WSLCB - Executive Management Team
(November 6, 2019)

Here are some observations from the Wednesday November 6th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team public meeting.

My top 3 takeaways:

• Director of Legislative Relations Chris Thompson provided an update on the legislative landscape including a focus on vapor products, agency request legislation submitted to the Governor, and anticipated cannabis policymaking in 2020.
  • Legislative Work Session on Vapor Products (audio - 3m). The House Commerce and Gaming Committee (COG) will hold a work session on November 21st on “Vapor product policy, regulatory issues, and public health, safety, and societal impacts.”
    • Thompson said WSLCB will present on topics such as “what happens in terms of licensing, for instance. How many are out there and what type? What’s our agency’s role in oversight and enforcement?” He indicated the committee aimed to understand the “context” of WSLCB’s efforts in addition to their substantive regulatory actions.
    • The committee also expressed an interest in WSLCB’s response to the executive order on vaping and emergency rules the Board adopted to implement an emergency ban on flavored vapor products.
    • Thompson expected there may be panelists from the Department of Health (DOH), the State Board of Health (SBOH), the Governor’s office, industry representatives from the Washington CannaBusiness Association (WACA), and prevention community representatives such as Seth Dawson of the Washington Association for Substance Abuse and Violence Prevention (WASAVP).
    • Thompson anticipated the agency would have 20 minutes to present, and had been working with Public Health Education Liaison Sara Cooley-Broschart and Director of Communications Brian Smith to gather information before following up with Director Rick Garza and other staff.
    • Garza later noted that Broschart would likely present on the agency’s vapor efforts and address any proposal WSLCB is involved in regarding “how do you regulate those two different vape markets” of nicotine and tetrahydrocannabinol (THC).
    • Thompson did not mention that in addition to the COG work session, three other legislative committees will be hosting work sessions on vapor products and “cannabis financial services offerings” during the fourth week of November.  See Cannabis Observer’s calendars for the Washington State House of Representatives and Senate for details.
  • Vapor Product Legislation (audio - 4m). Thompson told the Board about a “separate discussion” internally at WSLCB and with other state agencies pertaining to broader legislating of vapor products, including the potential to "solidify permanently" the state’s flavored vape ban.
    • Thompson saw a push for “other measures that might be appropriate” on vapor oversight and regulation coming from the Governor’s office since SBOH passed the flavor ban. He said executive request bills on vapor products might become “two packages” of agency request legislation, one from WSLCB, another from DOH.
    • Thompson stressed planning for the legislation’s form, source, and substance was still in the preliminary stages. He noted that WSLCB staff’s “initial read on what that could look like have taken place with agency leadership” including Board Chair Jane Rushford.
    • Representative Gerry Pollet was mentioned as a potential sponsor for vapor product legislation. Earlier this year, Pollet introduced a vapor product regulation bill, HB 1932, which was granted a public hearing but not moved forward. At a press conference for the Executive Order in late September, Pollet described working with Attorney General Bob Ferguson at Governor Jay Inslee’s request in 2015 on legislation that Pollet claimed would have given “the tools to prevent deaths and illnesses in Washington state.” Pollet also spoke favorably of the new prohibition when it was proposed at the SBOH board meeting on October 9th.
  • COG Leadership Change (audio - 1m). Thompson, Garza, and Deputy Director Megan Duffy had a “really positive” meeting with the committee’s new chair, Representative Strom Peterson. Peterson was “receptive to what we’ve shared with him,” which included general industry education; roles and responsibilities of the WSLCB; and the agency’s request legislation. 
  • Agency Request Legislation (audio - 3m). Thompson reminded those present of the agency’s proposed request legislation. One “would grant Tier 1 producers retail privileges for medical product in one of three potential avenues for connecting with customers in a retail transaction: home delivery, sale from out of the production site, or shared retail outlets” such as a farmers market. WSLCB’s other endeavor was a “social equity program proposal that would grant new cannabis retail licenses to applicants meeting social equity-related criteria.” Thompson last discussed the agency request bills during his briefing to the Board at the October 16th Executive Management Team meeting.
    • Thompson said the agency was still awaiting “determination” from the Governor’s office on the proposals. In particular, the social equity bill "has been the focus of on-going analysis, legal and policy analysis." He affirmed that he’d "briefed the Governor's policy advisor," almost certainly Sheri Sawyer.
