WSLCB - Executive Management Team
(December 14, 2022)

Here are some observations from the Wednesday December 14th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) Meeting.

My top 4 takeaways:

• Staff shared new information on the approved cannabinoid regulation request bill being presented to legislators for sponsorship and its likely conflict with potential hemp in food legislation which WSLCB officials hadn’t seen.
  • Policy and External Affairs Director Justin Nordhorn brought up the request bill “and then how it interacts with some of the hemp and food task force recommendations” (audio - 4m, WSLCB video, TVW video).
    • He stated that “we also have other comparable documents…one from Oregon, and we also have one from Virginia that we’re going to be reviewing” in addition to the findings of the Washington task force.
      • Washington task force members also looked at comparable work from counterparts on a Colorado task force that had been drafting a lengthy report with recommendations.
      • Learn more about Virginia’s program on industrial hemp extract intended for human consumption.
    • While acknowledging the task force mandate included “these short-term turnarounds for recommendations” which meant “you can't necessarily get all of the information that needs to be considered in some of those particular aspects,” Nordhorn made clear WSLCB staff had concerns about what the task force was advising:
      • “They’re recommending further study and doing a pilot on milligram limits and setting that out into 2025…the concern there of course is that's not addressing the immediacy of the issues that we face across the state with some of these potent products.”
        • The task force report “recommends maximum allowance for Class A (THC-like effect) compounds be set in rules when the pilot program allowances are replaced by a program administered in WAC by WSDA no later than January 1, 2025.” The proposed pilot program would include Class A/THC limits specified in the enacting legislation, whereas a more flexible permanent program in rule would be established by 2025.
        • In the task force meeting which was occurring at the same time as the EMT, several members articulated a plan to vote on maximum THC content for hemp in food “as a placeholder in the pilot program, until there is further input” from regulators or legislators. The subject was not further discussed during a follow up meeting on December 21st.
      • Nordhorn continued, “They have a concept of trying to categorize cannabis into a couple different classifications and they're calling it ‘Class A’ and ‘Class B.’ Essentially what it does is it lists everything that's in Class A of some known THC [tetrahydrocannabinol] compounds; it does not cover all of the THC compounds. It uses some language that I'm surprised to see because of last year's contention around some of the definitions, but they said ‘THC like’ and so, well, what does…that mean?”
        • The text of the agency request bill defines “hemp consumables” based on their “THC concentration.” The existing statutory wording for THC concentration would be modified so that it “means percent of tetrahydrocannabinol content, including any hydrogenated or structural isomer forms of THC, of any part of the plant Cannabis, or per volume or weight of cannabis product, or the combined percent of tetrahydrocannabinol and tetrahydrocannabinolic acid in any part of the plant Cannabis regardless of moisture content.” 
        • The task force report offered a detailed definition for ‘THC like,’ indicating the group meant: “molecules that include the interconnected three-ring system of a) a six-carbon aromatic ring, b) a pyran ring; and a cyclohexene/cyclohexane ring. Known compounds that fit the description provided in this subsection (3)(d)(i) include:
          • (A) Tetrahydrocannabinols – a single double-bond in the C ring:
            • (1) Delta-10-THC and isomers;
            • (2) Delta-9-THC and isomers;
            • (3) Delta-8-THC and isomers;
            • (4) Delta-7-THC and isomers;
            • (5) Delta-6a-THC and isomers; and
            • (6) Delta-10a-THC and isomers;
          • (B) Hexahydrocannabinol – no double bonds in the C ring
          • (C) Carboxylates (C-2 and C-4) of tetrahydrocannabinols or hexahydrocannabinol:
            • (I) Delta-9-THC acid (Delta-9-THCA);
            • (II) Similar carboxylates of Delta-9-THCA for tetrahydrocannabinols in (d)(i)(A)(1)
            • through (6) of this subsection; and
            • (III) Carboxylate esters in (d)(i)(A)(1) through (6) of this subsection.
