WSLCB - Cannabis Advisory Council
(July 17, 2019)

Here are some observations from the Wednesday July 17th Washington State Liquor and Cannabis Board (WSLCB) Cannabis Advisory Council meeting.

My top 3 takeaways:

• The Cannabis Advisory Council (CAC), including new members, offered perspectives on the top five agency priorities during a long conversation.
  • The Council went around the table for introductions, including new members since the workgroup last convened in January (audio – 3m, video).
    • Lara Kaminsky, Executive Director of The Cannabis Alliance.
    • Mark Ambler, new member and founder of the Tier 1 Producer Association.
    • Chris Masse, a partner at Miller Nash Graham & Dunn LLP, observed for CAC members David Bean of the Puyallup Tribe and Robin Sigo of the Suquamish Tribe.
    • Eric Gaston, of the Cannabis Organization of Retail Establishments (CORE).
    • Crystal Oliver, Executive Director of the Washington SunGrowers Industry Association (WSIA).
    • Aaron Bosset, new member and founder of the Black Cannabis Commission.
    • Andy Brassington, President of Evergreen Herbal, represented the Washington CannaBusiness Association (WACA) after the departure of Susie Gress.
    • Bailey Hirschburg, of Cannabis Observer, represented Washington’s chapter of the National Organization for the Reform of Marijuana Laws (WA NORML).
    • Council Members unable to attend included Frank Fauls of the Cannabis Farmer’s Council, Neomosha Nelson from Sound Artisan Growing Ethics (SAGE), and Angel Swanson from the Marijuana Business Association (MJBA).
    • The WSLCB was represented by Board Member and Executive Sponsor Ollie Garrett, Board Chair Jane Rushford, and Director Rick Garza.  Board Member Russ Hauge was unable to attend.
    • WSLCB staff present included Executive Assistant Dustin Dickson, Policy and Rules Coordinator Kathy Hoffman, Tribal Liaison Brett Cain, Legislative Relations Director Chris Thompson, and Sara Cooley Broschart, the agency Public Health Education Liaison.
  • The CAC agenda outlined five topics which the agency hoped to solicit feedback on: Medical Cannabis, Smallholder’s Opportunities, Social Equity, the 2020 Legislative Session, and Prevention (audio – 2m, video).
  • Medical Cannabis (audio – 11m, video). Previously mentioned on May 1st, May 29th, June 17th, June 25th, July 10th, and July 17th. Hoffman said it was “a very important topic” with significant interest, particularly “ensuring that there’s an adequate supply of medically compliant product available for sale in retail stores with a medical endorsement.” Challenges she highlighted were whether there was enough compliant products on the shelves and if “there’s an understanding of what medically compliant product is.” Hoffman reminded them the agency’s goal was “the highest level” of health and safety, but ultimately “we believe that all products on retail shelves should meet a higher quality of product standards, including tests for heavy metals and pesticides.” She said this was being pursued in rulemaking to see that “all product is safe for all consumers.”
    • Kaminsky and Ambler called for a patient representative on the CAC “to ensure their voice is louder,” a suggestion Hirschburg and patients Kari Anne Taylor and Don Skakie advocated for the month before.
    • Kaminsky said the Alliance organized a Patients Committee and called for cannabis test results to be more accessible. She indicated retail customers were often told, “Those records aren’t on hand, or we can’t access them.”
    • Kaminsky asked the agency to work with the Alliance on legislative fixes like exempting patients from cannabis taxes.
      • Learn more about agency discussions and hearings on last session’s excise tax bill, SB 5234.
    • Gaston urged testing all flower to avoid “liability being created” for businesses. He backed a state-run testing program for pesticides or heavy metals.
    • Hirschburg noted that due to a lengthy “reformatting” of lab accreditation and “ideally, a much improved testing system” with the Department of Ecology (DOE), new standards would not be available until 2024. He pressed for more accessible solutions like medical cooperatives hosting farmers markets for patients, or direct sales by growers. Oliver added it was important to restore the relationship “between the farmer and the consumer.”
