WACA - Legislative Preview Conference - 2022 - WSDA Update
(December 13, 2022)

Here are some observations from the Tuesday December 13th Washington CannaBusiness Association (WACA) Legislative Preview Conference.

My top 3 takeaways:

• Kelly McLain, WSDA Policy Advisor to the Director and Legislative Liaison, explained a bit about her role in relation to the department’s hemp program and agency interactions with the legal cannabis sector.
  • McLain laid out how "all things cannabis fall under her portfolio" as the legislative liaison and said she’d outline “information about where WSDA intersects with your industry.”
    • A similar overview of hemp regulations was offered by Hemp Program Manager Trecia Ehrlich at the WACA Spring Meeting in June 2022.
  • Acknowledging that she worked with WACA Executive Director and Lobbyist Vicki Christophersen and Deputy Director Brooke Davies when it came to passage of “the true industrial, or commercial [hemp] program in Washington,” McLain contextualized the status of the licensed sector with statistics. “As of 2021, we had about 115 growers around the state that were producing hemp for a variety of commercial purposes…somewhere in the neighborhood of…7,000” acres, she explained. This number was “smaller than it was in 2021,” she noted, though there was no cap on the number of hemp licenses that could be approved. McLain contrasted this with how “they had about 300 producers in 2021 in Oregon at 10 times that in acreage. So Washington, from a hemp acreage perspective, is not a large producer at this point.”
  • McLain noted that WSDA staff reported information to the U.S. Department of Agriculture on a monthly basis. Hemp production licensees were required to “have permits from us. Their crop has to be inspected by us, it has to be tested by us and that crop can be sent for destruction; just like under the high THC cannabis space to the consternation of many people across the country.”
  • Recognizing there were multiple intersections “with your industry and with your marketplace,” McLain estimated that around 45% of hemp producers licensed in the state grew “specifically for either CBD [cannabidiol] or other cannabinoids.” She identified smaller segments of licensees producing or processing hemp for:
    • “The smokable hemp market”
    • “Fiber and…investigating fiber-based options.”
    • “Seed, and seed banking, and transplant, and clones”
    • “Grain, although the largest spaces in the country where that's happening are places like Montana.”
  • “And 13 are producing for this ‘other’ category which includes…microgreen lettuces and other experimental uses,” added McLain, noting microgreens were regulated under the 2011 Food Safety Modernization Act by federal officials.
    • WSDA hosted a work group on hemp microgreens which met in July 2021.
  • Outlining some of the state hemp rules, McLain noted “the only requirements from the federal government is that we regulate the production of, but not the processing of, hemp.” She mentioned the expansion of the program to include a voluntary hemp processor registration and a hemp extract certificate for those processors. McLain looked forward to the point when hemp was “all federally legal [because] we have states that require different” standards. She considered most state rules to be “​​very similar to regular food products,” but they still needed some alignment. McLain observed that “figur[ing] out how to do the work of creating a program while the program is live [was] not ideal.”

• McLain discussed several other programs including hemp in food, cannabis laboratory accreditation standards, social equity, and the status of an organic-equivalent standard for cannabis products.
  • Washington State Hemp in Food Task Force (​​WA Hemp in Food Task Force)
    • “So originally the hemp industry came to WSDA and Department of Health (DOH), the two regulatory spaces for food products…this time last year and said, ‘we're gonna run a bill…hemp is a food ingredient,’” and McLain told them, “that's not gonna work because we need to know a lot more information.” The task force was set up, “we met 11 times in three months, it was a very fast-paced process.”
    • The group’s final report was submitted to lawmakers on December 1st and “there's a small group of individuals that are working on a bill that will legalize the sale, and create a regulatory structure for hemp extracts and food and dietary supplements. It's not WSDA legislation….It is industry-led legislation.” She expected that the report would “leave you probably wanting things” such as a recommended cap on the amount of THC permitted in hemp products which the task force failed to find consensus on. McLain mentioned they “strongly recommend[ed] that WSDA be in charge of any food ingredient type pathways. So, sanitary standards should follow what's done for other food ingredients, those kinds of things.”
    • “There's a bit of a catch-22 when you go through a process of building a program,” McLain indicated. She expected policy makers could “build it all in statute, and hope you've been clear enough that the agencies implementing it do it really, really well,” something that might appear to be “a great idea; it's not usually great in actual application.” The alternative was to encode “as much structure into the statute” as possible, along with giving “agencies who are in charge some rule making authority. There's pluses and minuses to that process…as I'm sure you're well aware.”
    • She anticipated WACA leaders and members would continue to be part of the legislative process, and that Washington State Liquor and Cannabis Board (WSLCB) request legislation on cannabinoid regulation would also be a factor in advancing any bill.
