WSLCB - Board Caucus
(February 28, 2023)

Here are some observations from the Tuesday February 28th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• An update by Director of Legislative Relations Marc Webster covered the status of several cannabis bills, gubernatorial appointments, and how board members could “weigh in.”
  • Webster focused on bills still active in the House and Senate after passing cutoff deadlines, telling the board agency request bills were “where they should be.” Following fiscal committee hearings the previous week, he expected lawmakers would be “on the floor most of this week and a bit of next week.” Time management by legislative leaders was crucial as “I think some of our bills in the past have gotten kind of tripped up at this stage.” He explained that the number of bills that could be addressed tended to fluctuate “because there are often a ton of floor amendments on bills, especially controversial ones. And so, some bills can take a long, long time to move, and it also generates a ton of work for staff” (audio - 1m, video - WSLCB, video - TVW).
  • SB 5080 - “Expanding and improving the social equity in cannabis program” (audio - 1m, video - WSLCB, video - TVW)
    • Stating “amendments are definitely starting to fly around” the bill, Webster stressed he was attempting to keep their messaging on the topic “clear, cogent, and consistent.”
    • In past legislative sessions, “the three of you provided really timely input to decision makers and I think that helped immensely so we are probably gonna be looking at a repeat of that,” he said. “We need to make it clear that the board stands behind its agency request legislation, that we need it to move, that we're supportive of the bill,” Webster argued, telling board members he would follow up on the most appropriate format to convey that message. He and Board Member Ollie Garrett had met with sponsoring Senator Rebecca Saldaña the previous day and were expecting her to “clarify what we need from you and when we need it.”
  • SB 5367 - “Concerning the regulation of products containing THC [tetrahydrocannabinol]” (audio - 1m, video - WSLCB, video - TVW)
    • On this bill, Webster had noticed “an odd alignment of stakeholders” with cannabis industry and prevention groups calling for the threshold for allowable THC in hemp products to be lowered. “It was lowered in [the Washington State Senate] Ways and Means [Committee] from where we had it, which was one milligram per unit and three per package, to 0.5 milligrams per unit and 1.5 per package,” he commented, “but I think we'll see floor amendments to reduce it further.”
    • Webster also mentioned that Policy and External Affairs Director Justin Nordhorn was quoted in a Pluribus News story on efforts to expand hemp cannabinoid regulation in states, which showed “how Washington [was] one of many states wrestling with this issue” (audio - <1m, video - WSLCB, video - TVW).
    • Board Chair David Postman observed that the threshold “shouldn't go any higher, for sure" though he was fine with it being lowered, since then the “better it is for public safety and health." Board Member Jim Vollendroff concurred, “negotiating down is fine; negotiating up is not” (audio - 1m, video - WSLCB, video - TVW).
  • A third request bill from WSLCB, SB 5405, “Modifying the liquor and cannabis board's subpoena authority,” wasn’t mentioned in caucus but had been calendared and was awaiting WA Senate second reading.
    • SB 5405 and SB 5080 were added to the WA Senate February 28th evening session for amendment, debate, and potential votes, with the latter bill having been passed by Senators at time of publication.
  • HB 1614 - “Concerning the home cultivation of cannabis" (audio - <1m, video - WSLCB, video - TVW)
    • Webster noted the bill hadn’t been recommended out of the Washington State House Appropriations Committee (WA House APP) after it was removed from consideration for a scheduled executive session on February 24th.
  • Turning to WA Senate approval of gubernatorial appointments, “it looks like the long awaited hearing for your board appointments [was] finally on the horizon…in early March.” He encouraged members to “reach out if you need anything in preparation for that” (audio - <1m, video - WSLCB, video - TVW).
    • Find out more about WSLCB board terms from the agency profile by the Washington State Office of the Governor (WA Governor).
    • This profile previously indicated that Garrett’s term of appointment to WSLCB ended on January 15th. However, at time of publication it showed Garrett had been reappointed to a term which began on February 1st, and ends January 15th, 2029.
  • Vollendroff explained that there had “been a few bills that have come up that I've been tracking…off to the side" which board members hadn’t discussed. He wondered, "how do we, as board members, weigh in” on bills when it appeared the agency was “not going to take a position.” He felt there had been bills worth discussing whether the board would take a stance, but sensed an “assumption that we don't want to take a position, and…is there a way that we could have a process in the future that involves the board more in some of those conversations?” (audio - 9m, video - WSLCB, video - TVW).