    • If any of the request legislation gets gubernatorial approval, the next stage will be looking for a primary sponsor and “other preparatory steps.” Thompson believed there were lawmakers receptive to sponsoring the proposals.
    • The agency released a new draft of the social equity bill on November 4th in an email to cannabis stakeholders saying, “Given the calendar and the deadlines, we have already submitted the draft to the Governor’s office for review, but if you want to offer any comments on the latest version of the bill draft, we would welcome an opportunity to hear your thoughts on the latest form of our social equity program proposal.”
    • The new draft appears to include at least two substantive modifications from the original:
      • Section 4(3) would no longer require local governments to review social equity retail applications and would not allow local governments to filter/block applications from WSLCB’s consideration.
      • Section 4(3)(a) narrows the list of prioritization criteria for applicants from "communities of color, veterans, and women" to “communities of color."
  • Bills From Outside WSLCB (audio - 7m). Looking beyond the agency, Thompson stated outside groups had already been reaching out to the Board and agency staff regarding potential bills or bill concepts.
    • Thompson aimed to create a "less ad-hoc, more kind of structured" process for engaging with stakeholders whereby key WSLCB staff considered proposals together before articulating WSLCB’s position. He emphasized the need for “discipline” by issue advocates to produce bill language as the agency wouldn’t “take a position on a concept.” 
    • Garza explained a number of advocates in the past had conflated interest in proposals by board members or agency staff as tacit approval, leading to the need for a more structured process (audio - 3m).
  • Budget (audio - 2m). Thompson noted that vapor product legislation could have both direct and indirect budgetary impacts. A vapor tax bill earlier in the year that included appropriations for “text compliance” and sales-to-minors compliance checks had “envisioned...funding that wasn’t provided” because the bill was passed at the end of the legislative session after the budget. A supplemental budget request would address funding for those activities as well as the vaporization of WSLCB resources incurred implementing the flavored vapor product ban.
  • Other Cannabis Legislation (audio - 9m). Rushford inquired about other cannabis bills and how the agency would consider them.
    • Thompson said he had yet to see any “concrete bill” from the cannabis industry but acknowledged WACA’s interest in a “funding resource for cannabis industry members with a social equity focus." He spoke of individual licensees or industry groups suggesting changes to the agency’s request legislation such as letting producers larger than Tier 1 share in expanded opportunities to serve medical patients.
    • Thompson said the newly formed Craft Cannabis Coalition wanted to put together a proposal addressing “better supports for smaller operators.”
      • Thompson described the coalition as a “successor to CORE,” the now defunct Cannabis Organization of Retail Establishments.
    • He then mentioned a “bunch of usual stuff" such as cannabis home grow legislation and “continuing interest around bills from last session that didn’t go.” Thompson’s examples were bills exempting cannabis patients from the state’s excise tax in addition to what products retailers could sell ("apparel and things like that”). Also ownership/residency issues, "specifically publicly traded companies” was likely to come up as a bill or amendment. Board Member Russ Hauge recalled that WACA had “hinted about that."
      • See Cannabis Observer’s coverage of the home grow bills heard by COG on January 21st and the Senate Labor and Commerce Committee on January 31st.
      • HB 1238 allowing retailers to sell more diverse merchandise received a public hearing by COG on February 4th.
      • HB 1236 on business and nonprofit entities obtaining cannabis licenses had a public hearing on January 28th. A second bill introduced late into the 2019 legislative session also would have reformed ownership of cannabis companies. It had a public hearing on April 1st.
    • Other reactions to the agency’s proposed request legislation “take us into a regulatory realm” more than legislative, according to Thompson. Increasing canopy limits and “retailing out of production shops” were topics the agency had considered addressing through rulemaking. The latter issue saw a bill introduced earlier this year.
    • Thompson also anticipated discussions around cannabis social consumption spaces, which also saw legislation at the start of 2019, as it “remains a priority for a number of folks in the advocacy space.” Thompson felt the topic had been “taking on a social equity cast” as evidenced by recent mention in a webinar he had participated in organized by the National Association of Attorneys General (NAAG).