  • Cannabis Lab Work and the Cannabis Lab Accreditation Standards Program (CLASP)
    • WSLCB officials had “been sending their investigative samples to our …chemical hop lab in the Yakima area for a very long time” under an interagency agreement, McLain told the group. “But since then we've also added work at the Food Safety lab,” she said, where testing could be conducted to determine unsafe levels of any “metals, mold and mildew, foodborne pathogens, and pesticides and heavy metals.” The chemical hop lab had “aging” equipment, and she speculated that WSLCB leaders could have requested a new and separate laboratory for cannabis rather than sending tests to a WSDA facility, “but that's what we did.”
      • In October 2022, WSLCB published procurement information for a “One-year Contract with Orange Photonics, Inc. to provide Light Lab 3” Cannabis Analyzers, a field testing device with modules for detecting various cannabinoids.
    • McLain explained that what had been called the Interagency Coordination Team (ICT) was renamed as the Cannabis Lab Accreditation Standards Program (CLASP), though it included the same “science staff” from WSDA, WSLCB, and DOH. She said WSDA officials would still lead CLASP, but the standards would be developed with the lead regulatory bodies “to make sure that it aligns with how they would administer programs at their agencies…with a goal of rulemaking in 2023 to meet a 2024 deadline in the statute for [the Washington State Department of] Ecology.” Her impression was that the “legislative committee that helped pass that bill and gave the 2024 deadline was already unhappy with that deadline. So, until we're sure we can't meet it, nobody's gonna go back and ask for a new date.”
    • McLain summed up the goal of CLASP as making sure the “industry has a reliable standard to meet and it's something that you'll be able to count on when people ask questions about product safety.” She said documentation to begin rulemaking at WSDA would be filed the following week and would have “space to open up that dialogue and start listening sessions, and getting interested parties at the table to have conversations around what we're proposing.”
      • At publication time, a new rulemaking project was not evident on the WSDA rulemaking screen nor the Office of the Code Reviser website.
  • Washington State Legislative Task Force on Social Equity in Cannabis(WA SECTF)
    • WSDA staff had collaborated with task force members in 2022, having “​​conversations around program operations” such as the implications “if cannabis were to move from LCB regulatory space.” She cautioned that “25% of our agency is funded by federal funds” which she considered the “reason that things are housed at LCB right now” since “federally, legalization is not on the table.” However, “when federal legalization happens,” McLain posited that “movement of programs from LCB to other places that they're better suited…makes sense.”
  • Washington State Hemp Commission Task Force
    • McLain referenced the many attempts to create a cannabis commission, and that a task force was formed because “the hemp industry [became] interested in moving in that direction as well.” She was confident that “we will see a bill from industry to create a hemp commission this next session.”
    • “When I came into this role four and a half years ago, almost five years ago, we had not worked very effectively in the cannabis space in the previous…five years since the passage of [Initiative] 502,” McLain stated. She was “trying really hard to change the culture and the agency around that,” mentioning the department’s role in regulating cannabis edibles. “Whether it's backwards thinking, or difficulty with change, unpacking some of that in an agency is difficult. And so we're working hard to try to improve access.”
  • Organic Equivalent Certification
    • McLain mentioned a “very exciting” development had been the appropriation of funding to complete the project for a “parallel pathway for organic-like certification for cannabis” to the “national organic program.” Licensed producers could “pay a fee and participate,” she said, and gain “another thing you can put on your label. It's another marketing opportunity that would exist for you, with the goal being when federal legalization happens, that organic program can dovetail” into “our normal national organic programs standards.” She acknowledged the long running effort to stand up the certification finally had the budget to aim for “having, by June 30th 2023, an organic-like certification option for your industry.”
    • McLain indicated that WSDA staff were pleased the department was included among agencies implementing ​​the Healthy Environment for All Act (HEAL Act) and would consolidate “all our work in diversity, equity, [and] inclusion…creating new spaces for community input and engagement into the work that we do.” This would include cannabis subjects, providing a “space where…we have a lot of opportunity to make really, really good strides towards equity and inclusion…and people really having the opportunity to voice their concerns about whether our programs are meeting their needs.” 

• Attendee questions centered on regulatory concerns, ideas for expansion of economic opportunities, and calls for a unified legislative agenda around cannabinoid regulations.
  • Scott Atkison, Zips Cannabis and Canna 4 Life Owner, admitted he didn’t “understand a lot of what you just talked about,” but when he heard “‘hemp’ and ‘extract’ and ‘concentrated,’ I'm thinking…that the valuable compound to extract and concentrate in hemp is THC.” Calling legal cannabis a “THC industry” as that was the “primary compound that our customers come in and buy,” he was concerned over a perceived “desire from the hemp industry to to really figure out how to concentrate the THC out of the hemp plant, and create…THC products.”