          • (D) Alkyl analogues (C-3) of tetrahydrocannabinols or hexahydrocannabinol:
            • (I) Delta-9-THCP (Delta-9-tetrahydrocannabiphorol) and n-alkyl analogues;
            • (II) Similar alkylated analogues of Delta-9-THC for tetrahydrocannabinols in (d)(i)(A)(1) through (6) of this subsection; and
          • (E) Hydroxylated analogues of tetrahydrocannabinols or hexahydrocannabinol:
            • (I) 11-hydroxy-delta-9-THC and 8- and 10-hydroxy analogues; and
            • (II) Similar hydroxylated analogues of Delta-9-THC for tetrahydrocannabinols in (d)(i)(A)(1) through (6) of this subsection.
        • (ii) Possesses statistically significant CB1 agonist activity as demonstrable by binding affinity (Ki) and potency (EC50) to CB1 receptors at less than 200 nM; and
        • (iii) Results in positive effects for all four components of the tetrad test in rodents or reliably causes functional impairment in humans as assessed by a method possessing scientific consensus.”
        • This language was similar to an attempt at defining ‘impairing cannabinoids’ in 2022 legislation, SB 5767, drafted by Washington CannaBusiness Association (WACA) leaders in conjunction with “scientists and industry professionals” including task force member Bonny Jo Peterson, Industrial Hemp Association of Washington (IHEMPAWA) Executive Director.
      • Nordhorn pointed out “at the end of the definition,” Class A compounds “would have to be part of a study on lab animals to be able to show some connection with the CB₁ receptor and a bunch of technical issues…And then it goes to the Class B is anything that doesn't fit in the Class A. So, the concern there is if you don't do any tests on your THC product, and it's not on the list, you can use it in any product out there on the market.”
        • Nordhorn’s concerns could be eased by acknowledging that the task force report recommended prohibiting all chemically transformed or synthesized compounds from inclusion in hemp foods, beverages, and dietary supplements. It’s Cannabis Observer’s understanding that a majority of compounds perceived as problematic by WSLCB officials would be circumscribed by such a provision.
        • As well, it’s worth acknowledging that the future products that WSLCB officials seem concerned about already exist and are available in physical stores and online marketplaces throughout Washington state. That raises the question of which public entities will be tasked with enforcement of any future requirements around hemp cannabinoids for ingestion, and how the transition to a more regulated open marketplace will be effected - and funded.
    • Nordhorn cautioned that these concepts might not be in eventual legislation, “but that is part of that official recommendation that I thought you should be aware of because there are, there are some considerable concerns in there” that didn’t “line up…with our proposal, nor the interest that we have in curbing the youth access.” He noted that “the study that they cited is actually the study that we used to draft our proposed legislation. So…we have some common ground in that particular area on some of the milligram issues” even though he thought “they would like to see more than we have proposed.” Nordhorn’s final concern was “we didn't have any input on those recommendations” even though there were several “things that impact our agency, the consumers who are interacting with our licensees…and industry.”
    • Board Chair David Postman asked if staff had seen draft legislation from hemp stakeholders. Nordhorn responded that they hadn’t, naming some of the participating agencies and stakeholders, stressing he wasn’t aware of any bill language, “but those recommendations are out there and obviously they'll be open for discussion.” Some stakeholders had told Nordhorn there would be an associated bill, but he had yet to see either language or “what members are interested in the conversation” on the topic (audio - 1m, WSLCB video, TVW video).
      • Task force members confirmed during their December 14th meeting that officials with the Washington State Department of Agriculture (WSDA) had received a draft of potential hemp in food legislation “about two weeks” prior. Members reviewed some of the agency feedback during their December 21st meeting.
  • Having joined the agency in the spring, Board Member Jim Vollendroff wondered if it was “normal that we would not be included in the discussion” on hemp regulations. Nordhorn replied that it was “difficult to answer because…when the legislature puts the bills out…they call out particular agencies” and WSLCB had not been assigned a role in relation to hemp. So, WSDA staff “may exclude us just for that reason,” he reasoned. But due to “some crossover” in regulations, it “would have been nice to be involved in some of those conversations to be able to provide that input.” He had positive impressions of WSLCB partnerships with the WSDA and the Washington State Department of Health (DOH) and doubted “that there was probably anything intentional behind that” (audio - 1m, WSLCB video, TVW video).
