WSLCB - Executive Management Team
(December 12, 2018)

Here are some observations from the Wednesday December 12th WSLCB Executive Management Team meeting.

My top 3 takeaways:

• WSLCB Enforcement is drafting a letter to retailers regarding compliant medical cannabis products and enforcement of rules on accompanying and on request materials (audio – 9m).
  • Chief of Enforcement Justin Nordhorn reported the letter is intended, in part, to increase awareness of differences between recreational and compliant medical products, particularly as regards testing for pesticides and heavy metals.
  • The letter also reminds retailers of their obligations, specified in WAC 314-55-105, to provide accompanying materials detailing pesticide usage on cannabis products and on request materials detailing product testing results.
  • The goal of this reminder is to encourage compliance ahead of increased enforcement.
  • During his briefing on WSLCB’s opportunities to adjust the marketplace for medical cannabis at the November 14th Executive Management Team (EMT) meeting, Chief Nordhorn suggested stepping up enforcement of these rules as his first recommendation.
• Licensing and Regulation is convening a group of industry stakeholders and peer agency representatives to discuss contemporary business financing practices (audio – 4m)
  • Director of Licensing and Regulation Becky Smith reported she has independently met with “a couple of folks from the industry…that have more of the finance background” as well as staff from the Washington State Gambling Commission and the Washington State Department of Financial Institutions (DFI).
  • These participants will be joined by “folks that represent producers or retailers,” “somebody from small business,” and WSLCB Board and Enforcement representatives for a group discussion in late January.
  • Smith: “We want to know more about the things that we don’t know about. And we know enough, but not enough to make really solid decisions moving forward with the industry about, when it comes to financing what kind of things should be approved. Sort of the business structure that happens in other businesses is something that we want to learn more about before we give recommendations moving forward.”
  • For more detail, see Smith’s 30-minute presentation on “Financier Vetting and Investment Opportunities” at the November 7th EMT and the adoption of Board Interim Policy BIP-06-2018 at this week’s Board meeting which enables licensee access to personal funds before vetting.
• Smith also provided an update on retail licensing (audio – 13m).
  • Of 545 retail licenses statewide, 491 are active.
    • In 2015, SB 5052 required WSLCB to license 222 additional retail locations. Smith said WSLCB licensed 260 locations, “because remember we still had some left over from 502.”
  • 37 retail licensees have received retail title certificates to indicate they hold a license that cannot operate because of bans or moratoriums in their jurisdictions.
    • “About 50” licensees qualify for title certificates but some licensees delayed hoping their location’s ban/moratorium would end.
    • Some licensees have sold title certificates to other parties, a practice anticipated and tracked by Licensing.
    • Nine 502 retail locations never received their license because of a ban/moratorium, but cannot relocate. Smith indicated they will be offered title certificates.
  • 19 licenses remain available.
    • 15 are in ban/moratorium areas, and WSLCB is reluctant to continue licensing in these jurisdictions.
    • Applications for the remaining four 502 licenses in remote areas of the state are being processed from the priority one queue. Smith reported 50 priority one applications are queued.
  • Smith said 1 license has been discontinued and 10 have been discontinued or revoked. None have pursued redress through adjudication.
    • Smith said her division will license remaining stores before considering what to do with discontinued or revoked licenses constrained to specific jurisdictions.
    • Smith confirmed Board Member Russ Hauge’s interpretation: “…you’re saying nothing is going to be done with those until we have the rest of the loose ends tied off because we’ve already got more stores than were originally called for?”
  • Smith indicated WSLCB Policy Analyst and Tribal Liaison Brett Cain would be reviewing licensing programs in other legal states to see if remaining licenses could be distributed to benefit small businesses.