    • McLain challenged Atkison’s impression while acknowledging the fraction of a percent of THC permitted in hemp plants, claiming, “the goal is CBD products that would not be sold inside the 502 space.” Atkison was aware of this, yet “to the extent there could be some tension” in the cannabis industry around hemp items, he wanted to know how involved WSDA staff were in “some conversations around…one to three milligrams of THC…coming from hemp being considered for going into products.” He conveyed that simply as a “citizen…how would this product not be regulated and be allowed to be sold outside of the 502 regulated system?”
    • McLain agreed that Atkison had touched upon several “things that need to be figured out if hemp extracts are going to be allowed outside of the 502 retail space.” Her impression was that “products claiming that they have cannabinoids are being sold everywhere right now…whether you're buying it in a Rogue River Seltzer at your favorite local tavern or you're buying it in gummies to help you sleep.” McLain didn’t see a “comfortable space” for DOH and WSDA leaders “that includes hemp derived products that are impairing,” although “what that means…is subjective right now because we don't have really great science around what exactly the numbers should be.” She suggested staff had engaged in “hours and hours” of discussions on an appropriate THC limit for hemp items. “What we do know is that when somebody rolls a smokable hemp joint made with hemp flower it is likely already above that one to three milligram,” McLain remarked, adding, “you're going to get concentration that's going to exceed something, and that's why LCB is also working in this space to determine what's appropriate for sale outside the 502 space.” 
    • Aware hemp industry representatives had a “working draft” of legislation to permit hemp cannabinoids in food, McLain said the draft bill wasn’t establishing a “parallel marketplace where hemp-based products are available without the taxing structure, without the regulatory structure.” She voiced concern when she saw anyone “buying a product that maybe wasn't made in Oregon where I know what the program looks like, but they're buying something that says ‘CBD’ on it,” and she wondered, “what are you even buying, you don't even know what you're consuming.”
    • Verda Bio CEO Jessica Tonani, a WA Hemp in Food Task Force member, spoke up to say that significant amounts of THC in hemp consumables would only be achieved when the compounds were created synthetically. She argued the group’s final report made clear that “we believe all synthetics should be banned.” Christophersen encouraged her to elaborate on the THC thresholds task force members talked about. Tonani claimed hemp plants exhibited a “natural ratio” of CBD to THC of 20:1. She commented that “we wanted to enable that natural ratio” while setting a threshold where the “THC component, [regardless] of those other cannabinoids, would not be impairing and…that threshold is where the biggest debate came.” 2.5 milligrams (mg) of THC was an amount equivalent to “what you get in the standard Charlotte's Web dosage,” Tonani told the group, and was consistent with “what the [European Union], Australia, and Canada have all declared” as the “threshold for impairment.” She then brought up the Colorado hemp cannabinoid task force that had been drafting recommendations which allowed “two and a half milligrams with no package…we proposed package limits.” She knew that WSLCB request legislation “has a number they proposed of one” milligram, but she considered it an area where there was “active debate.” Tonani summed up that the “goal [was] any products in the state of Washington will have to meet 20:1 ratio, which is the highest proposed in the country.”
    • Atkison then brought up serving limits, which Tonani noted would be achieved by limiting the number of servings per package. He was still troubled by the possibility of someone consuming multiple packages, reasoning “if they're gummy bears I could just gobble them down.” Tonani mentioned that the amount of CBD someone would ingest as they tried to consume more THC “would be very hard because of the suppressive factors of CBD…and the cost structure of adding that 50 milligrams of CBD would be very high.”
  • Shannon Vetto, Evergreen Market CEO and WACA Trustee, mentioned contention over how to define impairing which came up in legislation to regulate cannabinoids in 2022. She was curious how the hemp in food task force defined it and also asked about the timeline to test a hemp crop’s THC content.
    • “The reason that USDA [U.S. Department of Agriculture] mandates that…hemp is tested within 30 days of harvest [was] to avoid a significant increase in THC concentration between the time we test and the time that the plant is cut,” explained McLain. Additionally, she believed that the limit of THC in hemp “looks to be potentially moving federally…but the goal is to keep…the product within that 30 days right before harvest it needs to be as close to 0.3[% THC by dry weight] as possible.” She also brought up their sampling protocols for hemp which Ehrlich detailed in July 2022, and how the smaller scale of the Washington hemp sector meant “we don't tend to see the same kind of cross-contamination problems that we've seen in other states.”
