WSLCB - Executive Management Team
(October 16, 2019)

Here are some observations from the Wednesday October 16th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team public meeting.

My top 3 takeaways:

• Staff from across the agency reported on efforts to implement the ban on flavored vapor products, and resulting impacts on available resources.
  • In September, an outbreak of lung injuries linked to the use of vapor products came to the Board’s attention. While no cause(s) had been positively identified, on September 27th Governor Jay Inslee signed Executive Order 19-03 which directed action against “flavored vapor products” by the Washington State Department of Health (DOH), WSLCB, and the State Board of Health (SBOH).
    • DOH began tracking and reviewing hospitalizations, surfacing cases dating back to April which matched federally defined criteria.
    • SBOH passed emergency rules creating a new prohibition at their October 9th meeting.
    • The WSLCB Board followed suit on October 16th, passing emergency rules requiring display of vapor signage at cannabis retailers and vapor product disclosure. The rule changes were communicated to licensees following this EMT meeting.
  • Deputy Chief Steven Johnson provided an update from the Enforcement division, noting Chief Justin Nordhorn was “still on annual leave.” Johnson agreed with a sentiment in the room that vapor issues had abruptly occupied a large portion of the agency’s attention and effort. “I’ve had to pull some resources out of the liquor side to augment and support the vaping unit” (audio - 4m).
    • For “non-THC” vapor licensees, Johnson said Enforcement was trying to reach out to every retail store “before the holiday season, before Thanksgiving.” He elaborated that officers were given “clear expectations, clear instructions” that “we’re trying to take on an educational role to begin with...before we do any type of enforcement.” He later added that large vapor product retailers like “Safeway and Fred Meyer” were notified through key staffers as “we have good working relationships with the management of those companies.”
    • Johnson told the group that Enforcement’s cannabis unit was making contact with licensees as it was “a little more complicated when you start building in the number of producer/processors that are involved.” 
      • At Board Caucus the day before, Cannabis Policy and Rules Coordinator Kathy Hoffman said one of five additional emergency rules planned for adoption at the October 23rd Special Board Meeting would enable WSLCB “the ability to enforce” SBOH’s emergency rules.
  • Board Member Russ Hauge asked about correspondence between Johnson and Miller Nash Graham & Dunn Partner Chris Masse regarding “characterizing flavor.”
    • Johnson said he’d shared Masse’s comments with other staff, including Director of Communications Brian Smith, but felt that “the rule is pretty clear, the information that the Communications division has already put out is pretty specific.” Discussions weren’t concluded, but Johnson described the sentiment on his team was “to stay with where we’re at on the definition” instead of “changing now midstream.”
    • Smith said information on the agency vapor page came directly from the SBOH rules, had been vetted by counsel, “and it stands.” He added WSLCB was fielding numerous “individual submissions” from licensees asking if particular substances qualified as characterizing flavors.
  • Smith said KIRO 7 news contacted him for a story on the state’s illicit vape market for which he and vapor unit Enforcement Captain Lisa Reinke gave interviews (audio - 1m).
    • KIRO 7 published their story on October 14th.
    • In February 2018, Reinke and Enforcement Lieutenant Susan Anderson gave a presentation to agency leadership which warned the vape industry was targeting youth.
  • Near the conclusion of her update, Deputy Director Megan Duffy noted that “vaping has been the main emphasis for a lot of folks around the agency over the last month, three weeks, whatever it’s been. So that’s taken up a lot of time and things have been set aside or slowed down a little bit.”

