WSLCB - Board Caucus
(August 20, 2019)

Here are some observations from the Tuesday August 20th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• The Board conducted final preparations for ancillary gatherings associated with the agency trip to Bothell and its centerpiece Board Meeting.
  • Prevention Roundtable. Board Chair Jane Rushford looked forward to a meeting of prevention stakeholders coordinated by WSLCB and scheduled for later that afternoon (audio – 2m).
    • Rushford, Public Health Education Liaison Sara Cooley Broschart, Cannabis Policy and Rules Coordinator Kathy Hoffman, and other agency staff planned to connect with 23 advocates from prevention communities.
    • Rushford indicated an agenda had been shared with stakeholders, most likely this one passed along by a helpful Cannabis Observer subscriber.
    • For more context, see Cannabis Observer’s notes in The Week Ahead.
  • BIP 14-2019. Hoffman prepared the Board to adopt a new board interim policy (BIP) granting retailers an additional six months to sell down products with packaging and labeling (PAL) approved prior to January 2020 (audio – 2m).
    • BIP 14-2019 would also “provide direction on what retailers should do with those products after [the new deadline of] January 1, 2021.” Hoffman and the BIP referenced three sections of the Washington Administrative Code (WAC) regarding destruction of cannabis products: via returns to processors [ WAC 314-55-077 ], by retailers [ WAC 314-55-079(13) ], and overall disposal requirements [ WAC 314-55-097 ].
    • Hoffman confirmed the impending change during the July 17th Cannabis Advisory Council meeting following an explicit request made by Chair Rushford during the Special Board Meeting earlier that day. The PAL deadline extensions were originally requested by the Washington CannaBusiness Association (WACA).
• Cannabis Policy and Rules Coordinator Kathy Hoffman recommended the denial of two petitions for rulemaking and introduced an issue brief on pyrethrins from the Washington SunGrowers Industry Association (WSIA) – but did not mention the delayed draft rules on Cannabis Penalties.
  • Hoffman’s last rulemaking update was presented at the August 7th Board Meeting. She reviewed rulemaking work group progress at the August 13th Board Caucus.
  • The first petition for rulemaking, first publicly mentioned at the July 9th Board Caucus, appeared to advocate for efficiencies for holders of multiple cannabis licenses situated on adjacent properties (audio – 3m).
    • The request would “simplify and make more efficient a rule, an unidentified rule, I think what he was talking about primarily is combining licenses.”
    • After several attempts to reach the petitioner for clarification, Hoffman finally spoke with them by phone August 14th, when the petitioner asked her to withdraw the request. The Board adopted her recommendation to “deny the petition based on the petitioner’s request to withdraw.”
  • The second petition was “a little more complicated” according to Hoffman, as it regarded “a request to remove point of sale (POS) tracking at the retail level” (audio – 4m).
    • The proposal would exempt retailers from having to use MJ Freeway’s Leaf Data Systems, the state’s troubled traceability system.
    • The petition was initially “more of a comment” Hoffman received May 22nd. After follow up, the petitioner provided draft language on June 26th.
    • Hoffman indicated she supported the petition’s goal of “simplifying the amount of information tracked within the database.”
    • However, the petitioner also questioned WSLCB Enforcement’s need for “time and date, and sale price of each and every items.” Here Hoffman disagreed, saying “there’s a reason for that that’s important to [WSLCB].” She noted that “without [POS] records, a retailer can’t accurately track inventory. And without accurate inventory records” the agency couldn’t meet statutory obligations under RCW 69.50.345(5) or 69.50.342(1).
    • Her advice was to reject the petition because “among other things, point of sale records are used to validate what is sold out of the I-502 system, as well as what came from it and what is allowable to be sold within the system.” Hoffman went on to cite obligations under WAC 314-55-079 and 314-55-095 as further grounds to continue expecting retailer reporting through Leaf. 
    • The Board adopted Hoffman’s recommendation and denied the petition without questions.
  • Hoffman shared WSIA’s issue brief on pyrethrins, an ingredient in many pesticides approved for use by the Washington State Department of Agriculture (audio – 3m).
