WSLCB - Executive Management Team
(January 11, 2023)

Here are some observations from the Wednesday January 11th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 4 takeaways:

• Staff talked about panels that occurred during the Cannabis Regulators Association (CANNRA) conference in Florida, starting with what officials gleaned from discussions on cannabinoid hemp and legal cannabis market structures.
  • Staff who attended the Tampa conference shared initial thoughts on the event after returning in December 2022. Director Rick Garza discussed the history of CANNRA along with agency staff learning from, and sharing with, their counterparts in other legal cannabis states.
  • Garza asked staff that attended the conference to provide impressions of panels and topics raised throughout the multi-day event, starting with a panel on cannabinoid hemp which Policy and Rules Manager Kathy Hoffman participated on and covered other state hemp related task forces. “We're all trying to deal with this in a different way because it's come to our states in different ways and we have different authority,” which he said related to “how we deal with these impairing cannabinoids that are outside of our marketplace, let alone inside of it because we have issues there, too.” Garza mentioned that part of the WSLCB response to cannabinoid hemp products was an agency request bill on cannabinoid regulation (audio - 1m, WSLCB video, TVW video).
  • Hoffman talked about joining representatives from Colorado, Maryland, Oregon, and Virginia who were all “grappling with” setting policies on cannabinoid hemp products. She indicated the panel opened with “brief updates to the most important pieces of the scope and the charges of the task forces in our states” (audio - 6m, WSLCB video, TVW video).
    • Hoffman contributed less after explaining to attendees that the Washington State Department of Agriculture (WSDA) had assembled a hemp in food task force “and LCB was not part of that work…based largely on the way that hemp was regulated in Washington and our…emphasis on hemp regulation as a function that rests solely with the WSDA.” The final task force report hadn’t been released when the conference occurred, so Hoffman claimed to have limited insight into what the group was advising, but she considered the body to be “largely industry and therefore hemp-proponent driven.”
      • Find out more from Cannabis Observer coverage of task force meetings and work group events which constituted Appendix B of the task force report.
    • Other panelists reported “familiar” concerns, Hoffman said, naming topics like “synthetically derived…versus what's naturally derived…intoxicating versus non-intoxicating,” in addition to the “difference between consumable and non-consumable hemp products and what that means.” The latter subject had been evaluated by a Colorado task force, she indicated, with members having asked “what does ‘ingestion’ mean; these are kind of subjective terms.”
    • Laboratory testing, packaging and labeling, “inappropriate use of therapeutic claims,” and proper retail venues for hemp items were other areas that came up, according to Hoffman. She conveyed that while findings of the Washington task force would be considered, WSLCB officials were also looking at Colorado and cannabinoid standards used in Oregon, as well as their Task Force on Cannabis-Derived Intoxicants. Hoffman found that Maryland officials had also published a “comprehensive” legislative report in December 2022 she was also studying.
      • Watch the most recent meeting of the Oregon task force from December 2022.
    • Garza found the situation was “probably the most difficult challenging issue that the states are grappling with” and shared that following this panel he’d offered “input to the group” of CANNRA leaders, naming Executive Director Gillian Schauer and President Tyler Klimas from Nevada. Garza suggested they “should try to come up with either a white paper or a uniform kind of position that we would take to [Washington,] D.C. to work with the Farm Bill to further clarify” what the law allowed. He felt the intention of Congress in 2018 was to legalize “rope, not dope…but not anywhere near what happened where it became now a separate cannabinoid” marketplace (audio - 2m, WSLCB video, TVW video).
      • Hoffman confirmed that she and Director of Policy and External Affairs Justin Nordhorn were part of the “hemp committee” which was among the CANNRA “special committees.”
      • Nordhorn mentioned that CANNRA was “not one that is going to lobby” for specific legislation, but would instead “provide education” through their work “highlighting some of the key issues that need to be considered when policy development occurs at the federal level.” CANNRA members would give information and presentations to federal officials without “specifically champion[ing] for a particular issue” (audio - 1m, WSLCB video, TVW video).
        • Read more about rights for nonprofit advocacy, what federal authorities consider to be nonprofit lobbying, and a 2019 presentation on the distinction between education and lobbying provided to the National Marijuana Initiative, which is “one of three national initiatives within the federal High Intensity Drug Trafficking Areas (HIDTA) Program.”