    • Ambler encouraged direct sales of flower by growers as WAC 314-55-417 already permitted producers to sell seeds and immature cannabis clones to registered patients. He wondered if the agency could act with approval from the Governor, but without legislative change. “And then the patient can come, take a look at your operation, open your pesticide cabinet if you have one” to size up a producer better, he concluded.
    • Hirschburg said reforms should help “any patient where their doctor agrees” with a cannabis authorization, not just those registered in the state database.
    • Brassington suggested the agency focus on implementing SB 5298, newly passed legislation dealing with therapeutic claims cannabis products can make. Brassington felt the legislation “got watered down and bastardized in the process” but better labeling policies would serve patients and consumers.
      • See Cannabis Observer’s coverage of SB 5298’s passage.
  • Smallholder’s Opportunities (audio – 23m, video). Previously mentioned on January 16th, March 26th, April 2nd, April 16th, May 28th, June 18th, July 9th,  and July 10th. Garrett credited Hauge for leading the agency’s efforts, while Hoffman presented in his absence. Hoffman explained that significant effort was going into “defining” the agency’s qualifying criteria for small businesses. 98% of Washington cannabis businesses were considered small businesses under the state Regulatory Fairness Act definition according to a recent small business economic impact statement (SBEIS). Tier 1 growers were struggling, and Hauge and the agency wanted to find “carve outs” and “creative solutions” like a “craft cannabis” licensee designation that could help them succeed. Another potential idea was a market analysis to “see if there’s a market gap” smaller businesses could fill.
    • Brassington pointed to a WACA letter on the subject that suggested allowing any Tier 1 licensee to scale up to Tier 2 “overnight” and “let the market forces” play out. He called Vashon Velvet owner Susie Gress, his predecessor representing WACA in the CAC, a “collateral damage victim” of the tier system.
    • Gaston pointed out that Washington was unique in denying vertical integration, an arrangement he felt had led to more product variety throughout the state. He suggested “Fair Trade designations” for small farms and allowing sales in bulk to retailers who would handle packaging. Lastly, Gaston emphasized tourism, imagining it could “be a cornerstone of the industry.” Kaminsky agreed, and cautioned “tier size alone doesn’t distinguish” a producer as a small business.
    • Garrett asked about help for smaller retailers. Hirschburg said that due to an increase in the amount of licenses a single person could hold, the state could define ‘small retailers’ as anyone owning only one retail store. Advantages offered to all retailers might otherwise “scale up” for individuals owning several locations.
    • Oliver “didn’t see any harm” with helping 98% of licensees, and argued that Tier 2 or 3 producers could benefit from assistance like cooperatively-owned farms, shared processing, “farm direct sales,” farmers markets, or other business logistics support. “When we first got this market off the ground,” Oliver said, “I would reach out to different agencies to see if I could get, you know, the type of resources and technical support that you can usually get as a small business owner and they’d say ‘Oh, no, you’re in the marijuana so I can’t help you.’” Oliver later suggested a new Tier 1 “nursery” license. The primary role of nurseries would be to provide plant genetics to other producers or processors. She claimed there was already a “genuine need” expressed by outdoor growers.
    • Ambler demonstrated the need for reducing licensing fees using spare change. Comparing the fees with the square footage of canopy allowed under each tier, he laid out a nickel for Tier 3, $0.15 for Tier 2, and $0.75 for Tier 1 and called for lowering Tier 1 fees. Amber said Tier 1 operations needed “a reason to grow again.” Brassington instead suggested “do away with” Tier 1s altogether as “the best way to support small businesses is to let small businesses conduct their business with as few restrictions as possible.” Ambler added “when I hear overproduction it really makes my stomach turn,” as he’d found production much more open in Oregon. He felt a new Oregon law to establish cannabis exports would create “our new competitors.”
