WSLCB - Executive Management Team
(February 27, 2019)

Here are some observations from the February 27th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) public meeting.

My top 3 takeaways:

• The Board implemented a new cadence and format for EMT meetings for the remainder of the legislative session (audio – 12m).
  • The cadence of EMT public meetings was changed from weekly to biweekly, aligned with Board Meetings.
  • The format of the EMT meetings was changed to focus on a particular topic rather than roundtable discussion. Division heads who are the primary subject matter experts will lead the work sessions.
  • Chair Jane Rushford proposed the change at the February 26th Board Caucus (audio – 16m).
• WSLCB Director Rick Garza addressed the Board’s concerns about the agency’s legislative program (audio – 8m).
  • At the Tuesday Board Caucus, WSLCB Director of Legislative Relations Chris Thompson presented an hour-long update on the agency’s legislative activity – the first update for the Board in three weeks. One third of that time was spent airing the Board’s dissatisfaction with aspects of the agency’s legislative program.
  • Director Garza indicated he was unaware of Thompson’s failure to brief the Board and incorporate their perspectives during the critical window of bill activity before last Friday’s policy committee cutoff.
  • Garza had no intention of “throwing [Thompson] under the bus” for being “overwhelmed” by eighty different bills the agency was actively working, but suggested Thompson make efforts to connect with board members individually and visit EMT meetings.
  • Garza admitted unannounced shifts in agency position without Board consultation were not acceptable: “I’d be pissed, too.” Board Member Ollie Garrett re-emphasized that concern. Board Member Russ Hauge felt it was important but expressed understanding of temporal pressures on decision-making created by the legislative context. He reiterated his willingness to participate in the Legislative Steering Committee’s meetings on behalf of the Board.
• Agency leadership discussed SHB 1237 and SSB 5318, the contentious enforcement and compliance restructuring bills, and shared their preference for the Senate substitute (audio – 5m).
  • Garza said he supported “about 85%” of the language in Senator Karen Keiser’s substitute version of the bill.
  • Garza expressed concern about SHB 1237’s movement out of committee as written and said the agency would be meeting with the bill’s sponsor, Representative Steve Kirby, to convey a desire to “go with the Keiser bill.”
  • Enforcement Chief Justin Nordhorn indicated a change to required standards of proof in the Senate substitute were an improvement, but incomplete. Hauge asked, “would this limit our ability to seize product that is not in traceability?” Nordhorn indicated the House language would while the Senate substitute would not. Hauge said, “that’s really essential, I think. We have to have that. Even if we don’t pin a violation on them, it stings. And we know that product’s not in the black market.”
  • Garza said, “We had issues with the fact that the Board could not, would not be allowed to deviate from the settlements that would come.” Hauge suggested inviting Assistant Attorney General Geoffrey Allen to testify for the agency’s settlement authority and the separation of powers: “the legislature can’t tell the executive branch how to adjudicate disputes.”
  • Garza agreed that tactic would be worth implementing at a public hearing for SSB 5318 in the House. Hauge confessed, “It may be worthwhile to have somebody alongside who could speak more coherently to that since, essentially, I consider myself blackballed right now.” Hauge was referring to a series of events connected to this legislation which had culminated in efforts to rescind his gubernatorial appointment to the WSLCB Board.
    • On January 2nd, four legislators sent a letter to Director Garza describing their intent to reform the WSLCB’s “compliance and infraction process” and “asking that the WSLCB suspend any cancellation proceedings for licensees that have received four administrative violations in a three-year period for the duration of the 2019 legislative session.”
    • During the January 22nd Board Caucus, the Board discussed a draft response to the legislator’s “precursor” notice of intent to move HB 1237 and SB 5318.
    • On January 23rd, Lester Black published an article in the Stranger about the Senate’s confirmation of the gubernatorial appointments of the three WSLCB Board Members. The article cites the perspective of Vicki Christophersen, Executive Director and Lobbyist for the Washington CannaBusiness Association (WACA).
    • Hauge and Thompson testified against HB 1237 at the January 28th public hearing hosted by the House Commerce and Gaming Committee.
    • In his report back at the January 29th Board Caucus, Hauge described an unusual conversation with Christophersen subsequent to the public hearing.
    • On February 12th, a group of nine legislators formally petitioned the Office of Governor Jay Inslee to rescind the gubernatorial appointment of Hauge to the WSLCB Board.
    • On February 26th, Lester Black published an article in The Stranger describing an identical letter dated February 13th from ten legislators. The same day, WACA petitioned its members to email legislators to move HB 1237.
  • Garza reminded leadership, “I guess in our back pocket is: those sections lie alone in the bill. In other words, if it’s an issue of the executive, I think our executive is going to say, ‘No, we’re going to veto that section of the bill because that’s not your place’ to your point. But I think it’s important for us to state it before the committee, so that the Governor knows, ‘Yeah, we told them, that probably wasn’t their place.’”
  • Nordhorn brought up the agency’s efforts to proactively address concerns expressed at the legislature through the agency’s open rulemaking for cannabis penalties (audio – 8m).
    • Hauge shared that he had asked Policy and Rules Coordinator Kathy Hoffman to “draft up something that builds on our current compromise practice that would provide an incentive by allowing that violation to drop off if a person goes through the compromise process…essentially a deferred sentence.”
    • Hauge indicated the deferral process would apply to “advertising violations, all the administrative violations, and some of the public safety violations could be easily handled that way.”
    • Hauge suggested the deferral process be available to both cannabis and alcohol licensees, prompting a discussion of similarities and differences with the agency’s existing Responsible Vendor Program (RVP) for liquor licensees.
  • At the conclusion of the meeting, Member Garrett asked if there was a discrepancy between the stories circulated at the legislature by particular industry lobbyists as compared to the general sentiment of licensees about the continued evolution of the WSLCB’s approach to regulating the cannabis marketplace (audio – 3m).
    • WSLCB Director of Communications Brian Smith: “The lobbyists are definitely pushing that. I mean you saw the [Washington CannaBusiness Association (WACA)] email, I don’t know if you got that, where they were pushing their members to contact the legislators saying, ‘For the LCB treating you like criminals, you need to get this bill moving and send it in.’ So yeah, they’re suddenly pushing it.”
    • Chief Nordhorn: “And when I’ve talked to folks out in the hall, you know after committee hearings, some of the—even lobbyists—but other licensees are like ‘yeah I don’t agree with what they’re saying.’ But they’re not speaking up, it’s just the vocal few that are really pushing on those. And unfortunately, there’s a number of folks down [at the legislature] that are listening and believing instead of asking questions.”
    • Director Garza: “[Licensees who] have pending cancellations, you bet that’s what this is about.”
  • SHB 1237 is scheduled for a public hearing and executive session before the House Appropriations Committee on Thursday February 28th at 10am.
  • SSB 5318 is scheduled for a public hearing in the Senate Ways and Means Committee on Thursday February 28th at 1:30pm.