      • Schauer, also a University of Washington (UW) Researcher, spoke to Washington state lawmakers about the status of cannabinoid regulations in other states in December 2022.
  • Continuing, Hoffman reported that she was tracking “​​public health messaging in this space” along with Schauer and Public Health Education Liaison Mary Segawa. “In early 2021, states were” issuing “health advisories, and care sheets…and materials to prevention partners to share,” observed Hoffman, who hadn’t “seen anything updated recently, and I think maybe there's some more work we could do…because the landscape is just continuing to change.” She’d also encountered attendees asking whether “the task force in this space is more powerful or the work of…people within an agency going about the research in a different way,” indicating that she heard “general agreement that the second option results in a little stronger recommendation” (audio - 1m, WSLCB video, TVW video).
  • The second panel at the CANNRA conference highlighted “structural factors in markets and related implications for market diversity,” Garza stated. The difference that struck him was “vertical versus non-vertical, in our state you're not allowed to be vertically integrated.” He noted that New York officials had also barred vertical integration in their adult-use cannabis market, choosing to be “more like us” (audio - 1m, WSLCB video, TVW video).
  • Nordhorn started off by explaining that he joined representatives “from New York and Illinois,” remarking that the explanation of New York’s system revealed “a lot of similarities,” but “they're able to do things slightly differently than we did” (audio - 5m, WSLCB video, TVW video).
    • He’d also learned from attendees that many other legal cannabis states “have a fairly limited number of product choices, and when I say fairly limited, there's still over a thousand in the states, but…we have 18,000” throughout the state. Contemplating this “huge variety” in relation to “the Waterloo study” which had found that “90% of the surveyed people said they were utilizing the recreational marketplace,” Nordhorn had wondered if these factors were related.
    • Nordhorn mentioned that when Wasington’s legal cannabis sector was being set up by WSLCB, there “were some assumptions out there that this would be like other businesses and you'd have a particular percentage of a failure rate.” This was something that “naturally happens across all business lines,” he stated, yet “we haven't seen that dramatic of reduction in the number of licenses for people just saying ‘no…I'm not doing this anymore.’” Nordhorn knew many cannabis licensees were “small, but surviving,” and as with so many assumptions being made about cannabis markets, “they're not going to come out…exactly the way you're thinking.”
    • In Illinois, Nordhorn reflected that officials “focused a lot on the social equity aspects,” which Washington regulators hadn’t. But after hearing from other states, “we aren't seeing anything right now that” was a “gold star working equity program.” He expected that market structures would be something CANNRA members continued to focus on, telling the group “there was interest to have a broader discussion again on that at some point in time.”
      • On January 18th, WSLCB published an announcement that a 30-day application window for social equity retail licensing would be opened on March 1st utilizing available disproportionately impacted area maps.
    • Garza remembered that Axel Bernabe, Chief of Staff and Senior Policy Director for the New York State Office of Cannabis Management, as well as Kristin Davis Franklin, the Deputy Cannabis Regulation Oversight Officer from Illinois, joined Nordhorn on the panel. He’d also heard at the conference that in many states with vertical integration, stores were required to sell other licensees’ cannabis products, which “makes sense now because there wouldn't be much in there other than that of the grower or the processor if they didn't require that” (audio - 1m, WSLCB video, TVW video).

• Panels on legal issues and field operations were discussed next, covering issues like product testing, receiverships, patient engagement with the legal market, and challenges around undercover work related to minor compliance checks.
  • Garza introduced the panel on “Legal Issues in Cannabis Regulation: Litigation and Case Law Updates” which Assistant Attorney General and counsel for WSLCB Penny Allen participated in “moderated by folks from the Nevada Attorney General's Office.” He said Allen joined legal staff from Florida, Missouri, and Colorado (audio - <1m, WSLCB video, TVW video). 
  • Allen established that “we all had a very hard time narrowing it down to the three topics that we discussed” but members settled on “testing facilities, receiverships, and patient sales and registration…we chose these three in part because a lot of newer states are struggling with” those issues. “We shared information that might be helpful in building new cannabis laws and regulations, things to think about that you wouldn't normally think about,” said Allen (audio - 3m, WSLCB video, TVW video).
