WSLCB - Board Caucus
(September 10, 2019)

Here are some observations from the Tuesday September 10th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Board Member Ollie Garrett described a meeting with the Department of Commerce regarding WSLCB’s proposed cannabis social equity program (audio – 4m).
  • Director Rick Garza mentioned an upcoming meeting with the Department of Commerce (Commerce) during the August 28th Executive Management Team (EMT) meeting in relation to WSLCB’s Cannabis 2.0 (C2.0) project. Garrett first mentioned her meeting with Commerce at the September 4th EMT.
  • At the time, the WSLCB was considering agency request legislation to establish a cannabis social equity program which included a technical assistance grant program to be administered by Commerce.
  • Garrett described the department as “very supportive” of WSLCB’s C2.0 efforts including looking to “help with funding.” Commerce planned to take a year to understand WSLCB’s intentions, learn about the current market, “and what type of technical assistance, how the grants would work.” She described the department as “very pleased that we are making progress.”
  • Garrett said that she and Cheryl Smith, Department of Commerce Policy and Planning Director, had been communicating for more than a year. Garrett shared more about the C2.0 project and believed Director Lisa Brown would endeavor to have staff attend the next C2.0 interagency meeting.
    • See Cannabis Observer’s coverage of WSLCB staff reflecting on the first C2.0 interagency meeting during the June 12th EMT.
  • Board Member Russ Hauge asked about the department’s experience with the cannabis market and if Commerce had ideas about “how to protect smaller operators in a market like this.” Garrett’s impression was Commerce wanted a dedicated, full-time staffer to focus on cannabis responsibilities. She said most Commerce programs to assist small businesses “hadn’t been looked at in [the cannabis] industry when it comes to technical assistance, funding, and support.”
  • Hauge asked if there was resistance from the department due to their receiving other federal funds. Garrett confirmed there wasn’t.
  • Garrett mentioned that Brown and others from the department’s leadership had been “in discussions with others from the industry regarding [social equity programs].”
    • On Monday September 9th, the Washington CannaBusiness Association (WACA) issued a press release titled “Cannabis Association Proposes Solutions to Inequities in Legal Marketplace” along with a “Cannabis Capital Equity Act Fact Sheet” announcing its “top legislative priority for the regulated industry in 2020.” The proposal would establish an Equity Fund administered by Commerce and funded by “a 1 percent transaction fee on capital investments greater than $500,000 in Washington cannabis businesses” (where 1% of $500K = $5000). In turn, Commerce would “offer low-interest loans to eligible entities and individuals in our state.” State Representative Kristine Reeves, Vice Chair of the House Commerce and Gaming Commission and a candidate for the vacant Chair, and Aaron Bossett, a recent appointee to the WSLCB Cannabis Advisory Council, were quoted in the press release.
    • Garrett was complimentary of WACA’s proposal, particularly “their idea of being creative getting some funding.” WACA’s Cannabis Capital Equity Act appeared to be another lever designed to help lift out-of-state capital investment restrictions while ostensibly “lower[ing] financial barriers for prospective and current license-holders representing a diversity of race, color, national origin, religion, sex, age, or disability.” The trade association’s proposal differed from WSLCB’s drafted legislation, which envisioned grants paid for through appropriations from the state’s dedicated marijuana account and local tax revenue from jurisdictions electing to participate. More closely related, section 6(4) of WSLCB’s proposed legislation states “Additionally, the department may solicit, receive, and expend private contributions to support the grant program.”
    • Out-of-state ownership and financing was a consistent priority for WACA in their advocacy for legislation to help some cannabis businesses, most recently in HB 1236 which the organization’s representatives lobbied for in January and SB 5985 which reconstituted HB 1236 in March after that bill was not moved prior to the house of origin cutoff. Both bills remain active for the 2020 session.
• An emerging public health crisis associated with vaping prompted further discussion from the Board (audio – 3m).
  • On August 30th, the U.S. Centers for Disease Control and Prevention (CDC) issued an investigation notice regarding correlated health effects attributed to vaping products which the Board talked about during the September 4th EMT.
  • Since then:
    • On September 6th, Washington State’s Department of Health (DOH) posted advisory information confirming no vaping-related illnesses had been reported in the state.
    • Also on September 6th, a prominent U.S. Senator sent a letter to the FDA’s acting commissioner telling him to, among other things, take “decisive action” to reduce teen vaping or resign.
    • On September 9th, New York Governor Andrew Cuomo directed that state’s health authorities to take the following actions:
      • Issue Subpoenas to Companies Marketing and Selling “Thickening Agents” Used in Black Market Vaping Products
      • Issue Emergency Regulations to Mandate Warning Signs in All Vape and Smoke Shops in New York State
      • Advance New Legislation Banning Flavored E-Cigarettes
    • As of September 6th, CDC reported 450 possible cases of vaping related illnesses—more than twice as many as originally reported—as well as two more deaths.
  • Hauge said media coverage was “kind of confusing” but many cases were associated with “THC as well as nicotine-based cartridges.” Aside from a single death reported in Oregon, Hauge said all the possible cannabis-related cases he was aware of involved “unregulated” THC vape products.
  • Hauge noted one ingredient of particular concern, vitamin E oil, was “common to most, but not all, of the reports of death.” While vitamin E oil was regarded as safe to apply topically and ingest, once vaporized and inhaled the aerosol “blocks passages in the lungs when it cools back down.”
  • He promised to talk with Policy and Rules Coordinator Kathy Hoffman later that day, conceding that “there isn’t much we can grab ahold of right now” and that the “reports are very scary.”
• The Board mentioned activity in relation to sovereign tribes, proposed agency request legislation, and research on the transportation of cannabis.
  • Hauge brought up the agency’s rechartered Tribal Advisory Council (TAC), whose members met for the first time in several years last April. He reported the group had been trying to identify a “Tribal Co-Chair” to lead with him so that topics were addressed in a manner the tribal nations “found satisfactory.” Hauge was working to connect with Ron Allen, chairman of both the Washington Indian Gaming Association (WIGA) Executive Committee and the Jamestown S’Klallam Tribal Council. He hoped to have a TAC Co-Chair in place before the 30th Annual Centennial Accord Meeting scheduled for November 6th and 7th. Garrett agreed that without a co-chair, the agency shouldn’t call a TAC gathering “just to have a meeting” (audio – 2m).
  • Hauge reported that he’d been “reading the comments” on the agency’s potential request legislation, noting that he had yet to see “glowing accolades or support” – “but that’s the legislative process” (audio – 1m).
  • At the September 4th EMT, the Board denied a petition to change cannabis transportation rules while expressing interest in learning more. Garrett wanted to know next steps and “how long it’s going to take” to understand the petitioner’s concerns around extended or overnight transportation of cannabis products. Hauge promised to ask Hoffman for follow up during his meeting with her because “there’s maybe an issue there that we should address” (audio – 1m).