WSLCB - Board Caucus
(November 12, 2019)

Here are some observations from the Tuesday November 12th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• The Board prepared to move the Cannabis Penalties rulemaking project forward at the following day’s board meeting and expressed happiness with the progress (audio - 3m).
  • Policy and Rules Coordinator Kathy Hoffman updated board members on the Cannabis Penalties rulemaking project (WSR 18-22-099) which she last addressed during the October 29th board caucus. The effort had been at the CR-101 stage, during which WSLCB produced draft conceptual rules and heard feedback during listen and learn forums on September 26th and October 31st. 
  • Hoffman called the rules package “robust” and Board Chair Jane Rushford noted the Board was “very happy about it.” Rushford pointed out the rulemaking project was opened over a year earlier and went through changes to incorporate SB 5318, legislation signed into law in May 2019.
  • Hoffman called attention to the issue paper on the CR-102, saying the background and reasoning was “very long” but laid out “all the changes we made. The amendments, the effect of the amendments, how we adjusted everything down substantially, and then also aligned across the penalty type.” She praised the listen and learn forums, saying “we vetted this so well” that forums scheduled for seven hours total saw less than an hour of feedback between them.
  • The Board was scheduled to decide whether to approve filing proposed rules during the following day’s board meeting.

• The Board considered future regulatory activity after denying a petition for rulemaking to convert all tier 1 production licenses to tier 2 and change fencing requirements.
  • The petition for rulemaking was submitted by tier 1 licensee Kenny Hubbard on September 18th and asked “to collapse all tier 1 production licenses into tier 2 licenses.” He also asked the Board to “remove the fencing height requirement for all licensed outdoor marijuana production” and instead require fencing of “a sufficient height to create a sight barrier” (audio - 7m).
    • Hoffman advised rejecting both of the petitioner’s requests, saying staff was “not in favor at this time” of eliminating tier 1 licenses as the agency had drafted request legislation which sought to assist tier 1 licensees by expanding medical cannabis opportunities, although the governor’s office had not yet approved WSLCB’s proposal. Hoffman also emphasized rulemaking on Cannabis Production and Canopy (WSR 18-01-058) would be withdrawn before year’s end before re-opening rulemaking to expand tier 1 canopy allotments. She insisted the agency was looking for “a way to increase business viability for tier 1s already.”
    • Hoffman then urged denial of the second request “primarily because of the way the request is written” as it would “get rid of any requirement at all for a fence height.” Board Member Russ Hauge hypothesized that redefining fencing as a sight barrier “could mandate somebody putting in a very tall fence.” Hoffman agreed and relayed a comparison to wrecking yards suggested by agency enforcement where fencing was intended to dissuade access in addition to obstructing sightlines. She said, “We don’t want to invite illicit activity or people coming in [to outdoor licensed premises] to help themselves...we want to keep the product and the licensees safe.”
    • Hauge stated that he “wouldn’t mind looking at barriers” because “there’s a lot of stuff in rule that was a reaction” to the public policy environment after the passage of I-502, “but to enter into rulemaking with this kind of limitation would not be useful to us.” Board members concurred with Hoffman’s and Hauge’s assessments and voted to deny the petitions. 
    • Continuing a trend, the busy Board denied a petition for rulemaking concerning cannabis transportation rules on October 29th and rejected a similar petition in September.

• Considering some of the petitions and topics the Board had not chosen to pursue, Hauge inquired whether the agency was “keeping track of the things that we might want to look at, is there some list somewhere” of items the Board would address given sufficient time and staffing. Rushford and Board Member Ollie Garrett were receptive to prioritizing some of the topics raised once WSLCB finished rule projects that had been required of them (audio - 4m).
  • Rushford asked Hoffman for a “forecast” as she would “know where some of this might fit eventually.” Hoffman highlighted advertising as a concern that had been raised since she had joined the agency. She mentioned concerns provided by Crystal Oliver, Executive Director of the Washington SunGrowers Industry Association (WSIA), who listed out several issues important to her members. Hoffman had sought to “align [WSIA issues] with existing rule projects and with our priorities moving forward” before unexpectedly having to focus on vapor products.
  • Garrett said hashing out Board priorities with the Cannabis Advisory Council (CAC) was a way to make that body’s efforts “more substantial, more beneficial.” She noted that she’d appreciate getting a sense of what future projects were a priority for CAC stakeholders. Hoffman believed that after completing the Cannabis Penalties rulemaking project, WSLCB would still need to revise numerous sections of rules impacted by the penalty changes. She said that this offered one avenue for the inclusion of other priorities once they’d been determined.

• Board members talked about the agency position on home delivery of cannabis and the potential for agency action against a delivery service operating in possible violation of state law (audio - 4m).
  • While home delivery to medical cannabis patients was one component of the agency’s proposed request legislation, the subject was introduced a week earlier after Hauge noticed a billboard advertising “statewide delivery” by Pelican Delivers. The WSLCB studied the possibility of legal delivery last year, but neither the legislature nor agency followed up on the report’s findings.
  • Garrett asked about the agency’s position on home delivery and the legality of a company offering to act as middleman between retailers and consumers.
    • Hauge said that home delivery of cannabis was “still against state law” and wasn’t aware of any agency staff actively looking at the issue. Hauge was under the impression Director of Communications Brian Smith was following up with Pelican Delivers. Hauge also planned to discuss the subject with Enforcement staff to “see if I could get somebody’s interest in it,” though he conceded he was "not really sure what authority we have to go after it."
    • Garrett asked if there was a clearly identifiable violation. Hauge reasoned that if the service “ever executed a delivery, then I think there would be lots of things that would be a violation” including “advertising a service that is not authorized in statute.” He argued that if the agency didn’t “do something about it, I don't think anybody is going to do anything about it."
  • Rushford wondered if Pelican Delivers operated in other legal cannabis states. Hauge told her he’d seen mentions of “activity in other states” on the company’s website.