    • On testing she stated, “Washington stands in pretty good stead,” since the WSDA conducted cannabis testing for WSLCB. She indicated, “a lot of other states don't have that ability and they're struggling either to set up a reference lab, or they have to use two competing private labs to…get the same result in order to be able to move forward” in their investigations. This arrangement appeared “unique” to Washington, Allen explained, as “most other Ag labs have declined to do that.”
    • On receiverships, Allen described obstacles to state cannabis enterprises using federal bankruptcy laws and courts, but “most states have a receivership law and cannabis is using this.” She acknowledged that Washington had rules on receiverships for cannabis licenses, but noted a Colorado case had been litigated to the state Supreme Court. Allen felt “we tend to be a little bit better than everyone else…because of our rules.”
    • On patient sales and registration, Allen called Washington’s cannabis sector “streamlined” by not separating sales and oversight of medical and adult-use cannabis systems. She added that “hopefully we provided some information that was helpful so other states would not run into any problems.”
      • The effectiveness of medical cannabis endorsements for licensed retailers had been under review by WSLCB staff since fall of 2022.
  • Garza introduced a “violations and sanctions” panel on which Westside Cannabis Captain Joshua Bolender participated. He noted the panel was moderated by Oregon Liquor Cannabis Commission (OLCC) Policy Advisor Danica Foster, and Bolender was joined by “Courtney Cosgrove from Montana,” as well as former OLCC Director of Compliance Jason Hansen (audio - <1m, WSLCB video, TVW video).
  • Bolender said he’d been “LCB’s only enforcement representative” at the conference, and “this panel in particular was satisfying” to take part in. He’d spoken about “the journey that LCB has been on in terms of enforcement” and their attempts to “triage violations or investigations that come to us” (audio - 4m, WSLCB video, TVW video).
    • He emphasized the former “zero tolerance policy in a lot of different areas including license integrity and ownership, and we subsequently cancelled a lot of licenses for hidden ownership, or hidden financing, and we had stiff monetary fines.” However, “the industry matured…and hired good lobbyists and good representation and we engaged in more dialogue with them,” Bolender said, leading to a “kind of a wake-up call in 2018 where we realized that maybe some of the more punitive approaches that we were taking were no longer necessary.” He mentioned penalties were reformed in rule in 2020 following legislation from 2019, and that Enforcement staff had transitioned to an “education first approach” where some personnel became “field-based educators that could provide face-to-face education with licensees and try to help prevent a violation from occurring, or prevent a licensee from receiving a stiff penalty.”
    • This enforcement change didn’t detract from “taking serious public safety violations seriously,” he’d told attendees, like “furnishing cannabis to minors,” diversion of cannabis, or more severe “criminal activity” occurring at licensed businesses. Bolender felt the agency had maintained a better standard of “hold[ing] licenses accountable…for serious public safety issues.”
    • Another takeaway for Bolender was the benefit of having “commissioned police officers, or law enforcement officers” within a cannabis regulatory agency. He noted some cannabis regulators relied on enforcement staff from other agencies and had described having a “real hard time getting general law enforcement interested in taking on that police work.”
    • Garza had appreciated Bolender’s performance on the panel, saying he’d talked about enforcement topics Garza expected the Washington State House Regulated Substances and Gaming Committee (WA House RSG) would be interested in hearing about at their Thursday January 19th work session with agency leadership “​​Examining the Development of Cannabis Policy and Regulation Since Passage of Initiative 502.” He added that “we started so strict and then learned over time” where to revise rules, and were “in a different place now” (audio - 1m, WSLCB video, TVW video).
  • Another panel where Bolender participated was on “best practices for field surveys, inspection compliance, youth decoy operations, and more,” said Garza. Other panelists involved were Montana Medical Marijuana Inspector Supervisor Devin Keller, Hansen from Oregon, and Benjamin LaBelle from Florida (audio - 1m, WSLCB video, TVW video).
  • Bolender established that what the agency called “compliance checks” were often called undercover “decoys” or “stings” in other states. He’d shared the WSLCB policy to conduct such checks on “every cannabis retailer and tribal store twice every year,” though that had been disrupted by the coronavirus pandemic. Bolender pointed out that one realization was “not using the area officer as the inside officer with the minor that's…attempting to purchase underage because obviously staff or licensees might recognize that area officer.” “Armed robberies” also came up during this panel, he commented (audio - 7m, WSLCB video, TVW video).