    • Hemp production and product regulations were established in Title 15 RCW covering agriculture and marketing through legislation passed in 2019 directly under WSDA authority. Furthermore, RCW 15.140.030(2) states, in part, “All rules relating to hemp, including any testing of hemp, are outside of the control and authority of the liquor and cannabis board.”
    • The board’s primary power around hemp relates to cannabidiol (CBD) use as an additive in legal cannabis items. A 2021 law gave new authority to the board in relation to a voluntary hemp processor registration program, enabling oversight of dual licensees “engaged in producing or processing hemp at the same location for which they are licensed to produce or process marijuana.” That law granted Education and Enforcement staff powers to “test samples represented as hemp…for the sole purpose of validating THC content of products represented as hemp.” 
  • Postman discussed the THC limits in hemp products as proposed by WSLCB and the task force, stating “the hemp industry wants a higher threshold” whereas “some in the [initiative] 502 industry would like zero, basically saying ‘anything with THC in it needs to be sold through a 502 store.’” So Postman considered the WSLCB request bill “somewhat of a middle ground” (audio - 4m, WSLCB video, TVW video).
    • He’d heard concerns from licensees regarding there being “no limit on how many bags you could buy,” and that a child or adult ingesting multiple servings could “get high, probably also get a stomach ache, but they get high from that.” Postman wondered how the draft bill would account for the fact that “we don't have a limit on quantity so we can't really control intake.”
    • Nordhorn said that they’d tried to “put that limitation in the single packaging” so that it wasn’t “an adult sized serving” of THC. However, this was complicated because the “science isn't hard and fast on this,” and he said there were several studies “out there that speak to the ratios of CBD, in particular, to THC.” With a single milligram (mg) of THC in a “product the likelihood is you're going to have a whole bunch of CBD and other types of product in, in that serving,” so Nordhorn believed having CBD content, “especially if it's on a 20:1 ratio…is likely to curb those euphoric effects of the THC.” The agency was “trying to regulate the unregulated area” through their request bill, he remarked, rather than “trying to control the amount of product that a person is going to acquire, right?”
    • Postman asked for clarification that CBD content “counters the effect of the THC in a gummy and so you don't get a compounding effect?” Nordhorn said that was his understanding, but “I haven't seen anything that's definitive in the literature” about what ratio this occurred at, “some people say it's 5:1, some people say it's 10:1…the general consensus that I've seen is 20:1 or more of CBD. And what it does from a molecular structure is the CBD molecule is bigger than the THC so it gets in the way.” He further warned, “now I couldn't say if somebody eats…ten bags of those things. Are they not going to get high?...I don't know, and I don't think that there's enough science to be able to say one way or the other.”
    • Postman planned on “having more conversations about this and what that science is, and the study you talked about that both us and the hemp industry have looked at.” He expected “this is going to be obviously a big topic of conversation as our bill makes its way through the system.”
  • Director of Legislative Relations Marc Webster announced all three agency request bills had been approved for him to seek sponsorship. He’d started “discussing them with legislators, and we have some sponsors lined up but we've also been waiting to see the full committee assignments, especially on the house side.” Webster expected changes to both cannabis policy committees, the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA) and the Washington State House Commerce and Gaming Committee (WA House COG), and noted their proposals had been mentioned at the Washington CannaBusiness Association (WACA) Legislative Preview Conference on December 13th. He declared WSLCB representatives were “committed to working with the industry and all stakeholders to get it right” and pass cannabinoid regulations in 2023 (audio - 2m, WSLCB video, TVW video).
    • Postman was complimentary of Webster’s “great job” acclimating to his role at WSLCB, calling him a “fast learner” (audio - 1m, WSLCB video, TVW video).