• In response to a Board request the week prior, Deputy Director Megan Duffy provided brief information technology (IT) updates on traceability and the agency’s systems modernization project.
  • Traceability (audio - 4m).
    • The Traceability Advisory Committee last met on September 19th. See Cannabis Observer’s summary of the August 8th committee meeting.
    • Duffy explained that the agency “extended the contract with MJ Freeway through the end of November ‘cause we have some more complicated issues with which to negotiate with them on.” The newest contract amendment retained the same goal of “stability of the system” and again constrained the vendor from engineering additional releases.
    • Duffy said staff had organized an “external group of folks from industry to talk about what approach next.” The external work group’s function was to “define and talk about how we should be approaching traceability in the state” while also “focus[ing] on what the real scope should be and really resolve some of the issues.” Staff would consider the perspectives put forth in the work group and “what the implications are for the system that’s currently in-place, or not.”
      • The first meeting of the Traceability 2.0 work group occurred on September 24th, and the group is next scheduled to meet on October 24th.
      • Traceability Advisory Committee member and Cannabis Observer founder Gregory Foster brought up the idea of fundamentally changing the state’s tracking of legal cannabis to the Board in July. At the time he urged the Board to move “towards a reporting and compliance-oriented approach where the agency defines the data that it needs, when it needs it, and in the format that it needs.”
  • Board Member Ollie Garrett asked about the status of traceability at that moment. “I would still say bumpy,” Duffy replied, adding work was ongoing. 
    • Garrett continued, asking whether other legal cannabis states “have the issues and stuff with traceability that we have?” Duffy described it as “different flavors of problem depending on where you are and who the vendor might be.” Johnson agreed, saying “other [states] have other vendors that - they have different issues.”
    • Garrett asked if there were any “perfect” vendors, to which Johnson answered “absolutely not.”
    • Hauge inquired if the agency was “looking at any kind of more fundamental changes in the way we do this?” Duffy confirmed that both internal and external groups were considering core changes to traceability so long as they met “our regulatory mandate and the need for traceability and in order to ensure, kind of, public health, that we can do a recall if/when we need to do a recall.”
  • Systems Modernization Project (SMP, audio - 4m).
    • According to a 2018 project synopsis, the SMP effort was focused on “replacing WSLCB’s legacy licensing, enforcement and imaging solutions.” Originally started in 2016, part of the project’s budget was extended by legislation enacted earlier this year, HB 1430. Find out more from the Office of the Chief Information Officer’s (OCIO) project dashboard.
    • Duffy described the effort by the agency as “a lot of creating the foundation that we need in place in order to hopefully, right, launch successfully because it's not something where I think we wanna be doing business requirements, you know, making decisions while the plane is in the air.” 
    • In addition, the agency had to go through a “gating process” enforced by the OCIO to secure funding “from the IT pool” which required “tech budgets” and “longer term planning documents.” Duffy said she’d had some “back and forth” with the OCIO since submission of those materials, but expressed confidence differences would be worked out. 
    • SMP had been “broken up into phases so that each, in theory, could be a standalone phase” depending on required time and costs. Duffy said that the phase which was the most important was Licensing, where she claimed “80% of the need is.” Duffy added staff was doing everything they could to make “a fully informed decision” on a vendor.
  • Hauge asked which project, traceability or SMP, was receiving more staff attention. Duffy answered that it was definitely traceability fixes and potential changes to that system, then SMP, “and now there could potentially be something associated with the vaping as well.” She suggested new legislation requiring “ongoing disclosure” could demand the attention of limited IT staff.

• Director of Legislative Relations Chris Thompson provided an update on WSLCB’s proposed agency request legislation to create a social equity program (audio - 8m).
  • WSLCB’s social equity program and medical cannabis/small producer draft bills were last discussed on September 24th by Director Rick Garza. Social equity had recently been presented for discussion by Garrett and the subject of public comments.
  • Thompson acknowledged he “had a lot of catching up to do” after several weeks of vacation but knew that Garza, Board Chair Jane Rushford, and others had been drafting changes to the agency's social equity proposal.
  • The proposal was being revised to “narrow the scope of who would be included in eligibility for [priority or expanded retail] licenses” and to build out “background research” on the “disproportionate impact of cannabis enforcement.” Additional research would aid review by the Washington State Office of the Attorney General (OAG), who required “nationwide and state-level data points” on issues like “arrests and incarceration.”
  • Hauge asked where the agency was sourcing that information as he endeavored to track that issue as part of his “other job” as Chair of Washington’s Sentencing Guidelines Commission. He cautioned that the OAG was asking to condense “an enormous social problem down into a statement that we’re adopting” and offered to review Thompson’s work. Thompson described OAG’s Civil Rights division as understanding the problem but wanting “something more than what was in the language we included in the intent section.” He stressed that this wasn’t a “big new” effort, but more a matter of providing “source information.”
  • Thompson articulated the OAG’s concern: “the original bill [draft]’s scope wouldn’t be easy to tie directly to disproportionate impacts in the case of all classes of persons included in the state nondiscrimination statue.” Thompson’s understanding was that there were doubts over whether cannabis justice disparities existed “based on creed, based on disability, based on sexual orientation” as there may be less data supporting the existence of bias towards those communities.
    • Learn more from this factsheet about racial disparities nationwide among cannabis arrests from the National Organization for the Reform of Marijuana Laws (NORML), the Drug Policy Alliance’s site on Race and the Drug War. and the American Civil Liberties Union (ACLU)’s project: The War on Marijuana in Black and White. Or find out about racial disparities evident in broader sentencing and incarceration from the National Association for the Advancement of Colored People (NAACP)’s Criminal Justice Fact Sheet. Wikipedia also maintains a page on Race in the United States criminal justice system.
  • Garrett asked if anyone had heard from municipalities or counties interested in the proposal’s offer of additional retail stores for jurisdictions which embraced and helped fund the equity program. Thompson responded that “there appears to be some interest” from local governments. “I won’t say a lot,” he added, explaining he was reticent to name interested localities “at this stage.”