    • Masking policies for enforcement officers entering stores was another tricky area, he remarked, “for a while all customers were required to wear masks, but then only state employees were required to wear masks into the stores” which had the effect of “tipp[ing] our hand a little bit.”
    • “Staffing challenges” were also a concern for WSLCB and states with commissioned officers, Bolander explained, adding that he found few other states “seem to have as difficult of a time staffing…their enforcement positions as Washington” did, perhaps due to “other law enforcement agencies competing for those officers.” He’d shared how this had impacted their compliance checks and inspections, or affected enforcement decisions on “having to…fill gaps with overtime…having our supervisors having to go out and conduct field work…and really thinking hard about how we staffed in terms of geography.”
    • Touching on “pesticides and lab integrity,” Bolender had shared his view that Washington had “one of the more robust pesticide enforcement programs” mentioning the investigation and action against Praxis Laboratory by the agency in 2020.
      • On January 19th, WSLCB staff published a newsletter article on “Pesticide Enforcement.”
    • Bolender said the discussion turned to “shadows of human trafficking that a number of states are seeing,” stating that in Washington “most of that has involved illicit growing but we've even seen a little bit of it with our licensed grows.” Officers had encountered employees claiming a licensee was holding their identification, something that was “suggestive that there could be human trafficking going on there.” He added that “Oregon has seen a lot of signs of it, too.”
    • In all, Bolender considered the panel a positive exchange, mentioning that he would be “provid[ing] a lot of information to states that are just starting to set up their programs such as Missouri or Maryland.”

• Responsible cannabis consumption was an educational challenge for cannabis regulators, and CANNRA members had shared their difficulties implementing cannabis lounges and social use policies.
  • Segawa focused on health and educational topics while at the conference. After attending a panel on “education campaigns, in particular on responsible consumption,” she joked that she looked forward to “stealing some of their information” for some “major updating” she wanted to do with Director of Communications Brian Smith (audio - 4m, WSLCB video, TVW video).
    • Regarding cannabinoid regulation, Segawa suggested since the start of 2023, she’d perceived growing interest in “information sheets” as she’d been “working with some of our partner agencies on a fact sheet right now for this synthetic cannabinoid piece.” Segawa also appreciated hearing how states evaluated their education efforts around cannabis.
    • Another panel had focused on cannabis consumption venues, and Segawa commented that she was struck by “the difficulty of doing that in a safe way” that was cost effective for those businesses. “When you start talking about figuring in the smoking laws that we have,” she had several questions like: “How do you build that safe working environment for the employees in those areas? What kind of ventilation systems do you need when that smoke is out of the room into the neighborhood?” Segawa also heard concerns about unlicensed sales, and “when somebody is ready to leave, do they get to take the product with them, or is it disposed of?” She’d learned that states with cannabis lounge policies “have very few takers…Alaska has three, only three licenses that…have gotten the approvals.”
    • Pointing to the attendance of Canadian officials, Segawa talked about an analysis she’d been doing between "my two stints here” on that nation’s “federal regulations versus what's happening in the different provinces.” She commented that “you might expect that the provinces would be very similar and that's not necessarily the case,” noting differences in packaging and labeling (PAL) standards.
    • Board Chair David Postman followed up to ask about Canadian PAL regulations. Segawa relayed that in the province of Quebec, “their assessment is that [stricter PAL standards hadn’t] reduced the retail sales or anything when they compare” to other provinces. Postman then asked if there was evidence PAL rules there “reduced overuse or use [by] minors” but Segawa had yet to see any health impact data related to that (audio - 1m, WSLCB video, TVW video).
      • Find out more from the Health Canada resource: “How to read and understand a cannabis product label.” 
      • Board members heard favorable comments on Quebec’s strict cannabis standards from a Canadian researcher in November 2022.
  • Segawa then pointed out that “given the frequency…of requests for our data,” she’d found other states “make a lot of data just readily available for the public” (audio - 1m, WSLCB video, TVW video).
  • Returning to cannabis consumption venue licensing in other jurisdictions, Garza felt “though they may have passed laws to allow for public consumption, it's pretty difficult to put it into place for a number of reasons” (audio - <1m, WSLCB video, TVW video).