    • McLain didn’t feel she had “an answer for you today on what impairment really means,” and that further research would help experts settle on a specific level. She noted that at 2.5 mg “you need to see a pretty substantial amount of CBD in the product in order to avoid impairment at that level.” Tonani joined in to say there were two definitions for the term “floating around,” including a list of specific cannabinoids and isomers. The task force had opted to try and “future proof” this list by requiring any company offering products with unlisted cannabinoids do a “tetrad test, and this tetrad test essentially looks at the binding efficiency to CB1 receptor [cannabinoid receptor type 1], safety, whether or not it can make a person high.”
    • Christophersen knew of two bills on the matter, one from WSLCB “that sets a threshold of THC, for what can be sold outside of the market, and redefines THC to make it clear that it's all the things,” and another from some WA Hemp in Food Task Force members which included “definitions.” She forecast a “rigorous debate on how to do that,” suggesting that WSLCB leaders preferred a straightforward threshold to trying to define a subjective concept like impairment.
  • Doug Henderson, Painted Rooster Cannabis Company CEO, asked whether allowing “low dose beverage products” to be sold outside of the adult use cannabis market had been discussed, “or would that be handed over to a hemp processor over a cannabis processor?”
    • Tonani recognized that “Colorado approved it” on their task force, but Washington’s group hadn’t, adding “it didn’t come up.” McLain chimed in to state she’d “be interested to have that conversation with LCB.”
  • Becca Burghardi, Northwest Cannabis Solutions Assistant Director for Research and Development, inquired about marijuana infused edibles (MIEs), wondering if there was a “path forward to improve those timelines” for product approvals.
    • “We've had a massive turnover, [the coronavirus pandemic] was really, really hard on our food safety program, and that's where our MIE work happens,” McLain commented. “As of right now we have 26 [program staffers] so 11 less” than they had five years earlier, “with all of the same food safety requirements,” she noted.
    • Saying that both law and rule for MIEs required approval of each flavor, “every single one of those has to be independently, individually investigated and evaluated by our team, which adds to the timeline substantially.” McLain mentioned several positions had replacements hired, and “we are looking to ideally, in the future…have dedicated staff that do anything cannabis related in our food safety program.”
    • After some prompting from Christophersen, McLain deemed it a “perfect supplemental bill for us to go and clean up the statue” in 2024.
  • Eric Gaston, Evergreen MarketCo-Founder, didn’t understand the “reticence, if there is any, with having these new products regulated within the current 502 system and distributed” by stores like his.
    • Tonani argued that since “there are a ton of CBD products out there right now and…pulling those all into the 502 system would” necessitate changes so that out-of-state manufacturers followed Washington safety rules. Similarly, regulators “also want our businesses that farm in the state of Washington to be able to participate, and be competitive versus other states.” She also thought the adult use cannabis market was not where consumers looked for non-impairing substances, “nor do they necessarily want to go into a dispensary if they just want a high CBD product.” Because “every other state is allowing hemp industries to do something,” Tonani didn’t see the task force recommendations as all that different, adding, “just because it's made out of hemp doesn't necessarily mean it should fully fall into the regulated system if it's not impairing someone.”
    • Similar to Atkison, Gaston had concerns that people could take multiple servings of a CBD item and get intoxicated from the THC content. Tonani was confident that packaging limits and a 20:1 ratio of CBD to THC would constrain potentially impairing formulations of hemp products. McLain believed legislation might be able to address the concern over package limits, the cost of production, or potential age restrictions on sale. Christophersen attested to having seen the "creativeness" in producing products with heavy cannabinoid content, and the concern among her members that “without appropriate bookends around this, people are gonna get creative again.”
  • Andy Brassington, Evergreen Herbal Chief Financial Officer (CFO) and WACA Board of Trustees Vice President, remarked that he hoped to see a “sensible bill” that was “good for the overall industry” on hemp and cannabinoid requirements in 2023. He mentioned possibly combining WSLCB and stakeholder drafts, and an effort to “be consistent with other states that have done things right,” preferably avoiding “two competing bills.” 
  • Ezra Eickmeyer, Producers Northwest Principal, disagreed with the notion that adding CBD isolate into products was expensive at $600 to $700 per kilogram, and he didn’t see a 20:1 ratio leading to a price barrier on items. He lauded WSLCB officials for working legislation but he believed there to be “so many loopholes that could make that law almost help allow for THC on the shelf.” Insisting he was among those that had lobbied for previous hemp bills, Eickmeyer suggested that “chromatography can get THC out of full spectrum extraction from hemp” and technology was “improving the last four years that can remediate THC right out right out of the product.” He hoped lawmakers would “find ways of creating metrics to make the price too high for the public to want to bother” seeking THC content in hemp items.
  • McLain concluded by saying officials at WSDA “welcome any and all input to help make any of this process better.” She wanted to see “a lot of work during session” on legislation that helped cannabis and hemp licensees while also addressing the “uncontrolled marketplace out there.”