WSLCB - Board Meeting
(August 21, 2019)

Here are some observations from the Wednesday August 21st Washington State Liquor and Cannabis Board (WSLCB) Board Meeting hosted in Mobius Hall at Cascadia College in Bothell.

My top 3 takeaways:

• A new board interim policy was adopted to extend the deadline for retailers to “sell down” products with packaging or labeling approved under the previous system (audio – 3m, video).
  • Cannabis Policy and Rules Coordinator Kathy Hoffman outlined the new interim policy for the Board the day before at the August 20th Board Caucus.
  • Hoffman introduced the new board interim policy (BIP) and its relation to five other BIPs passed earlier in the summer. She said, “between June 7th and July 17th of 2019 the LCB approved and revised five board interim policies relating to the implementation of cannabis packaging and labeling rules and marijuana infused edible products.” The BIPs required “that licensees must fully comply with each policy by July 1, 2020.” However, as retailers would be able to receive products which were not in compliance with BIPs up to the deadline, they would benefit from “additional time to sell through or sell down these products.”
  • Under the new policy, retailers have until January 1st, 2021 to sell down products “subject to the five prior” BIPs. Retailers in possession of any products “on or after January 1st of 2021 may return them to a licensed processor consistent with WAC 314-55-077 or dispose of the products consistent with WAC 314-55-079(13), and 314-55-097.”
  • The Board had no questions and voted to adopt the BIP.
    • Learn about other adopted BIPs at WSLCB’s Interim Policies page.
• Board Members heard a swift cannabis rulemaking update (audio – 7m, video).
  • Hoffman’s last rulemaking update was presented at the August 7th Board Meeting. She also reviewed rulemaking work group progress at the August 13th Board Caucus.
  • Cannabis Penalties (WSR 18-22-099). Following “really good feedback” from industry representatives, the agency’s internal work group met August 13th and decided to “revise our fine structure and significantly reduce it.” Hoffman planned to revise the draft rules to “stratify” true party of interest (TPI) “throughout the penalty grid.” This led Hoffman to postpone a planned release of conceptual draft rules originally expected by August 15th. Hoffman felt the “detailed work” needed for a more “compliance-based model” required moving the release of the draft “closer to August 30th.” After listen and learn sessions to solicit feedback on the draft, she expected to “request to file a CR-102 somewhere in the November neighborhood.”
  • Voluntary Compliance Program (WSR 19-15-074). This rulemaking project had yet to elicit any comments to Hoffman, who planned to focus on the process more “as soon as we sort out a framework for the penalties guidelines” at which point she’d “start moving into [this project] a little more robustly.”
  • TPI (WSR 18-22-054). The work group met on August 12th to consider an appropriate definition of “control.” Hoffman said Colorado used a definition from the U.S. Securities and Exchange Commission (SEC) which her team was evaluating in addition to definitions used by other agencies dealing with commerce such as the Washington State Gambling Commission (WSGC). Hoffman expected draft conceptual rules would be ready by “mid-September” followed by a CR-102 in November.
  • Quality Assurance (QA) Testing and Product Requirements (WSR 18-17-041). Hoffman sounded an optimistic note, saying her office was “moving along nicely” towards a second listen and learn session on August 22nd at WSLCB’s Olympia headquarters. She planned to highlight the purpose of the Small Business Economic Impact Statement (SBEIS) to give context to stakeholders on “what that means and how we’re going to use it moving forward.” Hoffman expected a CR-102 to be ready in late October or early November.
  • Packaging and Labeling (PAL, WSR 19-12-029). Hoffman planned to analyze information received during a meeting on August 12th with industry stakeholders and regulators in Oregon and Colorado. Further comments would be collected through September 2nd, with a listen and learn session planned for the middle or end of that month. Hoffman was “hopeful” the CR-102 would be ready in “late October.” 
    • Director Rick Garza mentioned the meeting with stakeholders and regulators briefly during the August 13th Board Caucus.
  • Vapor Product Rules (WSR 19-13-036). Hoffman said staff planned to meet internally the following week to review her proposed revisions and ensure “we’re fully honoring and implementing the requirements” for vapor products in bills HB 1874 and HB 1074 passed earlier this year.
• During public comment, Jim MacRae called out the agency’s handling of cannabis regulation in contrast to alcohol and tobacco products (audio – 5m, video).
  • MacRae last publicly addressed the Board at the July 17th Special Board Meeting.
  • MacRae began by offering accolades for the Board’s accessibility and their increasing focus on PAL as evidenced by the bevy of BIPs adopted over the last year and a half.
  • He claimed policies the Board pursued were “consistently disequitable to cannabis” as compared to other substances WSLCB regulated (tobacco, alcohol, vapor products).
  • MacRae said, “To go forward and say ‘Yes, we will restrict all of these things with cannabis’ because we have some issues about – preventing youth access seems to be a big one and, you know, potential safety issues” was “fine and dandy in a vacuum.” However, he felt the same kinds of rules were disparate when viewed against the casual availability of high-proof alcohol “which was totally accessible to young mothers and their children” walking down a grocery store aisle. MacRae highlighted “cotton candy vodka” which featured “flowers and the sweets on the label of the vodka bottle in bright colors” stocked on shelves at “kid level.” MacRae hoped any child trying it wouldn’t enjoy the taste, but said that if consumed by kids “it would kill them” by overdose.
  • In contrast, MacRae believed a child accidentally eating marijuana infused edibles (MIEs) was bad but consumption of nicotine or alcohol would be far worse as those substances were “demonstrably more harmful in the acute sense.”
  • MacRae suggested the agency was inadvertently “carving out a niche for the alcohol industry—the [cannabis] products cannot even imply that they look like a more poisonous alternative” and “giving an advantage, from a marketing perspective, to alcohol.” He felt this was particularly true with BIP 08-2018 which restricted claims of curative and therapeutic properties from cannabis products. “Why bail on a pre-existing set of regulations that are there federally?” he wondered, arguing they were applicable despite the federal prohibition on cannabis.
    • MacRae was likely referencing 21 C.F.R. § 101.93 2018 subsection (f) on “Permitted structure/function claims.”
  • MacRae concluded by saying, “those actions seem inconsistent with the direction this board is going which is one of more equity, more fairness. Please embrace fairness.”