WSLCB - Board Caucus
(September 24, 2019)

Here are some observations from the Tuesday September 24th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Director Rick Garza confirmed no causes had been identified in the state’s investigation into the vapor health scare and hinted at an upcoming announcement by the Governor’s Office (audio – 10m).
  • The health effects of vapor products had been a concern for the Board since hundreds of vapor-related pulmonary illnesses came to light earlier in September. Agency staff had discussed how they’d handle their state and/or federal responsibilities pertaining to the products. And WSLCB planned to implement new regulations through the vapor product rulemaking process already underway.
  • Other developments:
    • On Tuesday September 24th, a congressional subcommittee heard testimony on state and federal investigations into vaping’s health effects. As of September 19th, “There are 530…cases of lung injury reported from 38 states and 1 U.S. territory. Seven deaths have been confirmed in 6 states.”
    • As of September 23rd, three new cases in Washington state had been tabulated by the Department of Health (DOH) bringing the total to six including hospitalizations in King, Spokane, Snohomish, and Mason Counties. No deaths have been correlated with vaping in Washington state.
    • On September 23rd, a Puyallup Tribal police officer filed a lawsuit in Pierce County Superior Court alleging that tetrahydrocannabinol (THC) vapor products from a half dozen manufacturers caused his lipoid pneumonia. The complaint for personal injuries stated that his symptoms began the same day as the first vaping-related illness was reported in Washington. At the time of publication, DOH had not publicly confirmed any cases in Pierce County. The suit named the following Washington companies as defendants:
      • Canna Brand Solutions, an Everett packaging company
      • Conscious Cannabis, a Spokane County producer
      • CannaNW d/b/a Rainbow’s Aloft, a Stevens County processor
      • Edgemont Group d/b/a LeafWerx, a Wenatchee producer/processor
      • JayM Enterprises d/b/a MFUSED, a Seattle processor
      • CJ Gardens d/b/a Janes Gardens, a Lake Stevens producer/processor
  • Garza said that WSLCB had been working with DOH and the Governor’s Office “weeks ago on what a proper response would be.” He reported that the agency’s Public Health Education Liaison Sara Cooley Broschart and Director of Communications Brian Smith were “co-leads” and had met with industry members and other agencies. Garza confirmed the U.S. Centers for Disease Control and Prevention (CDC) had not determined cause(s) for the lung illnesses and “they’re still doing analysis” of concentrates and products.
  • Garza said the agency needed to consider how it would act if the state or federal government provided information which identified unsafe products in the legal cannabis industry. Typically, Garza stated, public health responses were coordinated by DOH and “the only thing that we provide, so that you’re aware, is the retail license for vape shops outside of the cannabis industry. And there’s not a whole lot of regulation around that industry right now.” He said that DOH was still trying to gauge their own authority in current law. Michigan, which recently moved to ban flavored vape products, had already given their state regulators “broader authority by law and by rule” according to Garza. He concluded that the Board’s “authority in the cannabis world is actually much more broad.”
  • When Board Member Ollie Garrett asked for a breakdown of the products Washington state victims of the illness had reported vaping, Garza responded that state officials were using “delayed hospital reports” to identify cases fitting a profile of symptoms. “At the time the hospital reports were written on the one case in King County it was nicotine.” But he stressed they hadn’t located the product in that case yet. New York, “which doesn’t have legal cannabis,” had been reasonably certain their illnesses were due to “illicit products” when their governor took action on the vape market.
  • Garza said Governor Jay Inslee would be “giving some direction in the next couple days” on “what he would like to see moving forward.” Garza added that he expected Inslee’s requests would include “the need to bring legislation forward to further regulate the vaping industry” beyond WSLCB and DOH’s current grants of authority. He noted that Representative Gerry Pollet had introduced legislation on vaping regulations earlier in the year but that it hadn’t progressed. Garza concluded the situation had created “an urgency that’s probably good” for the purpose of more strictly regulating vape products.
  • Garza continued by saying the agency had reached out to processors of cannabis vape concentrates to ensure they disclose “all of the compounds, additives that are used in vape products in our industry right now.” As of January 1st, WAC 314-55-105(2)(c)(ii)(B) required disclosure of “Any other chemicals or compounds used to produce or were added to the concentrate or extract” on product labels.
  • Garza also said the agency was reviewing their current recall rules in the event a contaminant source was present in the 502 market. But he cautioned “a lot of folks believe it’s probably not a cannabis-derived compound or additive it’s something that’s being placed into the concentrates or the devices that could be problematic here.” He said WSLCB had “brought all the trade organizations in” and found several businesses proactively “removing product or providing signage” about vape risks.
    • Here is a draft of the vapor product warning sign which would be posted by retailers.
  • Garza said Director of Legislative Relations Chris Thompson had begun working more closely with DOH Deputy Director of Policy and Legislative Relations Ryan Black on all the products WSLCB regulated to “help educate and orientate legislators.”
• Garza discussed the WSLCB’s proposed request legislation and a recent legislative work session which featured an agency presentation.
  • Agency request legislation on a prospective social equity program and medical cannabis/small producers was submitted to the Governor’s staff and the Office of Financial Management (OFM) for review on September 13th. The Board last discussed the draft bills on September 17th.
  • Board Chair Jane Rushford asked about the agency’s contacts at the legislature and their reactions to the issues the agency was raising. Garrett said she’d been working with Thompson on the lobbying effort and promised to meet with any lawmaker who wanted to know more about the agency’s request bills. Rushford noted that Thompson was “driving through his last list” of legislators to contact before going on a vacation.
