tier 3 producers not at maximum should get “reviewed and possibly moved down to a lower tier” by WSLCB. Another concept was a single, large canopy limit for all producers without tiering, he said.
      • Participants suggested a “trigger” to increase canopy in the event of national legalization, “but until then keeping production as is to avoid market saturation in the state.”
      • He added there was a more “technical” debate around multiple licenses under a single unified business identifier (UBI).
    • Room 4 (audio - 1m, video).
      • This group was also interested in delineating some canopy differences based on type of production, Poolman commented, but “our group was a little less concerned with the total [canopy] cap versus the cap on the number of licenses that someone could hold.” He passed on the idea that canopy might be “aligned with market needs” by using sales information to “better inform how much canopy should be in total production.”
      • Their members agreed with the prior group’s sentiment that “a relegation versus promotion system” for moving licenses between tiers might be helpful to manage production, said Poolman.
    • Room 5 (audio - 1m, video).
      • “Having a dormant tier or license…or non-producing canopy” was mentioned in Dang’s room, along with a need for consistent enforcement.

• "How should we measure canopy?” elicited common responses that any standard needed uniform application and enforcement, yet exceeding canopy should be permitted up to a certain threshold - then should be strongly penalized.
  • Those in Room 2 were open to several concepts around judging plant count, size, or whether the existing canopy standard was suitable if clearly and consistently communicated and enforced. Nordhorn stressed this question was about how WSLCB should, “as an organization, be monitoring and measuring” (audio - 1m, video).
    • Ryan Lee, Martin Davis, PLLC Associate Attorney (audio - 2m, video).
      • Focusing on plant counts as the main production limit, Lee thought canopy tiers should be based on a common unit of measurement decided to be appropriate for growing a single plant divisible into the tier’s overall allotment of space. He argued this would be “super simple for enforcement, very easy to demonstrate on a site plan, and…gives you a lot more ease of…consistency of enforcement and just generally ease for everyone involved.”
    • Kevin Mullin, Double Delicious Sales Manager (audio - 3m, video)
      • Speculating that a grower could experience “a crappy year" beyond his control with a low yield despite the maximum number of plants, Mullin wondered how the system would respond to “situational” challenges for individual businesses. Lee asked for clarification if Mullin was proposing allowing excess production. Mullin demurred this could be “a craft versus commercial” distinction, but the dry weight yield seemed like a better canopy measure than a plant count.
    • A speaker identified as ‘JD,’ echoed the sentiment of Betts, Lee, and others that “plant canopy is pretty well defined…everybody just wants to understand what is the methodology of enforcement, right? And then it's on each license holder to ensure they stay within their canopy limits” (audio - 1m, video).
  • Staff facilitators provided highlights from their groups’ input on Question 3.
    • Room 1 (audio - 1m, video).
      • Kildahl shared the perspective that canopy measurement could involve "measuring plants tip to tip," differentiating by “growth stage of the plant,” and the need for consistent review of canopy by agency officials. He remarked that measuring canopy in “blocks” of a fixed size based on tier size had also been brought up.
    • Room 2 (audio - 1m, video).
      • Nordhorn relayed concern about consistently applying any canopy measuring standard. The existing canopy standard was “workable,” but disagreement reigned over whether plant count, blocks of square footage, or yield weight was the most effective measurement. 
    • Room 3 (audio - 1m, video).
      • Whether growing indoors in “trays” or outdoors in “a bed space,” DeSpain explained that rather than reinventing canopy measurements, his participants said officials should “fix it” and include adequate enforcement. Another idea was “a drip edge of plant, which is apparently how other plants are measured,” he stated, along with some who didn’t think that canopy needed to be measured by WSLCB at all.
    • Room 4 (audio - 1m, video).
      • Participants called for using Washington State Department of Natural Resources (WA DNR) “drone footage and software to measure the actual canopy.”
      • Some hoped for a system that allowed a certain amount of overproduction so that “it's not something to worry about necessarily. But set a limit so that if there is somebody significantly over that canopy limit, that we do go hard after on penalties.”
    • Room 5 (audio - 1m, video).
      • Dang heard that indoor growers with vertical racks in their production facility needed to have that count towards canopy, “so there were some discussion about using a volume measure, or a 3D measure.”
      • She remarked there were also calls for consistency and diminishing ambiguity in enforcement and rulemaking, along with preserving some flexibility in site management for producers.

• Policy and Rules Manager Kathy Hoffman wrapped up the event which would be followed by a second world café on Tuesday November 29th (audio - 2m, video).
  • Hoffman and Nordhorn were grateful for attendees donating their time and said a “follow up world café” would be scheduled, later announced for November 29th. She anticipated “looking forward to working with you more on this very, very important topic.”
    • Hoffman discussed the world café with the WSLCB board on October 11th.
  • On November 18th, WSLCB staff published themes captured around each question.