WSLCB - Board Meeting
(October 25, 2023)

Here are some observations from the Wednesday October 25th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Policy and Rules Coordinator Daniel Jacobs presented board members with a CR-101 for Retail Medical Cannabis Endorsements based on a previously approved petition [ Rulemaking Project ].
  • The question of how many endorsed retailers were compliant with rules established in 2016 was brought up by agency leaders in November 2022. Staff first mentioned the petition requesting “businesses to either surrender their endorsement, or for the agency to ask someone to surrender their endorsement if they're not using it” on February 28th. That petition from patient advocate John Kingsbury was discussed at length on March 28th and accepted at the board meeting a day later.
    • WSLCB rules on holding a “medical cannabis endorsement in good  standing” in WAC 314-55-080(3) covered adherence to Washington State Department of Health (DOH) rules, as well as agency requirements to:
      • “Have a consultant on staff”
      • “Prohibit the medical use of cannabis by anyone at the retail outlet at all times”
      • “Maintain at all times, a representative assortment of cannabis products necessary to meet the needs of qualified patients”
      • “Not market cannabis concentrates, useable cannabis, or cannabis-infused products in a way that make them especially attractive to minors”
      • “Demonstrate the ability to enter qualifying patients and designated providers in the medical cannabis authorization database”
      • “Issue recognition cards and agree to enter qualifying patients and designated providers into the database”
      • “Keep records to document the validity of tax exempt sales”
      • “Train employees” on procedures for patient authorizations, recognition cards, and products.
    • At time of publication, DOH maintained responsibility for the medical cannabis authorization database, regulation of the medical cannabis consultant certificate, and product standards.
    • Find out more from an October 2021update on the DOH program, tax preferences, and patient trends. Additional summaries of the history of medical cannabis implementation have been published by DOH and WSLCB staff, and the Washington State legislature.
      • A 2021 study of Sales and Use Tax Exemptions for Marijuana Retailers with a Medical Endorsement by the Washington State Joint Legislative Audit and Review Committee (JLARC) found in fiscal year (FY) 2020 that of $1.57 million in cannabis sales reported under the tax exemption “less than 1% of beneficiary savings for this preference were for purchases identified as DOH compliant product,” saving patients “approximately $7,000." This seemed to indicate retailers advertising medical endorsements anticipated greater sales of non-compliant products to patients who get a sales tax exemption.
  • In the meeting, Jacobs introduced a CR-101 to start a rulemaking project on the endorsements (audio - 4m, Video - WSLCB, Video - TVW, Transcript).
    • Jacobs explained that Kingsbury’s petition was received on January 31st calling for a revocation process for non-compliant endorsement holders. Agency officials already had that authority, he stated, but the petition had been accepted by board members “as an opportunity to update the rules.” 
    • In an example offered by Jacobs, were an endorsed retailer to fail in meeting many elements of the rules, they were “immediately non-compliant, and therefore no longer eligible to hold the endorsement.” He commented that staff considered “it may be prudent to create a clear period to cure, where the endorsement holder has a certain amount of time to remedy the non-compliance, before the endorsement becomes subject to rescission.”
    • After a comment period, “open until December 9th, which is a Saturday,” Jacobs said meant the public could “get comments in until Monday morning” of December 11th. He expected draft conceptual “rule language posted on the website ideally in early January, which would put stakeholder engagement sessions in mid-January and the CR-102…tentatively filed January 31st.” There would then be a public hearing on those rules “tentatively on March 13th, and assuming all goes well, rules finalized by the end of March to have them in effect by…the end of April.”
    • In conjunction with the rulemaking project, Jacobs noted “two of LCB’s other divisions, Licensing and Enforcement and Education, [were] currently engaged” with DOH officials “on refining the process and procedures for cooperative engagement on oversight of medical cannabis endorsement holders.” With shared responsibilities over aspects of endorsement compliance, he said their “collaborative effort [was] going to be continuing simultaneously with the rulemaking process and there may be some overlap that ends up reducing the need for rulemaking.” This would allow staff to “look at medical cannabis endorsement holders from different angles,” Jacobs asserted, before opening the floor to questions.
