WSLCB - Board Caucus
(October 22, 2019)

Here are some observations from the Tuesday October 22nd Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• The WSLCB planned to adopt emergency rules clarifying the agency’s authority to enforce the State Board of Health’s “flavored vapor products” ban on tetrahydrocannabinol (THC) vaporizable products (audio - 2m).
  • Concerns around vapor product safety took shape in early September following several mysterious lung illnesses attributed to the products by the Department of Health (DOH). Since then, a series of actions by Washington’s governor, the State Board of Health (SBOH), and WSLCB have resulted in a ban on “flavored vapor products.” As the board had greater enforcement authority over cannabis licensees as compared to non-THC vapor product licensees, the agency required retail warning signage and increased processor vaporizable product disclosure requirements via emergency rules.
    • On Monday October 21st, the Vapor Technology Association (VTA) and The Vaporium, a Pierce County retail vapor licensee, filed a lawsuit against the SBOH and DOH in Thurston County Superior Court for “declaratory and injunctive relief.” VTA had recently organized similar lawsuits challenging other state bans, including New York, Oregon, and Massachusetts, as well as leading a lawsuit against the U.S. Food and Drug Administration (FDA). Vaporium owner Kim Thompson was one of many who spoke against a flavored vapor products ban during SBOH’s October 9th board meeting (audio – 2m, video).
  • WSLCB Cannabis Policy and Rules Coordinator Kathy Hoffman told the Board that two more emergency rules would be presented for adoption at the following day’s Special Board Meeting which would alter WAC 314-55-079 regarding cannabis retailers and 314-55-077 regarding cannabis processors. The emergency rules are one line additions to each WAC chapter which formalize the WSLCB’s authority to enforce the SBOH’s ban: “The board may take disciplinary action against any marijuana [retailer or processor] that fails to comply with the provisions of chapter 246-80 WAC.”
  • Hoffman said the emergency change “bridges the enforcement requirements” of SBOH’s rule with the agency’s authority under RCW 69.50 allowing WSLCB to enforce the health agency’s new rules.
    • It was unclear to Cannabis Observer why WSLCB’s formal declaration was necessary as SBOH’s emergency rules state they “may be subject to enforcement by any agency under authority of RCW 43.20.050(5).”
    • RCW 43.20.050(5) states: “All local boards of health, health authorities and officials, officers of state institutions, police officers, sheriffs, constables, and all other officers and employees of the state, or any county, city, or township thereof, shall enforce all rules adopted by the state board of health. In the event of failure or refusal on the part of any member of such boards or any other official or person mentioned in this section to so act, he or she shall be subject to a fine of not less than fifty dollars, upon first conviction, and not less than one hundred dollars upon second conviction.”
    • Whereas the language in statute indicates “all other officers and employees of the state...shall enforce all rules adopted by the state board of health,” WSLCB’s emergency rule language says the agency may take disciplinary action. This would appear to grant the WSLCB some discretion in choosing to enforce another agency’s rules which are already being challenged in court as “invalid.”
• The Board prepared to adopt additional emergency rules to implement the new prohibition which would enhance the agency’s enforcement authority over non-THC vapor licensees (audio - 1m).
  • Hoffman told the Board she planned to present emergency rules for adoption which would alter WAC 314-35 regarding non-THC vapor products. She said the change would “allow for summary [license] suspension under the vapor product only rules” as well as a “petition for stay.”
    • Hoffman said the two new rule sections would allow WSLCB’s Enforcement officers to “carry out the provisions of the State Board of Health emergency rule.”
    • Hoffman elaborated that the proposed emergency rule would work in tandem with rules the Board approved the week before.
    • Once adopted, all emergency rules passed by the Board remain in effect for 120 days unless the Board subsequently renews or suspends them.
  • After the Board voted on the emergency rules, Hoffman said she’d present a memorandum to delegate suspension authority to the Enforcement division.
    • The memo states: “The authority to serve orders of summary suspension of vapor product licenses is delegated to the enforcement division under the supervision of the chief of enforcement, who may further delegate this authority. The enforcement division may serve an order of summary suspension when a licensee has continued to sell or distribute flavored vapor products in violation of State Board of Health rules, chapter 246-80 WAC.”
• Deputy Director Megan Duffy followed up on a request to enable processors to offer credits or exchanges for returned flavored vapor products (audio - 3m).
  • During the general public comment period at WSLCB’s last board meeting, two cannabis industry representatives called attention to challenges the flavored vaporizable products ban was causing cannabis licensees needing to return items they could no longer sell. They asked for agency permission to “credit” businesses for unsold products.
  • Duffy said staff had been “working on that concept” including doing “initial outreach to a variety of licensees and stakeholders” to gain “broader input” on the issue to inform a “thorough analysis.” Duffy predicted staff would be able to recommend a workaround at the following week’s Board Meeting.
  • Board Member Ollie Garrett suspected a timely agency response was “crucial” for businesses already subject to returning newly-banned products. Duffy acknowledged the “time pressures” but wanted to ensure the agency arrived at “a well balanced” analysis and resolution “whatever that might be.” She indicated changes would likely be implemented “via board interim policy” as it would “make the most sense” and could be undertaken by the Board “fairly quickly.”
  • Director Rick Garza joined in on the discussion saying, “We’ve all seen the string of emails that have been coming back and forth with people having concerns and the whole idea of allowing for exchange and credit.” The agency was considering “what are the next steps” given that emergency actions had happened “quickly.” He said he’d been working with Duffy and staff to “see what we can do to assist” cannabis licensees “without being in conflict” with SBOH’s rules (audio - 2m).
    • Late on Tuesday October 22nd, the WSLCB distributed an “Anonymous Survey on Return of Banned Vapor Products” which acknowledged the new prohibition “has created a financial liability for many cannabis licensees.” The agency sought to understand the impact of current rules which “do not allow retailers to return the banned products in exchange for credit to be used for future purchase of allowed products.”