  • Garrett felt the agency’s efforts “complement” the Washington CannaBusiness Association’s (WACA) Cannabis Capital Equity Act which would fund a state equity program through a 1% fee on investments greater than $500K into licensed cannabis businesses. The Department of Commerce would administer the proposed Equity Fund and provision loans to “prospective and current license-holders representing a diversity of race, color, national origin, religion, sex, age, or disability.” Garza said that WACA’s concept “complements quite well” the program the agency envisioned as WSLCB was “probably not going to move forward some tax increase.” Garrett was hopeful the agency would be “working on something in unity” with WACA during the 2020 legislative session (audio – 3m).
  • Garza also briefed on WSLCB’s participation in a House Commerce and Gaming Committee legislative work session on cannabis on September 12th. He called it a “status report of what’s going on with the industry” that enabled the agency to present its request legislation, potency tax study work group, and rulemaking projects directly to lawmakers. Legislators heard from cannabis trade groups and academic institutions as well which Garza found “really interesting.”
    • Watch the entire work session on TVW, skip directly to Garza’s testimony, or check out the agency’s presentation to lawmakers.
  • Rushford said that Garza and Cannabis Examiner Manager Kendra Hodgson had represented the agency well and deemed the work session’s content and panels “excellent.” Garza said he expected another Committee hearing in November.
  • Garza added he’d met with Senator Karen Keiser, Senate President Pro Tempore and Chair of the Senate Labor and Commerce Committee, to give a briefing similar to what the House committee had heard. He described a generally positive response from lawmakers to the topics the agency’s request legislation raised but expected it would be “late October or November” before the agency heard back from the Governor’s office regarding the proposed bills. Garza believed the issues of equity, medical cannabis, and assisting small producers had been raised in the legislature often enough that the topics wouldn’t take anyone by surprise (audio – 4m).
• Garza shared more on regulation of cannabis licensees who also hold hemp permits from the Department of Agriculture (audio – 2m).
  • Garza last talked about WSLCB’s consultation with the Washington State Department of Agriculture (WSDA) on their Industrial Hemp Research Pilot (IHRP) program on July 24th.
  • Garza noted that he’d met with WSLCB staff to learn where the agency was in their efforts to help WSDA, particularly in relation to cannabis licensees adding cannabidiol (CBD) from hemp they’d grown to their legal cannabis products. He said there were 10 dual permit holders among producer/processors at the moment and “in the next ten days we will communicate with those licensees and anyone else who’s interested” via a webinar. He indicated the agency asked impacted licensees questions to prepare a frequently asked questions (FAQ) document “about how [hemp and cannabis licensure] coexist.”

• Board Member Ollie Garrett mentioned the need for WSLCB Enforcement officers to receive implicit bias training when discussing enforcement practices in late March 2019. At that time, she indicated she had suggested the idea in 2018 and been rebuffed.
• Garza brought the topic up by saying he’d met with Washington State Office of Financial Management (OFM) Organization Performance Advisor Lenora Sneva. He explained that she had experience in “diversity, equity, and inclusion” (DEI) and was “very knowledgeable around some of the implicit bias training that we were doing” (audio - 6m).
  • Garza said that during the WSLCB training there was a "little bit of a hiccup” in how staff responded leading him to consult with OFM staff “who are part of the state team that’s working on this.” He asked them “how would you move forward in this training,” saying that he believed “when you look at DEI you got to look beyond just training, right? It's how you recruit." The OFM staff provided quality input in Garza’s view and he planned to return to board members with new bias training guidance.
• When Garrett asked if the DEI staff from OFM had provided the implicit bias training to agency staff, Garza replied that WSLCB’s training had been run by Caprice Hollins of Cultures Connecting. “[OFM] use a lot of different folks,” Garza commented, “some from the universities, some that are consultants.”
• Garrett said she knew that the Washington State Office of Minority & Women's Business Enterprises (OMWBE) had conducted similar training in the past and they were received “very positive[ly].” She noted that the “hiccup” during WSLCB training was atypical when she’d asked around at other agencies where staff went through implicit bias education. Garza said, “There have been [issues] with this one” and noted that “conversations” which had come up during WSLCB’s training had occurred at other agencies. He felt it boiled down to “the approach that you use.” Board Chair Jane Rushford said the reaction following the training was “revealing” and would “help to clarify” next steps for the agency.
• Garza reported that OFM hadn’t conducted their internal implicit bias training yet but had “started with a large survey that was done to all employees.” OFM, which was almost the same size as WSLCB according to Garza, “created focus groups from the information they garnered...then created action committees given the results that they learned and they’re moving slowly into the training.” In contrast, he said that at WSLCB, “we went straight in with the training.”
• Rushford said that either she or Garrett would participate in Garza’s next internal discussion on implicit bias training. Rushford added that she hoped that the scope of the agency’s implicit bias education would grow to encompass “other areas of gender.” Garza mentioned that gender identity was part of the “whole gamut” of OFM’s survey on which they based their “committees that were created afterwards to address the issues that they found in the survey.”
• Garza reported that he’d asked OFM staff for guidance and they responded that WSLCB “learned a lot in what you did.” Rushford agreed that the training had been “a big reveal.” Garza said “there's a lot of different trainers out there and part of the discussion” with OFM was to get their help to “figure out who might be good for us to bring in next and then lay it out so that it's more holistic than just the training.”