    • On December 21st, the Washington State House Democratic Caucus announced the reorganization of the WA House COG, which had acted as the house policy committee on cannabis since 2015, as the Washington State House Regulated Substances and Gaming Committee (WA House RSG). The group would be co-chaired by Representatives Shelley Kloba and Sharon Wylie with a policy portfolio “considering issues relating to the regulation and taxation of alcohol, tobacco, vapor products and cannabis, as well as product safety and access, and issues relating to the regulation and oversight of gaming, including tribal compacts.”
      • The WA House COG final work sessions featuring cannabis policy issues occurred on November 30th and December 2nd.

• Several division leaders talked about the status of mapping disproportionately impacted areas (DIAs) for use in scoring applications to the social equity program, as well as how the application window may coincide or conflict with another major agency project.
  • Director of Licensing Becky Smith said of “the DIAs…we have received the drug conviction data from the Administrative Office of Courts,” and provided it to Environmental Systems Research Institute (ESRI) staff and University of Washington (UW) researchers the agency was contracting with to draft DIA maps reflecting several decades of data. She was aware “there's some overlaps with the data from King County” but they had “a January 1st…due date. So we should be seeing some maps in January” because “our top priority is making sure that these maps get completed...we're on a very good track” (audio - 1m, WSLCB video, TVW video).
  • Once staff had obtained completed DIA maps, Postman wanted to know how long it would take to publish them (audio - 2m, WSLCB video, TVW video).
    • Smith explained that she was working with Communications and IT staff on where “those maps will be found” but it “should be very quickly.” The idea was to be able to have some instructions for people on “how we want them to use those maps,” she added. Smith said they covered several decades since the 1980s, applicants would have to be “looking at the right areas in which their address would fall in the right year.” Once functional, she promised the maps would be “searchable by address…as long as you know the year.”
    • On December 21st, WSLCB staff published an update about the social equity DIA maps that stated:
      • “The LCB has been working with the courts and contractors to gather data to identify Disproportionately Impacted Areas (DIAs) and to create interactive maps for applicants to see if they lived in those areas. This is one of the requirements for opening the Social Equity application window.
      • This process has been complicated by incomplete and difficult to obtain conviction data and by challenges posed by limited data in general from the 1980s and 1990s. We believe we have all of the available data from the courts now and have begun the work with contractors to code it into census tracts for 1980-2010 with income and other demographic data to determine those areas that were most impacted by the war on drugs.
      • In addition, we have been working with third party providers to provide training videos and review applications. Working with contractors takes additional time to develop requests for proposals, review bids, and select providers. It also takes significant time and effort to provide direction to these providers to make sure that their work aligns with the vision of the Agency and the Legislative intent.”
  • Smith told the group that Make Green Go!, which had been retained by the Washington State Department of Commerce (WA Commerce) to assist on the mentor roster, was also creating social equity training videos for WSLCB. Six videos would be available “by the end of December,” and she anticipated hosting educational webinars around “mid-January” once the mapping was available to provide prospective applicants the chance to “ask questions, not just of LCB but of our third party vendor as well.” Additionally, Smith’s team and IT staff were collaborating with another vendor that would vet applications, Ponder Diversity Group, on “a secure way for us to move information from…our secured website to the third party vendor website.” She said that weekly meetings would be continuing around the equity program (audio - 3m, WSLCB video, TVW video).
    • Director of Communications Brian Smith echoed her remarks and said they were developing an ad campaign in English and Spanish to direct people to the agency website, aiming to advertise in the “largest Spanish-language publication in Washington state,” La Raza del Noroeste, as well as in The Facts Newspaper and other outlets (audio - 1m, WSLCB video, TVW video).
