WSLCB - Executive Management Team
(April 12, 2023)

Here are some observations from the Wednesday April 12th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) Public Meeting.

My top 4 takeaways:

• Staff discussed the ramifications of announcing environmental pesticide actions as it related to media inquiries, legislative funding, enforcement options, and interagency discussions on the matter.
  • Director of Communications Brian Smith established that he’d first spoken with an Associated Press reporter on April 6th for an article on the action that ran the following day and was picked up by other news outlets. "Gene [Johnson] always does a good job on that stuff,” remarked Smith, noting that additional requests for comments were coming from “mostly trade publications” but he alleged “the reach of that hasn't gone any farther than Oregon” (audio - 2m, video - WSLCB, video - TVW).
    • He found claims of wider media interest from that morning’s public comments did not reflect interest the agency had fielded to that point. 
    • Considering “how the communications rolled on that,” Smith described being in contact with staff at agencies including the Washington State Department of Agriculture (WSDA) and Washington State Department of Ecology (DOE) “that would need to be involved, or at least be aware, of what was going on with that.” This was done so “everyone was aware as to what we were going to be say[ing], that the message was specifically our own and we did not mention anyone else, but want[ed] everyone to be aware of what was happening.”
  • Director of Legislative Affairs Marc Webster brought up the operating budget and noted that “funding for the lab at the Department of Ag was not included in the House budget” and he’d be advocating for that as “it’s so necessary” with the environmental pesticide situation which had already raised “a lot of question from members.” Postman and Webster agreed it “should convince them to fully fund the lab.” Webster felt many of the licensees who were impacted in eastern Washington were also calling their lawmakers “so I think it should be an easy fix” as the money was in the senate companion, so he had to ensure “that happens on the House side too and that in the conference budget that it is included” (audio - 3m, video - WSLCB, video - TVW).
    • Webster highlighted a couple approaches to allocating the funding, “going back two years…that funding was at the LCB and then we would just send it to [WSDA] through an interagency agreement. They wanted to budget it directly at Ag, So for…three or four years, maybe they budgeted it directly at [WSDA] using the dedicated cannabis account. They could continue to do it that way, they could revert to the old way…and put the money back here for us…to send over. We're neutral on that, but they just have to do something.”
      • WSLCB Enforcement staff reviewed the agreement in February 2020, indicating that the agreement had been amended with an Memorandum of Understanding (MOU) “because in 2017 the [WSDA] actually obtained funding from the legislature for a lot of this pesticide testing.” At that time we noted our impression funding was secured by the Department in 2019 after a surprise budget request in late 2018.
    • Director Rick Garza suggested speaking with Washington State Office of Financial Management (WA OFM) personnel to keep them “aware that when they negotiate the budget…maybe even a letter” to explain the WSDA position from Director Derek Sandison. Webster promised to pursue the issue with WSDA Policy Advisor to the Director and Legislative Liaison Kelly McLain, and keep lab funding “included in the big OFM list of concerns.”
  • Director of Enforcement and Education Chandra Wax mentioned that use of notices to correct (NTCs) from her staff to licensees hadn’t been utilized by staff “where [it] shouldn't be, which in my opinion, would be in a public safety issue. We need to be really strong, and immediate in correcting those public safety issues,” possibly in reference to the use of administrative holds on licensees staff believed had environmental pesticides on their premises (audio - 10m, video - WSLCB, video - TVW).
    • Wax’s presentation included a note that her division had hired a chemist, as former Chemist Nicholas Poolman moved over to the WSDA Cannabis Lab Accreditation Standard Program (CLASP) team.
  • Garza felt they’d gotten prompt responses on the matter from his counterparts at DOE, WSDA, and the Washington State Department of Health (DOH). He emphasized that Chief of Prevention Lacy Fehrenbach in particular had been working alongside Wax. He’d previously conveyed to Postman the need to “reach out to the directors to make sure they're aware of what's going on here, and they, just been really prompt and responsive, all three of them.” Garza confirmed their involvement in other WSLCB meetings with stakeholders on Friday, ensuring “the right people” from their agencies attended, “because it's not going to be something we can solve on our own” (audio - 2m, video - WSLCB, video - TVW).
    • The board posted five voluntary cannabis product recalls related to the announcement on April 13th.
    • Fehrenbach was the DOH representative to testify in favor of the 2023 agency request bills on THC regulation, including SB 5367 which at time of publication awaited action by the Senate following changes in the House.

