WSLCB - Traceability Advisory Committee
(September 13, 2018)

Here are some observations from the Thursday September 13th Washington State Liquor and Cannabis Board (WSLCB) Traceability Advisory Committee meeting.

My top 2 takeaways:

• The Committee discussed the most recent MJ Freeway contract amendment (transcript, audio).
  • The amendment was effective August 27th.
  • The amendment extends the contract until January 10, 2019.
  • There will be three additional releases before the contract is considered complete, and the project transitions to a subscription cost basis.
    • Release 1.1 (Nov 6, 2018)
    • Release 1.2 (Dec 19, 2018)
    • Release 1.3 (Dec 28, 2018)
  • In the event of failure to deliver a release, liquidated damages will now be assessed daily at a rate of $3,750 per day.  In the previous amendment, damages were set at $18,750 per week.
  • In the event of an early release, MJ Freeway will be awarded $5,000 per week from a holdout which will eventually be delivered to the vendor.
  • I raised concerns about planning two software releases during the holidays and encouraged both the WSLCB and the vendor to move the second release forward.
  • There was considerable discussion about what will be included in Release 1.1 in November.  Committee members Lindsay Short and Jeremy Moberg requested and achieved a promise of greater access to documentation about fixes and features that will be included (or not included) in specific releases, and which workarounds will no longer be necessary (transcript, audio).
• The Committee discussed the Office of the Washington State Auditor performance audit titled “Improving Cannabis Risk Management Tools Using Business Transaction Data” (transcript, audio).
  • The provenance of the report was a request from WSLCB for analytical assistance from the State Auditor’s Office. That help eventually took the form of an I-900 performance audit.
  • The WSLCB wanted to understand how to create data-driven alerts for the Marijuana Examiners to inspect unusual transactions or patterns of transactions in the traceability data. The MJ Examiners would then ascertain if those transactions were possibly data entry errors or if the patterns should be brought to the attention of Enforcement.
  • The audit was initiated during the Biotrack era and used data from that source.  The report was primarily composed and delivered during the Leaf era, and is circumspect in drawing boundaries around the scope of the engagement.
  • The Office of the Washington State Auditor conducted interviews with WSLCB staff to develop process maps for each tier of the industry.  The maps show transaction points and places where licensees interact with the Biotrack traceability system.
  • Appendix D of the report details specific transaction points the Auditors deemed high-risk for data entry errors or intentional abuse.  For each of those points, the Auditors detail an algorithm for calculating threshold values within which transactions would be considered normal.  Transactions outside of those thresholds would generate an alert. WSLCB is responsible for calculating and adjusting those threshold values from traceability data sources.
  • WSLCB accepted the Auditors’ recommendations and intends to have MJ Freeway implement alerts in the 1.1 November release.
  • Committee members expressed concerns about what are considered high-risk transactions, the quality of the data from which the WSLCB will be deriving initial threshold values, and communication with licensees about potential data entry errors.
  • All I-900 performance audits must be presented to and given a public hearing by the legislature’s Joint Legislative Audit and Review Committee (JLARC).  WSLCB and the Office of Financial Management will present the audit this Wednesday September 26th in the O’Brien Building’s House Hearing Room B at 1:30pm.  There will be an opportunity for public comment to the Representatives and Senators who sit on the JLARC after the presentation.  Cannabis Observer will be observing.
  • At the next Traceability Advisory Committee meeting (Oct 11), the Committee will hear a follow up presentation from WSLCB about their process for defining the alert system and discuss how to achieve renewed stakeholder confidence in the integrity of the state’s traceability data.

Follow Up (Sep 26, 2018)

Here is the slidedeck from the September 13th WSLCB Traceability Advisory Committee meeting obtained via request.

• Slidedeck (PDF).
  • I was incorrect in stating data irregularity alerts would be implemented in November’s 1.1 release; the slidedeck states alerts will be implemented by December 31st, 2018.

This afternoon, the Office of the Washington State Auditor, WSLCB, and the Office of Financial Management will present their performance audit to the I-900 Subcommittee of the Joint Legislative Audit and Review Committee (JLARC) composed of sixteen Representatives and Senators.  It looks like the public hearing will be broadcast and recorded on TVW.