  • Hoffman’s reaction to the consumption lounge panelist from Nevada was that the “outlook is pretty bleak because the business model is not viable.” License fees “are extremely high” for cannabis retailers to have lounges, and only one lounge was operating so far. For social equity licensees, she noted “65 could have applied, 20 did, and only one opened and the licensing fee for that was $100,000.” There was also “pushback from local government,” Hoffman relayed, due to a “multitude of concerns” around air quality, health, and safety including “just the aroma of…cannabis in a community.” She said protocols had to be set “that all consumption has to cease when law enforcement comes into or on the facility” along with “whether or not alcohol or tobacco will also be served.” Hoffman shared Segawa’s hesitations around how best to “deter overconsumption,” wondering, “how do they get home?” Overall, Hoffman felt the processes she’d seen in other states were “just not a viable model” (audio - 3m, WSLCB video, TVW video).
    • Starting in 2023, Nevada licensed 20 cannabis consumption locations including a rebranded Las Vegas Hotel using a lower licensing fee as they weren’t permitted to sell cannabis on site.
    • New Jersey authorities announced consumption areas can be added to retailers with local approval.
    • A July 2022 list published by Leafly identified 36 U.S. cannabis consumption venues, with California having the most at 18. This includes a Chicago mobile lounge.
    • Find out more about social consumption policies from a March 2022 presentation to the Washington State Legislative Task Force on Social Equity in Cannabis Licensing Work Group. The task force went on to include consumption licensing among their reported recommendations to state lawmakers in December 2022.
    • WSLCB resources to reduce alcohol overservice and intoxicated driving include licensee training on recognizing and avoiding overservice, as well as tips for private events with social alcohol use.
  • Nordhorn remarked that “most of those programs are fairly young” and they were still hearing from stakeholders that “we have to be looking at…what this potential would be here.” He had heard that other states had evaluated “lower purchasing limits, special packaging limits, low dose options in these types of places” among other “risk mitigation variables.” Nordhorn found that aside from being approved for cannabis consumption, there were few  “opportunities for them to make money…if it's that sterile, I could see why they're not gonna make any money” compared with allowing “other models or practices…bowling for example…maybe people would be more interested in going into a place.” He was aware that “our tribal partners are very interested in looking at this as an option” and that agency staff could help “present that as an educational piece to them…because they may have opportunities that state licenses don't have when it comes to the Clean Indoor Air Act” (audio - 2m, WSLCB video, TVW video).
    • Board Member Jim Vollendroff recognized that CANNRA would reflect regulator views of consumption venues, whereas “it would be a different conversation, I suspect, if you had industry folks there talking about how this might work” (audio - <1m, WSLCB video, TVW video).
    • Garza concurred the concept was more appealing to cannabis industry stakeholders than for public officials. He suggested options that could help included local “veto power,” similar to the jurisdictions with cannabis business bans or moratoriums, allowing “commingling” of other activities like food service, and not having excessive fees. He guessed this was “because you haven't figured out a way to do it that the public's comfortable with” and he’d come away from the panel with an impression consumption venues were “not really viable” (audio - 1m, WSLCB video, TVW video).
    • Segawa remarked that she’d attended a different event in Colorado and learned cannabis tour buses there faced the challenge of whether they could travel through municipalities that banned cannabis businesses (audio - 1m, WSLCB video, TVW video).
    • Postman observed that $100,000 fees were likely to hinder any new business model’s viability. Segawa pointed out “many” states had higher fees, prompting Postman to assert “we make up for it with taxes” (audio - 1m, WSLCB video, TVW video).
  • Nordhorn then brought up how social use policies beyond lounges could include special occasion permitting and licensing, which he acknowledged would involve “less open” events at impermanent locations. He speculated it could be a “point of interest first before…a full-on lounge” and that laws on “open consumption, because it's not only consuming in public, but it's public view” were among statutes that would potentially need revising (audio - 1m, WSLCB video, TVW video).
  • Bolender had “one-on-one conversations” where enforcement concerns were raised that cannabis businesses “sometimes attract other types of criminal…activity to that area” in addition to “synergistic effects of intoxication combining alcohol with cannabis and other drugs” (audio - 1m, WSLCB video, TVW video).