    • Postman felt there was a process “but it's not so thorough and…there's some things I think just sort of historically we've, the agency has stayed away from.” He named Webster, Nordhorn, Director Rick Garza as people at the agency who tracked this, saying they and other staff would communicate: “here's the deal, and it just…falls to the side, and…generally, they seem like those are the right calls to me.” Postman added that he met with staff to discuss bills more regularly than Vollendroff or Garrett, but conveyed that the “best way to have that conversation, Jim, is here at a caucus.” Postman offered an example involving HB 1614, “I wanted us to try to get us [to a] position of supporting that home grow bill, and frankly, just didn't happen quick enough, and the bill died.” He felt that since caucuses were meetings with both Webster and the board, they were the best venues to bring up other legislation. Webster remarked that he was new enough at WSLCB that he was also unsure of the best forum, agreeing with Postman that caucus meetings made sense for that.
    • Vollendroff agreed to try and be “a little bit more proactive,” giving an example of the “the potency bills,” HB 1641 and HB 1642, which weren’t active, making it a “moot point now.” Nonetheless, “I would have liked…at some point to have a conversation about them. And where do we stand,” he told the group, because he felt “it seems like we…stood back and didn't really engage in a conversation about that.” Postman acknowledged that the bills were mentioned in his meetings with Webster, but they’d avoided taking a position “partly because [of] tax issues” in HB 1641. He elaborated, “historically I was told when I got here, ‘Oh, we don't get involved.’ I think that one does blend over onto the policy side pretty strongly, and there would have been nothing wrong with us entering that conversation.”
    • Postman continued by encouraging Vollendroff to “send an email to Marc and say ‘what do you know? Can we talk about it Tuesday?’ And then Marc can put it on his list…and we can all weigh in on it.” Vollendroff liked that approach, wanting to do more coalition building in the interim between legislative sessions on “consensus, or understanding where everybody is…because I imagine [potency legislation was] not going away. It's gonna be coming up again.” Postman agreed it was a “good exercise post session which is what was left undone that we think will come back…and which of those do we think we want to have a role in?” Webster and Postman mentioned that home grow and SB 5546, “Establishing a Washington state cannabis commission,” were topics that had come up repeatedly. Postman suggested board members “sit down…with a group and talk about that and say ‘here's where we think it could be improved.’”
    • Garza liked this conversation, indicating that Garrett had raised similar questions about another bill. On that topic, he argued there was “just a lack of us talking about” the matter and what agency leaders' position had been previously. Garza further recognized that Webster had to keep up with a “flurry of bills” during a legislative session, but that identifying and talking about them early on was a needed process. 
    • Calling out an “unwritten rule" that "agencies don't support legislation that's not funded in the governor's budget,” Postman said there were exceptions to that, but believed it was “sort of not cool to go and say ‘We support this bill that would cost $10 million that's not funded’” in a proposed budget. He highlighted that they could communicate with the governor’s staff about bills or fiscal concerns, and when it “would not necessarily be a problem because of budget impacts; it's more policy statements, and we…should do that.” Postman asked that future bill discussions include this understanding “when we decide, ‘Oh, let's go take a position on a bill that's not ours.’”

• Director of Licensing Becky Smith went over final details ahead of the opening of an application window for social equity retail licenses and responded to board questions.
  • Smith reported a 30 day window to apply to the social equity program would open on March 1st and conclude March 30th, before encouraging people to check out the application process (audio - 2m, video - WSLCB, video - TVW).
    • Smith stressed that people could “only apply once,” and recommended potential applicants look at the educational materials available, stating “staff have worked really hard in order to help and educate and train our applicants on the process.” She anticipated looking at applications the following week, adding that agency staff would “send out letters to each person as they apply just letting them know that we receive[d] their application.”
  • Postman wondered about the “lag” time between receiving an application and notifying equity applicants. Smith said that applications would be sent over “immediately from Business Licensing Services” (BLS) and that the letter would be sent out before an application was reviewed because “what we don't want is folks sitting out there wondering whether or not business licensing has received their application because they won't get notification from BLS.” She agreed with Postman that “there could be a week lag from when they submit it to when we're able to confirm that it was received.” Postman then mentioned the Frequently Asked Question page on the agency social equity site had answers to questions, and an email to submit new ones (audio - 2m, video - WSLCB, video - TVW).