    • Gaston proposed a “minimum wholesale price” for small producers to ensure customer choice and help struggling companies: “I want to operate in a business where my customer has 200 different vendors to choose from, instead of two or three.” Brassington opposed price supports.
    • Kaminsky noted that while any change in regulations were a “challenge” to small businesses, “traceability impacts small business much worse.” Brassington agreed, saying the traceability release “debacle” cost his company $80,000 in sales, potentially impacting his ability to pay staff.
    • Ambler explained that while he could work his canopy alone, beyond the Tier 1 limit he’d have to hire help. He concluded: “if you increase canopy, you increase jobs.”
  • Social Equity (audio – 20m, video). Previously mentioned on January 16th, April 16th, May 15th, June 18th, June 25th, July 9th, and July 10th. Cain briefed the group on the agency’s equity efforts, first pointing to plans rolling out in other legal states “to recognize and address the impact that cannabis prohibition has had on low-income communities and communities of color.” He said WSLCB was looking at ways to help new minority, veteran, or women-owned businesses by providing capital grants, technical support, compliance training, or “authorizations for local jurisdictions to issue additional licenses or privileges” with “equity-based” requirements. While there wasn’t a single model for these programs, Cain noted the agency would keep researching outside ideas to adapt and may host a listen and learn session on the topic.
    • Gaston said the industry wanted to “give back to disproportionately impacted communities” but sounded a note of caution against “set[ting] people up for failure” by licensing additional cannabis companies that may not succeed. He supported giving impacted communities more economic support without tying it to participation in the cannabis market. Brassington seconded this perspective.
    • Oliver asked Cain if they had talked to current minority licensees. He replied that WSLCB planned to do that as the equity discussion moved beyond the agency.
    • Hirschburg suggested jurisdictions which funded equity programs could receive greater “leeway” to issue additional licenses. Later in the discussion, he observed that social use retail lounges or producer tasting rooms could address the inability for some renters to find legal places to utilize cannabis, indicating that “the poorer you are the harder it is to find places to consume cannabis” in the state.
    • Bossett, having sat quietly up to that point, explained that Washington needed “a very unique, aggressive” equity model for the cannabis market. He felt the biggest challenge was access to capital, but socioeconomic gaps in generational wealth created disadvantages for minority involvement, with disparities in scholastic progress based upon race being another problem. Bossett urged the state to avoid a single statewide equity plan as minority communities weren’t evenly distributed around Washington. “Through gentrification, you can’t even identify a black neighborhood in the state of Washington anymore,” Bossett explained, indicating this was an impact of the war on drugs and a reason for suppressed ownership of licenses by African-Americans. He called for a “fully integrated system from farm to face” which dealt with things like testing. Traceability challenges, he noted “would have put somebody like myself, or from my community, out of business.” Bossett asserted the drug war was a method of racial oppression. He ended by identifying black churches and community organizers as the best sources for learning about the needs of minority neighborhoods.
    • Gaston warned against opportunistic “shopping for co-applicants that qualify” for an equity system, a practice that occurred when merging the recreational and medical dispensary markets. Ambler agreed, saying it’s still seen in federal contracting. Gaston also felt that it was appropriate to distribute existing available licenses, but didn’t want WSLCB to add any more.
    • Oliver agreed with Bossett that there were already serious issues within the market. She said equity was “very closely linked” to the earlier discussion about small businesses. “We’re wasting a lot of resources going after a social equity program if we bring folks into a system where small businesses are set up to fail.” As WSLCB proceeded with craft cannabis research, Oliver pushed for them to keep their equity plans in mind.
    • Garza said Prosper Portland’s equity program was “a small step forward” in Oregon and had taught the agency the importance of financial capital in social equity calculations. He promised equity was “a Board priority for the next month” and that the agency would put forward a plan in 30 days to address it. He indicated the Board was interested in ideas that help equity, existing small businesses, and medical patients, preferring ideas that impact at least two or all three issues. Any agency request legislation would include ample time for feedback from the CAC or other stakeholders. Garza used the example of social consumption, saying the ability of local jurisdictions to “opt in” to such a policy would be more acceptable to lawmakers.