• Next, staff talked about their work with the Cannabis Regulators Association (CANNRA), specifically their involvement in association committees, medical program analysis, testing standardization, interstate commerce policies, tribal compacting, and federal hemp legislation.
  • The last extended CANNRA discussion by the board was at the January 11th EMT.
  • Smith discussed how he’d missed that morning’s board meeting due to participating in a CANNRA “public education and communications stakeholder meeting” in which he “was quite involved.” He said CANNRA leadership wanted to have staff from their member states “that can help with communications for the organization” and he planned to helpExecutive Director Gillian Schauer with the association’s comments on environmental pesticide actions and other topics going forward (audio - 1m, video - WSLCB, video - TVW)
    • Garza praised Smith’s collaboration with CANNRA leadership: “they don't have a person that has a lot of experience in communications, you do…it's really great for you to help” (audio - <1m, video - WSLCB, video - TVW)
  • Director of Policy and External Affairs Justin Nordhorn detailed his collaboration with CANNRA members such as comparing medical cannabis between states, the agency responsible vendor program (RVP) for alcohol, and implementing interstate commerce for cannabis (audio - 3m, video - WSLCB, video - TVW).
    • Nordhon explained CANNRA members were interested in comparing medical cannabis programs to see “what's working well in other areas to try to leverage some ideas on what can we do as a state to improve that particular area.” 
    • Other officials also talked with Nordhorn about the RVP giving him a chance to “provide that level of experience that we've seen in other areas on what's worked” for “dealing with a number of the same issues.”
    • “I've been sitting on committees for interstate commerce roadmap discussions. We've had a number of different areas to discuss this last week,” explained Nordhorn. The topic of tax stamps as a way to normalize cannabis trade between states had come up, he said, indicating the concept was similar to existing laws Washington had for cigarettes. However, “when you're talking about the number of types of products…solids, liquids, dabs” he found some members wondering when the “same framework where they would be buying stamps from the State to be able to apply on these” was used, “what does that look like?” Nordhorn held “slight reservations around going to…the stamping system with so many different products. I think that might be a larger challenge that is not…a good return on investment,” but kept an open mind.
      • At time of publication, Washington lawmakers had passed versions of interstate commerce legislation, but Senators needed to concur or refuse House changes.
      • Learn more about tobacco tax stamps from the U.S. Centers for Disease Control and Prevention and tax stamp policy more generally from the International Tax Stamp Association.
    • Postman asked about potential “common testing standards” for cannabis between states, a subject Nordhorn stated had come up in CANNRA meetings and was “a point of interest” for all members. He felt it would “be very beneficial to have federal oversight…because I think what the default [was] going to be is whoever’s shipping into a state [was] going to have to meet that state’s standard.” Doing business in dozens of states could “really bog down some of the commerce issues” (audio - 1m, video - WSLCB, video - TVW).
    • Nordhorn commented that there were also “interactions and compacts discussed around Tribal Nations, what does that look like…for different states?” He said there was “brainstorming” around “what that would look like going across state lines” and the committee was meeting “monthly” (audio - 1m, video - WSLCB, video - TVW).
  • Garza urged staff to continue being involved in CANNRA subgroups. He remembered that during earlier dialogue on interstate commerce, members wanted to set up “a commission of the states to help the federal government determine how to move forward, and it all has to do with uniform standards around everything that we do when we regulate the industry” (audio - 3m, video - WSLCB, video - TVW).
    • Garza reported that the following week he, Schauer, and other CANNRA leaders “were going to be meeting with members of Congress specifically [U.S. Representative] Cathy McMorris Rogers who chairs one of the important Ag committees that's looking at the farm bill.” He expected CANNRA would educate the representative about “how we need to make that separation between hemp…and cannabis products that could be intoxicating.” Garza related this issue to agency staff successfully supporting THC regulations in SB 5367.
    • “We're also meeting with FDA [Food and Drug Administration] and TTB [Alcohol and Tobacco Tax and Trade Bureau], two agencies we've been spending time with” because of their “key role” in the federal cannabis market Garza told the group. Though he complained “sometimes they don't exercise [their authority], especially…FDA” related to the delta-8-THC “gummy phenomenon that occurred outside our regulated marketplace.”

