WSLCB - Special Board Meeting
(October 23, 2019)

Here are some observations from the Wednesday October 23rd Washington State Liquor and Cannabis Board (WSLCB) Special Board Meeting.

My top 3 takeaways:

• The WSLCB adopted emergency rules clarifying the agency’s authority to enforce the State Board of Health’s “flavored vapor products” ban on tetrahydrocannabinol (THC) vaporizable products.
  • Board members were briefed on the emergency rules at the Board Caucus the day before which aligned WSLCB with emergency rules passed by the State Board of Health (SBOH) on October 9th. The emergency rules from both state agencies were a response to Governor Jay Inslee’s executive order on a health crisis attributed to unidentified vapor products. WSLCB adopted initial emergency rules for cannabis processors and retailers at the October 16th Board Meeting.
    • Also on October 16th, WSLCB helped serve a search warrant at an unlicensed cannabis retailer in Olympia. Between September and October undercover officers made three purchases at the venue. The agency reported that the store’s cannabis-infused products “would have been illegal to sell in the regulated marketplace, including rice crispy treats, gummy bears, and flavored vapor products.” The agency’s press release noted action “was prompted by complaints from the community alleging that the store was selling marijuana without a license, selling marijuana to minors, selling product that made a customer ill, and attracting criminal activity to the area.” At publication time, no evidence had been presented tying the unlicensed retailer to any of the state’s one dozen confirmed cases of vaping associated lung illnesses.
  • WSLCB Cannabis Policy and Rules Coordinator Kathy Hoffman presented the emergency rules for adoption, prefacing with a mention of WSLCB’s emergency rulemaking authority under RCW 34-05-350. She noted the rules “would take effect upon filing with the [Office of the] Code Reviser” and remain in effect “no longer than 120 days after filing.”
  • The first emergency rule modified cannabis processor rules under WAC 314-55-077 and “would allow the board to take emergency disciplinary action against any processor that fails to comply with the provisions” in SBOH’s emergency rules as outlined in 246-80 WAC. She said the emergency rule “bridges the enforcement requirements” between SBOH’s emergency rules and “the authority of chapter 69.50 RCW that are realized in WAC 314-55-077” (audio - 4m, video).
  • The second emergency rule modified cannabis retailer rules under WAC 314-55-079 and would allow would allow disciplinary actions against stores “under the same premise” as the first (audio - 1m, video).
  • While reviewing the CR-103Es before the board, Hoffman realized they referenced “rules that establish summary license suspension and petition for stay provisions,” language which was inadvertently “carried over from a copy-and-paste” from the vapor product emergency rules. She promised to amend the documents before submission to the Code Reviser.
  • The Board adopted both emergency rules with the amended wording.
• The Board adopted additional emergency rules to expand the agency’s enforcement authority over non-THC vapor licensees and delegated authority to Enforcement to serve license suspensions (audio - 3m, video).
  • Both the emergency rule and delegation of authority were discussed at the prior day’s Board Caucus. The rule change modified non-THC vapor product rules in WAC 314-35 by adding provisions for “summary license suspension and petitions for stay.” The emergency action was “consistent with what’s previously happening with” SBOH rules and “necessary for the enforcement.” Hoffman asserted, “We do have the authority and responsibility to adopt these rules for the preservation of public health in the same vein that we have adopted the other two today.”
  • Hoffman said the vapor product emergency rule had a “two-pronged purpose”:
    • They would allow the Board to “serve an order of summary suspension after a preliminary staff investigation indicates that a vapor product licensee has violated the State Board of Health rules as described in 246-80 WAC and that immediate cessation of licensed activities is necessary for the preservation of public health and welfare.”
    • They would “provide a framework and process for an affected vapor product licensee to petition the Board for a stay of summary suspension” consistent with the state’s Administrative Procedures Act in RCW 34.05.
  • The Board adopted the emergency rule which Hoffman promised to file with the Office of the Code Reviser later that morning.
  • Finally, Hoffman asked the Board to “authorize delegation of authority for summary suspension of vapor product licenses.” WSLCB’s Enforcement division would receive the power to serve summary suspensions “under the supervision of the Chief of Enforcement who may delegate that authority” (audio - 1m, video).
  • Following the Board’s approval, the delegation of authority went into immediate effect.
• A pair of public comments focused on the agency’s regulatory implementation of the prohibition on flavored vaporizable products.
  • David Heldreth, Chief Science Officer at True Terpenes, contested the ban on terpenes derived from plants other than cannabis (audio - 3m, video).
    • Heldreth began by saying “if you read the health board ban the language says ‘marijuana, or tobacco or marijuana flavor, or terpenes from hemp, or terpenes from marijuana.’ And it seems odd that the Board is interpreting that as ‘only terpenes and terpenoids from hemp and from marijuana’ when marijuana and tobacco is spelled out there.”
    • Instead, Heldreth advised WSLCB to “allow botanical terpenes” which he claimed had a history of safe use by processors. He also maintained that companies like his which use only cannabis flavors to enhance concentrates should be allowed to operate “because it does specify that marijuana flavor is allowed.”
    • Heldreth’s second concern was that emergency rulemaking only allowed the agency to “ban something that’s a health problem” while both WSLCB and SBOH had “admitted that the flavors aren’t the problems, that it’s the additives.” He said that Vitamin E acetate was “causing the effects and actually has been linked to the problems” but wasn’t addressed by SBOH or WSLCB’s actions.
    • Pointing to the recent lawsuit against the state filed by vapor industry representatives, Heldreth predicted it “will probably cause the ban to be overturned” similar to other states which found “no link between flavor and [health] problems.”
      • The lead plaintiff in the Washington suit is Vapor Technology Association (VTA), a trade association which helped challenge other state vapor bans including New York, Oregon, and Massachusetts, as well as the U.S. Food and Drug Administration (FDA).
    • Heldreth speculated that non-THC vapor products could still add cannabis and hemp terpenes as flavoring under the rule, use the compounds as “viscosity agents,” or to achieve an “entourage effect” rather than flavor. He concluded the state’s response to the health scare “seems slightly ridiculous.”
    • Heldreth also testified to the SBOH regarding the flavored vape ban on October 9th, urging that body to regulate additives and distinguish regulations for THC and non-THC vaporizable products (audio – 2m, video).
  • Brooke Davies, Washington CannaBusiness Association (WACA) Deputy Director, followed up on her comments at the Board Meeting a week earlier (audio - 2m, video).
    • Davies told the Board that WACA wanted to be a “partner with the state in removing the now banned products from the market.” Citing “regulatory barriers,” she claimed it was "difficult for us to get this product off the market."
    • Returning to the topic of her last comment on the allowance for processor credit for unsellable vaporizable products, Davies said that current options for licensees were limited to “a cash reimbursement or nothing at all,” an arrangement which left retailers with “all of the loss.” She stated offering credit “would alleviate some of the stress,” an idea supported by “all” WACA members.
    • Davies acknowledged the agency’s survey on the topic sent to licensees the day before, but pushed the Board to revise their policies “quickly.”