  • Board Chair David Postman reflected that accepting the CR-101 didn’t guarantee rule revisions, but nonetheless, “I think we should end up with some rules here…this is an opportunity that some of us have been waiting for to try to improve the system.” He expected Jacobs would stay in “close contact” with representatives from any other WSLCB division cooperating with DOH staff to ensure a “unified approach” to both rules and internal policies. Jacobs replied that those "leading the collaborative effort" would be involved in the rulemaking project (audio - 2m, Video - WSLCB, Video - TVW, Transcript).
  • Board Member Jim Vollendroff asked, “do we know how many medical cannabis users there actually are and who this impacts,” recognizing that the database through which endorsed retailers entered and verified patient information was run by DOH (audio - 2m, Video - WSLCB, Video - TVW, Transcript).
    • “My understanding is that we don't have those numbers,” Jacobs said. However, as they shared responsibility for regulating issuance with DOH, he suggested part of their collaboration would ensure “if [DOH staff] suddenly see that an endorsement holder hasn’t issued any ID cards in several months, or some period of time, they're gonna…look into that.” Jacobs’ expected that it was something that would “get flagged to us and that we're gonna work together on.”
    • Postman knew that it had been hard for WSLCB staff to get an accurate number of patients in the DOH database, but understood Washington State had “a relatively low number of people on our registry, particularly compared to how some other states might handle it, and I think that you raise a good question. We should all know that before we start even into this process too much further.”
  • Vollendroff next asked if patient ID cards expired. Director of Policy and External Affairs Justin Nordhorn confirmed they needed to be renewed annually with a valid authorization (audio - 1m, Video - WSLCB, Video - TVW, Transcript ).
  • Board members voted to approve the CR-101 (audio - <1m, Video - WSLCB,  Video - TVW, Transcript) and Postman requested board members be kept updated during the project so they could stay engaged on the topic (audio - <1m, Video - WSLCB, Video - TVW, Transcript).

• Staff briefed on licensing social equity retail applicants who had been provisionally selected and fielded several questions from the board.
  • Staff last updated on the cannabis social equity program on September 27th.
  • Social Equity Program Manager Aaron Washington described how approved applicants were invited to an October 13th webinar. 23 participants attended to “get to know the team and ask any questions they have about next steps” (audio - 2m, Video - WSLCB, Video - TVW, Transcript).
    • Washington indicated that all questions raised during the webinar were answered by team members, except for deferring “questions regarding grants to the Department of Commerce who [was] tasked with overseeing that program - its representatives were also in attendance. We provided applicants the person to contact and the link to the Department of Commerce website.”
    • “We followed up with social equity applicants, including those who were unable to attend,” Washington told board members, to share:
      • “A YouTube link to view our recorded webinar;
      • A copy of the PowerPoint we used for our presentation;
        A document listing the questions and answers to applicants for future reference, and;
      • A voluntary survey to learn the demographics of our applicants”
  • Postman was curious what the "most concerning issues" voiced by applicants at this stage had been. Washington mentioned several questions “around being able to change the ownership or entity, and their business, which they would have to wait for another year” (audio - 1m, Video - WSLCB, Video - TVW, Transcript).
  • Board Member Ollie Garrett asked about results on the survey of applicant demographics. Washington responded that they’d only gotten 16 responses, “that's about 32% of our total…identified applicants,” and he was “waiting for more to come in, in order to give a better picture of what our demographics look like” (audio - 1m, Video - WSLCB, Video - TVW, Transcript).
    • Ponder Diversity Group, the firm responsible for reviewing and scoring applications for prioritization for retail license allotments by WSLCB Licensing staff, had also conducted a demographic survey of applicants mentioned by Washington on September 13th.
  • Cannabis Licensing Manager Linda Thompson, who last spoke to the board about the program September 13th, affirmed that all approved applicants had been assigned to a Senior Licensing Specialist by September 28th (audio - 1m, Video - WSLCB, Video - TVW, Transcript). She added:
    • “As of today, 94% of applicants have completed their initial interview”
    • “Some have already submitted initial documents for review, and have scheduled or have had a second interview”
    • “One application is completed and was sent to final approval on Monday, which is the final stage of the process”
    • “The most frequently asked questions are about the grants, how to access them and when they will be available”
    • “Applicants have asked about making changes to their entity structure…which isn't allowed until one year after licensure, per rule”
  • Postman wanted to know how many Licensing Specialists were working on the program. Thompson stated there were three, each serving 17 applicants (audio - 1m, Video - WSLCB,  Video - TVW, Transcript).