    • On December 13th, a revision on the WSLCB website acknowledged a change in the vendor the agency was contracting with to review and prioritize equity applicants, which stated: “The selected vendor to complete third party reviews for applications is Ponder Diversity Group…[Quintairos, Prieto, Wood & Boyer P.A.] QPWB recently informed the LCB that it was no longer providing government contract legal services. It has reassigned its responsibilities as Washington’s third-party reviewer to the Ponder Diversity Group. The Ponder Diversity Group consists entirely of the original QPWB attorneys and staff who have been preparing to serve as Washington’s independent application review and scoring team. The Ponder Diversity Group is a women and minority owned business enterprise.”
  • Director Rick Garza mentioned the proposed budget announcement that day by Governor Jay Inslee included $34 million for the WSLCB systems modernization project (SMP). He characterized the hefty budget ask as “just a really important piece of continuing the work” that would help implement “the first phase which is licensing and then covers the second phase which is enforcement.” He was aware that “we've got two things that are kind of colliding together,” Social Equity and SMP. The latter “program right now is updating our licensing process, and so recognizing that…puts a little pressure on licensing” staff that also have “this social equity program being implemented beginning about the same time.” Garza was also happy to see $5 million in the proposed budget for WSLCB request legislation on social equity (audio - 2m, WSLCB video, TVW video).
    • According to the Washington State Office of the Chief Information Officer (OCIO) project dashboard for SMP, the project began in September 2015 with a $3.3 million dollar budget request. Status reports and OCIO assessments on the dashboard show the project encountered trouble in 2017, including delays and the loss of a vendor. Funding to complete the SMP was carried over by legislation in 2019, and the agency sought nearly $18 million in a budget request in November 2021. The most recent OCIO assessment of the project was logged on December 5th, stating, “The project is well managed. Executive sponsor and LCB leadership is engaged at an appropriate level. External and internal communication is focused and consistent. Overall budget is sufficient to complete phase of work.”
  • Postman brought up “that moment which will come in the first quarter when we're bringing social equity online and doing” SMP at the same time. He figured, “we'll keep SMP on track because…that battleship is so big. How do we assure that social equity doesn’t lag?” (audio - 3m, WSLCB video, TVW video)
    • Deputy Director Toni Hood said the licensing division would “avoid doing social equity testing on the same system at the same time” as SMP work. She claimed agency staff would be “sticking with the March 1st date to open the applications.”
    • Becky Smith spoke up to clarify that her team did “not have an exact date of opening an application window, so everything's tentative right now” because they were waiting on work being completed by a third party. As for the risk of the projects “colliding,” she felt confident that they had sufficient workarounds to mitigate chances of that happening.

• A few additional reactions were offered regarding the Cannabis Regulators Association (CANNRA) meeting in Florida and how the group was evolving.
  • Staff provided their first impressions following the event during the December 13th Board Caucus.
  • Nordhorn was bullish on the engagement at the Miami event, including “really good connections on programs in other states that we’ll be following up on.” He complimented the work of Policy and Rules Manager Kathy Hoffman and others that presented on panels during the conference (audio - 1m, WSLCB video, TVW video).
  • Garza promised that all conference attendees would speak at the January 11th, 2023 EMT. He had spoken with Assistant Attorneys General Penny Allen and Jonathan Pitel who had also participated, and reported Pitel was “very interested in sharing some information that he gained from the conference.” Garza reflected that over the history of CANNRA, one of the main lines of inquiry had focused on “how did you set up your systems? And it ha[d] evolved to…not just how did you set it up? But how's it going?” (audio - 1m, WSLCB video, TVW video)

• Director of Communications Brian Smith discussed a change to the Cannabis Central Reporting System (CCRS) that would go live the following month which he claimed would conclude its development as a “project” (audio - 1m, WSLCB video, TVW video).
  • Smith said the launch of a “PREproduction” test environment for the update had been announced on December 9th and included a change “that many in the industry had asked for” regarding manifests. The new version would “roll out” to the production system on January 9th.
  • “It's my understanding that with that last…push that CCRS will sort of move into operational [status] as opposed to continuing on as a project,” Smith concluded, with Hood nodding in concurrence.
    • On December 21st, agency staff published a second bulletin confirming the launch date of January 9th and directing interested parties to the CCRS Resources Page.