• Agency leadership reviewed upcoming meetings including a gathering of the Cannabis Advisory Council, and Board Chair Jane Rushford shared observations from the annual state prevention summit.
  • Board Member Ollie Garrett told the group that a Cannabis Advisory Council (CAC) meeting which had been planned for December 10th would be rescheduled to December 17th to avoid a conflict with the MJBizCon Conference which begins December 11th. Garrett explained that “a lot of the [cannabis industry] folks go to that.” Rushford concurred it was “respectful” of industry members who wanted to attend (audio - 1m).
    • Executive Assistant Dustin Dickson confirmed the new meeting date to stakeholders in a subsequent email.
    • Garrett also emailed council members to request applicants for a patient representative on the CAC, a suggestion raised over the summer by patient advocates Don Skakie, Karie Ann Taylor, and Bailey Hirschburg in his role as a consumer representative on the CAC. The Board is asking for applications to be submitted no later than November 15th.
  • Rushford discussed her attendance at the Washington State Prevention Summit saying there were 400 attendees and “wonderful speakers.” She said that she, Broschart, and Policy and Rules Coordinator Janette Benham gave a workshop on the agency’s rulemaking process which “went really well” (audio - 1m).
  • At the conclusion of Thompson’s legislative update Rushford mentioned that the first Cannabis 2.0 (C2.0) public meeting intended to gather “other agencies with a cannabis intersection” would be postponed beyond November 14th. Instead, “one on one” meetings would happen between Rushford and other agency leaders with cannabis-related bills that had yet to achieve approval from the Governor’s office. Rushford discussed the possibility of a C2.0 public meeting during the September 17th Board Caucus.
  • Dickson confirmed revised meeting dates for the winter holidays he’d last brought up on October 15th. There will be a Special Board Meeting on November 26th, two days before Thanksgiving, and another a week before Christmas on December 18th. He explained that the meetings were needed to accommodate the agency’s robust rulemaking schedule (audio - 1m).

• A business advertising cannabis delivery in Washington in potential violation of state law caught the attention of Board Member Russ Hauge (audio - 1m).
  • Hauge told the other board members and staff that he’d seen a “billboard for Pelican Delivery Services in Kitsap County offering to deliver cannabis anywhere you wanted it delivered.” Hauge observed that he didn’t “really know how that works” to which Brian Smith flatly replied, “it doesn’t work.”
  • Hauge said he’d seen the billboard on Highway 3 in Gorst which advertised delivery of cannabis via use of an app. The company’s website and a now-closed LinkedIn job posting confirm they’d solicited drivers.
  • The Pelican Delivers website claims their operations were “protected by patent # 10,255,578,” a software patent on the confirmation of the legal age of a driver and customer. The patent description presumed the legality of adults acting as intermediaries in a cannabis transaction. RCW 69.50.4013(4)(a) allows delivery of half of legal cannabis purchase limits - but explicitly for “noncommercial purposes and not conditioned upon or done in connection with the provision or receipt of financial consideration.”
  • The company issued a press release in September promising to deliver statewide by October. In the release, Pelican Delivers’ owners were introduced: “Dave and Tina Comeau are household names in cannabis, having entered the industry at the ground floor over a decade ago in Washington state. The pair started out as medical marijuana growers and processors who went on to launch the Better Buds cannabis retail stores in 2016 that grew to a chain of retail dispensary outlets with significant sales and an increasing number of locations.” Better Buds posted an announcement hailing the delivery company, which is also featured on the retailer’s homepage.
  • An individual speaking on background indicated that Pelican Delivers announced their service at a WACA meeting. WSLCB studied the possibility of legal delivery last year, but neither the legislature nor agency have permitted it.