  • Vollendroff wanted to know about the applicants who had yet to do an initial interview with staff. Thompson said of three remaining applicants, one had “scheduled an interview in November…and then the two others are deciding on a date and time.” She affirmed, “it's not a lack of contact” (audio - 1m, Video - WSLCB, Video - TVW, Transcript).
  • “Why do you think we're getting the questions about the ownership transfer…what's the underlying issue there,” Postman asked (audio - 2m, Video - WSLCB, Video - TVW, Transcript).
    • Washington’s impression was that financing difficulties or changes wanted in their application were “definitely factors that we've come across.” Thompson emphasized wanting to "change who the players are," and changing business structures from sole proprietorships “to something else,” even though staff made clear “in the beginning” that there would be “no changes whatsoever.” Washington speculated that, in small businesses, “your arrangement can change and given the time frames that we've had for people to apply, and…that could just give rise to…a new opportunity, a new person that can come on board. So, they're asking about that to try to…have the opportunity to bring their business to fruition.”
    • Thompson said that “after a year of licensure when they [were] able to make changes,” all new owners “still have to meet the criteria to be considered a social equity applicant to be added for up to five years.”
  • Later, during general public comment, Black Excellence in Cannabis (BEC) Co-Founder Peter Manning said he “recently got some communication that we were being in labeled as ‘complainers,’ but I like everyone...to understand that” without BEC members and “people like myself” bringing “to the attention of the public at large that there was a problem with social equity in Washington when it comes to cannabis...I don't think we'd have” laws creating the equity program. He argued BEC members “seeks out a problem with the situation and tries to correct it” (audio - 4m, Video - WSLCB, Video - TVW, Transcript).
    • Manning observed that SB 5052, the law creating a second licensing window in 2015, “which Whites benefited off of, that process was completed in 180 days.” He contrasted this with the social equity program, which was “taking over 1460 days, and we still don't have completion of that program.”
    • Citing rule definitions in WAC 315-55-570, Manning read that a “preliminary letter of approval means an approval letter is issued to the social equity program applicant for the purpose of the securing the grant from the Department of Commerce, and the location, and other necessities to complete the licensing process.” He felt “if they get the congratulation letter, they should be able to directly go over to the Department of Commerce and get grant money.” Manning found this was a “disconnect between the funding being available to those people that receive social equity applications and the Department of Commerce.”
    • A result of this had been what he termed “predators” getting involved, and “this is why there's an uptick” in questions “seeking if they can sell because…you gave them the opportunity to open up a store, at the same time, the grant money should have been available there. We had more than three years to work that out…and I just think that that should be mentioned. I would like to see that looked into.”
    • Having reviewed older videos of WSLCB meetings, Manning called out Postman for“communicating with a Native American out of Spokane and she was in essence threatening to sue the LCB” but Postman had suggested “mediation” instead. “There's a differen[t] vibe when it comes to dealing with Black folks because…we're never offered any type of mediation…we always have to go to litigation, and you guys know what I'm talking about.”
    • Manning said “if we're pointing out facts why does it take the court to come in and side with us and say ‘hey, they are right. You guys need to make these changes.’” He hoped to “bridge a gap with the LCB from the Black and Brown community.”

• Board Member Jim Vollendroff reported on the 2023 Washington State Prevention Summit in Spokane he was attending along with other WSLCB leaders (audio - 2m, Video - WSLCB, Video - TVW, Transcript).
  • Vollendroff relayed that the summit included “a great showing of LCB staff” from the Enforcement and Licensing divisions, as well as Public Health Education Liaison Mary Segawa, who was “recognized with the Lifetime Achievement Award last night at a banquet.” Furthermore, WSLCB “was nominated and recognized as a state agency who has done exemplary work in the area of prevention. Specifically called out was our agency request legislation this last session,” SB 5367 to regulate hemp consumables as cannabis products.
  • “I was just leaving…a session in which policy was discussed, and I shared with the room of individuals an opportunity…where people can come and sign up, and interact with the board related to policy,” he explained. He commended Director Will Lukela for driving over to attend before going “back over to be in Tacoma today for the equity summit.”
  • Postman was glad Vollendroff could attend, and congratulated Segawa for her award ahead of her retirement from WSLCB. Vollendroff added he’d have “great photos to share at a later date.”