  • 2020 Legislative Session (audio – 16m, video). Previously mentioned on April 16th, April 17th, April 23rd, June 11th, June 25th, and following this timeline. Thompson gave an overview of how his staff would analyze prospective bills for 2020 agency request legislation, reiterating Board priorities of equity and help for both patients and small businesses. Thompson said the agency would preference bills with “little or no cost on licensees. Proposals that are external in focus” in addition to “areas where there’s some time-sensitive urgency. And then, areas where we expect there’s relatively modest controversy.” While nothing had been decided yet, he anticipated having drafts of ideas for stakeholders in August, with a target “drop dead date” of September 13th to allow for vetting by Governor Jay Inslee’s office before next year’s shorter legislative session.
    • Brassington called for a “consistent, unified legislative strategy.” Claiming WACA had worked with the agency in the run up to 2019, he encouraged all CAC member groups to get behind proposals by autumn.
    • When Hirschburg asked Thompson for further guidance on what manner of changes would have the most traction during the short session of the state’s biennium, Thompson summarized that “simpler and cheaper is easier to get through.” Thompson highlighted the fact that there will be fewer committee meetings and a new chair will be chosen for the House Commerce and Gaming Committee (COG) which typically hears the chamber’s cannabis legislation first. Thompson didn’t expect the majority caucus to declare the COG chair until November at the earliest, with Vice Chair Kristine Reeves leading the committee until then.
    • Thompson stressed that “we’re working really hard to approach policy in an integrated and comprehensive fashion” with significant communication and coordination between rulemaking, request legislation, and “private liaison” with businesses.
  • Prevention (audio – 9m, video). Previously mentioned on January 16th, March 19th, April 24th, May 15th, and May 21st. Cooley Broschart presented the last topic to the CAC, saying she dealt with “public health, communities, and prevention” at the agency. Working with community coalition groups and state institutions like the Washington Healthy Youth (WHY) Coalition, one of her key process questions was learning “what are the ways that prevention and public health are included” in cannabis rulemaking. Of particular interest to Cooley Broschart was learning retailer’s “thoughts on prevention” as several coalitions had considered or begun coordinating with them on prevention strategies.
    • Kaminsky had heard that “one of the biggest positive things we can do when it comes to prevention is education” and supported expanded efforts occurring “in tandem” between the industry and WSLCB or other health operators. She felt this partnership was one of the best ways to ensure prevention efforts were effective.
    • Brassington called for “consistent messaging” and larger coalitions. 
    • Hirschburg thought efforts to demystify the cannabis industry by having licensees speak in schools to explain “this is what we do, this is what the industry is like, this is why it’s not for you, this is why you may choose to be a customer of this some day, or not.” He also encouraged production of materials targeting prevention of adults purchasing cannabis for underage relatives and warning against “multi-drug use.” 
    • Oliver said that the Department of Health’s (DOH) Spokane office had organized focus groups on adolescent health needs in past years. She was worried because “sometimes I don’t understand where [prevention groups] are coming from” and felt collaboration could reduce “scientifically inaccurate” claims on the topic. Oliver was certain the groups could complement each other “but it feels to me like prevention doesn’t really want to talk to us.” Cooley Broschart wondered if one way to address this was by encouraging prevention groups to participate in rulemaking listen and learn sessions.
• New information was shared regarding current rulemaking and upcoming listen and learn sessions (audio – <1m, video).
  • Hoffman offered a rulemaking update earlier in the day at a Special Board Meeting, but several new facts were revealed as members peppered her with questions about the rulemaking process at the agency. Earlier rulemaking updates include May 29th, June 12th, June 25th, and July 9th.