• Concluding comments from several participants illustrated that part of the perceived value of CANNRA events was a result of constraining access to regulators and other officials, and staff predicted engagement with other stakeholders would remain confined to annual meetings like the one held in Seattle in June 2022.
  • Vollendroff said he’d met with Schauer after the conference and found that the number of committees organized through CANNRA had increased. He saw “multiple opportunities for us to get even more involved in some of these subcommittees” to have a greater voice in policy development and advocacy by the association. Vollendroff was receiving emails from CANNRA members through their shared Basecamp platform and was “trying to figure out how to manage that without getting overwhelmed.” He nonetheless found, “of the ones that I've had the opportunity to dig into and look at, there's just some great conversations happening” (audio - 2m, WSLCB video, TVW video).
  • Director of Communications Brian Smith was eager to begin “expanding the role of Communication with CANNRA” by searching for “people that can help shape…the conversation we're doing” with the media and public (audio - 4m, WSLCB video, TVW video).
    • Hearing about public education campaigns in New York and Colorado, Smith commented on their trouble posting educational material to social media sites because they mentioned ‘cannabis.’
    • Smith reported he’d be joining the expanded CANNRA “public education, communications, and stakeholder engagement” committee, which Schauer had charged with developing a “communication plan” for the organization. He noted, “it's led by Colorado and New York, but I'll be involved with that going forward…as will” Segawa.
  • Vollendroff passed on a reminder from Schauer that “we have a statewide membership in CANNRA” so staff from any state entity could get involved in the group or committees (audio - 4m, WSLCB video, TVW video).
    • Garza established that the statewide membership “payment that we make” to CANNRA meant “any government agency, even a city or county” could have staff participate “as an associate member.” He agreed with Vollendroff that getting more people involved would help both decision making within WSLCB as well as policies being endorsed by CANNRA, whose conferences he argued were “probably the most valuable meeting, as cannabis regulators, that we can be a part of.”
  • Director of Licensing Becky Smith recognized her CANNRA involvement “fell off” as she engaged in other projects at WSLCB, but when attending the conference she “had to step back and say ‘this is important for us to be at the table; this is important for staff to hear.’” She “never really understood why we have a chemist, but then having sat in those meetings and been very clear about, ‘Oh, you don't need one, you need more than one and these are the reasons why’ because that expertise sits with those folks.” Smith planned to get more involved in committees and the work being done by organization members, reflecting that letting other members of her team gain institutional knowledge through CANNRA would help with “succession planning” as WSLCB leaders retired (audio - 3m, WSLCB video, TVW video).
  • Becky Smith remarked that she “really enjoyed it just being regulators” at the conference as contrasted with other events which included industry representatives like the National Conference of State Liquor Administrators (NCSLA, audio - 3m, WSLCB video, TVW video).
    • Garza noted that in June 2022, “for the first time they created an external conference with the industry in a separate location at a separate time as an opportunity for us to at least engage with the industry and hear from them specifically the issues that are important to them.” He expected that normally those events would happen “six months apart” from the regulator’s conference, and believed “we're looking at inviting more people.” He expected the next such event would be hosted in Annapolis, Maryland in the coming summer.
  • As the discussion wound down, Postman opined that he preferred CANNRA gatherings to be free of industry actors since “we deal with our industry here…it's an opportunity for them to corner you to talk about their thing,” and he said  regulators wanted to keep their conferences centered on dialogues with each other. “Washington is a leader in this and people look to us and we should help other governments get ready to go,” he said, making staff time attending conferences best spent working with counterparts in other states and bringing back valuable information to the agency (audio - 6m, WSLCB video, TVW video).
    • Postman called attention to the National Governors Association which he said had events for Governors, but also “they do staff trainings” to help gubernatorial staff. He wanted CANNRA leaders to make similar offerings available to “line staff” at regulatory agencies who were directly involved in cannabis licensing or oversight, “because nobody else understands what they're going through except for those folks.”
    • Additionally, Postman seconded previous comments by Vollendroff on the need for their team to have a debriefing and discussion period following participation in conferences to share connections and new information as much as possible. “Somebody said you should go to a conference and if you come back with one good idea it was worth it,” he concluded.
    • Vollendroff also aimed to connect people with similar interests or expertise across agencies, and encouraged participants to “remember to introduce your colleagues” to CANNRA acquaintances.