• An update by Director of Policy and External Affairs Justin Nordhorn touched on new rulemaking anticipated following the legislative session, a stakeholder meeting on product samples, and cannabis research including “tolerance breaks.”
  • Nordhorn thanked Smith’s team for helping “on the public health website updates that we have.” Next he said staff were tracking legislation that would necessitate rulemaking by WSLCB. “I think that…the real projects that are on the forefront are higher than average as far as the quantity, and then the complexity I would say as well, so that may mean we have to table some of the other” projects staff hoped to pursue (audio - 3m, video - WSLCB, video - TVW).
  • Mentioning a March 22nd focus group on product samples, Nordhorn "felt that went really well." There were “around 15 people” participating, though a survey sent out afterwards suggested “folks who came in person had very high remarks” and “lower remarks on…the online observation only model.” Staff were still evaluating the feedback they received, but he argued they tried to “make a safe environment so…anything that’s said in here should be able to be shared freely.” Nordhorn believed this helped licensees who “may not be in full compliance, [yet] they may also not necessarily be a harm…to the system if we can have an opportunity to change something” (audio - 4m, video - WSLCB, video - TVW).
    • Nordhorn indicated a few people were given compliance education by staff at that time for some remarks that indicated a licensee did “something you probably [don’t] want to be doing.”
    • Only one retailer attended, “but we did have one industry association that represents retailers” present, Nordhorn commented. He remarked how, for retailers, “one of our concerns…from the State side of things is not having an abundance, or an overabundance of these samples floating around that are just…sitting in a box in a retail establishment, which we hear of.” Because some samples were unsolicited and not related to a purchase by the retailer, “it doesn't get tried and it sits there,” so Nordhorn wanted the agency to refine practices around distributing the samples.
    • Moreover, he said samples should also “represent the actual product…we have samples right now at a lower quantity level or volume level then you would actually buy in the store. And if you look at it from a beverage type of perspective folks say ‘that can change the flavor, that can change…a number of things and you're not actually getting whatever effect’ was, the desired experience that, that folks would have.” Nordhorn expected staff would look at ways to “streamline” product sample rules in the future.
  • Nordhorn mentioned attending “a session out of University of Washington where they were talking about cannabis tolerance breaks.” He described the practice where consumers, “if they've been utilizing a little heavier…having these - they call them ‘T-Breaks’...can help reset some of that.” Nordhorn speculated that a “30-day break” could impact how cannabis affected consumers, and that rather than “continuously increase” cannabis intake, less consumption “actually can help bring that back so it can offer the benefits that you're looking for,” particularly for those taking cannabis for “medical benefits” (audio - 1m, video - WSLCB, video - TVW).
  • A research body within WSLCB—something Garza had highlighted on March 28th—was brought up by Nordhorn, who argued it could help on topics like environmental pesticides. He planned to present in greater detail on the possibility “in a few weeks” (audio - 1m, video - WSLCB, video - TVW).
    • Postman was in support of hearing more about the research program, along with another internal meeting on medical cannabis issues (audio - <1m, video - WSLCB, video - TVW).

• Board members briefly addressed the ongoing search for an agency director to succeed Rick Garza at WSLCB.
  • Appointed as Director of the agency in 2013, Garza announced on January 4th he would retire in July,  leading to board members conducting a search for his successor.
  • Postman updated the group on board members “working with our recruiting firm Karras [Consulting].” He shared how representatives from the firm had been impressed by the “number of applicants we got; the quality of the applicants, the diversity, where they come from and everything.” Additionally, the “comments they got from LCB employees when we sent a survey out asking…our employees for advice on what to be looking for” had led to “over a hundred” staff responding “and they said they've never seen anything like that. So it's really…great engagement.” He promised board members would be talking with candidates directly soon, “I think we're on track to have somebody in the door before Rick goes out the door” in July (audio - 2m, video - WSLCB, video - TVW).
  • Board Member Jim Vollendroff seconded Postman’s impression, stating that candidates were “very impressive and diverse, and it's been interesting talking to people so far. He was “looking forward to continuing the process” to select a replacement before Garza formally retired (audio - 1m, video - WSLCB, video - TVW).