    • Cannabis Penalties (WSR 18-22-099, audio – 2m, video). Draft rules were expected to be ready for stakeholders around August 5th. Hoffman tentatively scheduled a listen and learn session for August 29th to be followed by a CR-102 filed in October.
    • Voluntary Compliance Program (audio – 3m, video). With the CR-101 approved that morning, Hoffman anticipated “extensive stakeholder engagement” and doubted that a CR-102 could be ready before January 2020.
    • True Party of Interest (TPI, WSR 18-22-054, audio – 5m, video). The draft TPI rules required significant collaboration with the penalty workgroup to craft a common definition of business “control.” Hoffman planned an August 12th meeting with industry partners followed by a listen and learn session on both TPI and penalty rules in mid-September. The CR-102 would be filed in October depending on the listen and learn session outcomes. Kaminsky asked that session formats be “laid out” for attendees beforehand to elicit the most relevant responses.
    • Quality Assurance (QA) Testing and Product Requirements (WSR 18-17-041, audio – 6m, video). Hoffman restated an intention of the agency that all cannabis products be tested for pesticides and heavy metals. Following an economic analysis which revealed potentially massive cost increases for producers and processors, a listen and learn session on cost mitigation and phase-in strategies was rescheduled for August 22nd after being cancelled in June. Hoffman planned to include conceptual draft rules with next week’s invitation for the upcoming session. Ambler asked if cost mitigation recommendations to the agency should conform to the state’s Regulatory Fairness Act (RFA). After some discussion, Garza and the staff explained that the CAC or any stakeholders should offer whatever input they think is best and let the agency review and determine if an idea can be pursued within the guidelines of the RFA.
    • Packaging and Labeling (PAL, WSR 19-12-029, audio – 5m, video). Hoffman said WSLCB received a “significant amount of comment” from the regulated community including economic data on projected impacts and design cost information from vendors. She was currently “mirroring up the quantitative and qualitative data” but was still open to more information for her analysis. Hoffman was “envisioning significant structural changes” to PAL rules with listen and learn sessions scheduled for September. She also indicated that the board interim policies extended by the Board that morning would be further amended to provide an additional six months for retailers to sell items with packaging approved under the old rules. Sections of the open PAL rulemaking project might be “bifurcated” into separate projects in order to meet legislative timelines mandated in SB 5298.
      • See Cannabis Observer’s coverage of SB 5298’s passage.
  • Hoffman shared a document explaining WSLCB’s rulemaking process. CAC members were broadly complimentary of her inclusive and deliberate efforts. However, Ambler and Brassington observed that some CR-101s would list specific reasons or intentions for rule changes at the outset, while others were “vague.” They believed greater specificity would produce better feedback.
  • Asked to distinguish emergency rules from board interim policies, Hoffman said the former were intended to address iminent health or safety risks and were good for 90 days before requiring renewal or being “substituted by permanent rules” (audio – 9m, video).
• Wrapping up, the Council briefly addressed environmental waste, upcoming meetings, and recent cannabis events (audio – 5m, video).
  • Kaminsky said a focus of the Alliance which hadn’t been discussed was environmental waste. Citing her group’s recent successful petitions for rulemaking on packaging, Kaminsky encouraged the agency to consider “Every time you’re looking at legislation or regulations, [keep] a lens focused on the environmental impact of those choices.” Brassington echoed her perspective, calling the frequently littered measuring cups for infused beverages “a disgrace.”
  • The Board will host a public meeting August 21st in Bothell. While the schedule isn’t finalized, Rushford predicted a prevention group meeting the day before, and possibly a listen and learn session (audio – 1m, video).
  • Hirschburg called attention to a recent study showing the Puget Sound region had the world’s highest levels of cannabis use according to wastewater analysis. He also expressed gratitude for organizers of Bellingham Budfest who worked with city officials and WSLCB’s Mount Vernon enforcement office to secure special dispensation for some cannabis businesses to advertise inside a 21+ area of the event. This event tested free speech concerns raised by a lawsuit against the agency by Seattle Hempfest.