  • Next, Postman asked what updates the board would get “during that 30 day window.” Smith replied that they wouldn’t know how many qualified for licenses until applications had been scored by the vendor—which started after closure of the application window—but she pledged to keep them updated on how many had applied. The third-party vendor, Ponder Diversity Group, would review qualifications, “and that could take months in order…for them to finish” (audio - 1m, video - WSLCB, video - TVW).
  • Garrett commended Smith and her staff for their work on the program, mentioning that she and Smith had met with representatives from the vendor and the Washington State Office of Equity, and had “a really great conversation” about keeping WA Equity staff “abreast of processes.” She added that a Ponder Diversity Group member was “very complementary of the LCB” and agency staff’s “involvement in working with them not…just hiring them and say[ing] ‘here, take this, run with it’” (audio - 2m, video - WSLCB, video - TVW).
    • Vollendroff subsequently thanked Garrett for her “heavy lift and your involvement in this,” which Postman swiftly seconded (audio - 1m, video - WSLCB, video - TVW).
  • Vollendroff wanted to know what happened if someone applied multiple times. Smith answered the board would “take the first application and the second one gets ousted.” She highlighted how important it was “that people know who they're getting into business with.” Vollendroff expected that if an applicant was “going into businesses with somebody and you don't know that they're on another application, your entire application…would get kicked out if…that occurred,” and Smith agreed. Garrett felt they’d been consistently clear on that point (audio - 2m, video - WSLCB, video - TVW).
  • Postman asked whether the “back office part of this” including data communication with the vendor and other agencies along with testing the platforms had been done. Smith responded that this was underway, and testing would be done that “hopefully will find the bugs and they'll be able to work through them.” She said the vendor would be checking their systems throughout the application window with a goal of being “ready to go in April,” but was so far impressed by their “stellar job in trying to think of everything that someone would need to know” (audio - 2m, video - WSLCB, video - TVW).

• Policy and Rules Manager Kathy Hoffman went over a new method whereby staff advised generally on a rulemaking petition instead of recommending a specific response before discussion of a petition on rescinding retail medical cannabis endorsements.
  • Hoffman explained that the previous method of making a staff recommendation on rulemaking petitions followed internal discussions, and she was suggesting a change to have staff instead give the board options on what the impacts of various actions might be (audio - 3m, video - WSLCB, video - TVW).
    • She used the example of a recently received petition on medical endorsements which requested a “discontinuation process to allow those businesses to either surrender their endorsement, or for the agency to ask someone to surrender their endorsement if they're not using it.” A separate petition pertained to an “alternative in terms of the exchange of money when cannabis is sold from a producer/processor to a retailer…allowing like three days for a check to arrive in the mail or something.”
    • Rather than advise a specific recommendation, she said staff would review petitions with the board and then give analysis that covered:
      • “The full spectrum of responses and feedback from our divisions.
      • “A complete DEI [Diversity, Equity, and Inclusion] analysis”
      • “Social Equity analysis as well impacts on other agencies if there are any”
      • “Three options to consider so that the board—in an open board meeting—can decide what to do with the petition”
    • These changes would “enhance the transparency of our deliberative processes within the agency” Hoffman remarked, and provide choices to deny a petition, accept it and open rulemaking, along with a “third option…typically to do some other form of addressing the issues.”
  • Postman was supportive of the change in approach to petitions: “I think we all benefit from having these conversations here.” He’d learned things from the other board members so he liked having the board able to “weigh in and talk about” any petition they considered (audio - 1m, video - WSLCB, video - TVW).
  • Vollendroff was similarly in favor of the change even as he predicted it “may slow some things down.” He perceived an “obligation” to have more dialogue around their petition decision making (audio - 1m, video - WSLCB, video - TVW).
    • Hoffman believed "having those robust discussions in public" represented "a step in the right direction" for developing quality policy recommendations. She reported that her staff would be taking this approach for the “next four petition responses and then we can reassess and see…if we're getting the results, if we're working in the direction that we'd like to go in.”
  • Postman returned to the petition related to medical endorsements, as the topic of medically compliant products was of “great importance” for him. He called for a briefing on “what the current status is; what are we doing currently outside of just the petition response…I think that would help me.” Postman asked for staff to include a representative from the Washington State Department of Health (DOH), as that agency had authority over compliant product standards. He thought DOH feedback would potentially be useful for the board on the subject of medical cannabis beyond a response to the already submitted petition (audio - 2m, video - WSLCB, video - TVW).
    • The topic of how many endorsed retailers were in compliance with rules for endorsement holders was first raised publicly by agency leaders in November 2022.