    • WSIA Executive Director Crystal Oliver recently raised the issue when Hoffman attended the group’s annual gathering in Omak in July. Earlier, WSIA Board President and Founder Jeremy Moberg spoke about pyrethrins during the January 16th Cannabis Advisory Council meeting. Cannabis Observer extends its thanks to sponsor Crystal Oliver for sharing the association’s issue brief.
    • Given substantial context described in the issue brief, the sungrowers encouraged WSLCB to “strike the action levels for pyrethrin & piperonyl butoxide from WAC 314-55-108” for concentrates.
    • Although raised in relation to the open rulemaking on Quality Assurance (QA) Testing and Product Requirements (WSR 18-17-041), Hoffman emphasized that project opened WAC 314-55-101 and 314-55-102, while the recommended change would impact WAC 314-55-108. Nonetheless, she was interested in digging deeper into the document’s assertions and ensuring the cited sources were credible before moving ahead.
    • In addition to the Board, Hoffman shared the brief with Cannabis Examiner Manager Kendra Hodgson and WSLCB’s new chemist.
  • Unmentioned but relevant was the agency’s delay in releasing draft conceptual rules on Cannabis Penalties (WSR 18-22-099).
    • In the August 15th email announcement, Hoffman wrote: “We’ve taken another look at the draft conceptual penalty rules, and would like to invest more time in assuring that these rules not only align with the spirit of the legislation that guided these changes, but goes the extra mile to support our licensed community. We also want to assure you that we are engaging in a thoughtful, deliberate, and inclusive approach to compliance rulemaking that will result in the least amount of impact to our licensees. Those efforts take time and attention to detail.”
    • The release date to provide draft rules to stakeholders was revised from August 15th to August 30th.
    • The last publicly available draft of conceptual rules was discussed during the March 26th Board Caucus.
• WSLCB Enforcement responded to a request from the Board to review the division’s interpretations of law and rule prior to publication of enforcement bulletins (audio – 8m).
  • Hauge spoke about the need for the Board to exercise more oversight of Enforcement interpretations at the August 13th Board Caucus. His concern was “whether, and to what extent [the Board] can share some of the load when [Enforcement is] having to do things like you had to do to answer” questions involving legal interpretation.
  • Deputy Chief of Enforcement Steve Johnson outlined the division’s process for creating, reviewing, and publishing Enforcement Bulletins.
    • Johnson said “when a topic’s [sic] identified for a bulletin we usually look at either inconsistencies that we’re doing, we’re looking at things that come from, a lot of questions from licensees, things that come from the director’s office, things that come from the Board. We build on those, we assign them to a subject matter expert in the division. If it requires an [Assistant Attorney General (AAG)’s] review, or a review of a [Washington Administrative Code (WAC)] or rule or a law for a legal interpretation, we involve them early on to get their input.”
    • The assigned subject matter expert composed a draft bulletin that was “reviewed by the chain of command” – either an Enforcement captain, Johnson, and/or Chief Justin Nordhorn himself.
    • Finally, the draft bulletin was “brought often to [Director Rick Garza]’s office for input if it’s going to have a bigger impact.” For the review, the Deputy Chief explained “we look at the topic, we look at the reason behind the bulletin; we look at the impact of the bulletin. We try to make sure that if there’s other divisions that are impacted that we work with them to make sure they know what we’re doing or that we don’t do something that’s going to have a negative effect on them.”
    • Johnson said the process had existed since he joined WSLCB in 2012, though he expressed openness to changes or “anything we can do to make it sell better.”
  • Johnson said he’d “definitely build in” Chair Rushford’s recommendation for draft bulletin topics proposed by the Board to include a final review by the Board to “close the loop.”
  • Hauge felt Johnson had “put [his] finger on it. As I understand the process now, there is no mandate to ‘close the loop with the Board.’” With that “glaring oversight” changed, Hauge hoped the “burden” of interpretation wouldn’t fall to Enforcement alone, nor would the Board be caught off guard. Hauge added, “I think it has been the practice probably longer than seven years for you guys to just do it, and take care of it. Particularly when we’re talking about alcohol while settled law, fine. But times have changed.” He indicated a revised process was particularly important in relation to emerging cannabis policies, and specifically mentioned the Enforcement division’s advertising interpretation which led to a lawsuit from Seattle HEMPFEST.