WSLCB - Board Meeting
(September 13, 2023)

Here are some observations from the Wednesday September 13th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Social Equity Program Manager Aaron Washington told board members staff had "nearly 500 applicants to notify over the next two weeks" in the first update since all applications had been vetted by a third party vendor.
  • Board members received updates on the status of Ponder Diversity Group—the company responsible for reviewing and scoring applications for prioritization by WSLCB of available retail license allotments—on July 19th and August 9th.
    • Legislation passed on May 1st, SB 5080, modified aspects of the program and allowed a limited number of cannabis producer licenses to be issued through the equity program, but rulemaking to implement the law had not been formally initiated by WSLCB at time of publication.
  • In the board meeting, Board Chair David Postman introduced Washington and Cannabis Licensing Manager Linda Thompson to brief on the program. Washington established that agency leaders “used a third-party contractor as recommended by the social equity task force…to avoid any appearance that agency employees influenced the process.” He stated that PDG staff "scored and prioritized" applications to “determine which applicants meet the criteria for the social equity program” using a scoring rubric recommended by task force members but subsequently revised by agency officials early in 2022. Washington said a PDG “review of all the applications has been completed” and they were “being uploaded into our system” at that time. He emphasized that agency officials would not be reviewing applications, as PDG staff “validated applicants’ qualifications, and scored all the applications” (audio - 5m, Video - WSLCB, Video - TVW, presentation).
    • Washington relayed that WSLCB officials expected “applicants will begin receiving notification about their status within the next two weeks.” He shared the “category of notifications that applicants may receive based on Ponder Diversity Group’s review. Due to the limited number of licenses available, which is 46 allotments in 22 counties, an application may result in one of the following categories.”
      • “Applicants who receive the highest scores in the county they chose, and were determined to be qualified for the social equity program”
      • Retail “title certificate…holders have the ability to reinstate their license by applying through the social equity program” if they meet the requirements of the program, and “can move their title certificate within the county it is located.”
      • “A tie in the county…for applicants that may qualify for the program but receive the same highest scores in the same county” would be settled through a “double blind lottery process…as follows: The third party firm, Kraght Snell, will use randomizing software to select the applicants who will move forward with the licensing process.”
        • Records suggest Kraght Snell, PS [Professional Services Corporation] previously had contracts with the Washington State Department of Enterprise Services, the Walla Walla Watershed Management Partnership, and the Central Puget Sound Regional Transit Authority. 
      • “Applications that were disqualified” for any of the following reasons:
        • “The applicant did not meet requirements.
        • An applicant did not score high enough to proceed.
        • An incomplete application, or
        • The applicant was not selected by results of the lottery.”
        • Disqualified applicants would “be provided a letter with the reason for the withdraw[al], and…if the applicant would like to appeal the decision, instructions to do so are included in the withdrawal letter.” 
        • “If an applicant would like to request their score and/or their application information related to the Ponder Diversity Group’s review, instructions will be provided on…how to submit a records request.”
      • “The preliminary letter of approval. Once the 46 applicants have been identified,” WSLCB staff would “issue all preliminary letters of approval at the same time.”
    • Washington noted that “we will have nearly 500 applicants to notify about their status over the next two weeks which will occur via email.” Even though applicants were “anxious to know the results,” he asked that they “wait until they receive their notification letter from the Liquor and Cannabis Board before attempting to contact us.”
  • Thompson discussed the next steps for applicants or title certificate holders receiving a letter of approval, stating they “will need to meet standard…requirements to receive a license, including but not limited to securing a location, financing, completing an operating plan, and criminal history forms.” She made clear there was “no time restriction for an applicant to find” a licensed location or financing (audio - 2m, Video - WSLCB, Video - TVW).
    • Thompson said there would be “a live virtual webinar to introduce the team, provide a brief overview of the next steps in the application process, [and] share how the licensing team can support” successful applicants. She added they would also conduct a survey to “determine each applicant's readiness to begin the licensing application process which will include questions [about] if they have a location, have secured financing, have both, or have neither.”
    • Those with letters of approval would “be assigned to our social equity case manager for help and/or support. The case manager will check in with applicants twice a month to see if they have any questions…some examples of this are technical support. If they are unsure of how to fill something out or need help navigating through a system” or contacting other government agencies.
      • At time of publication, the Washington State Department of Commerce was seeking comment on how to spend $9,000,000 in the Cannabis Social Equity Technical Assistance Grant Program available to applicants and licensees.
    • “Applicants will also be assigned to a senior licensing specialist who’ll assist with any licensing related questions, and can confirm proposed location compliance,” Thompson added.
  • Washington reported that PDG representatives conducted an anonymous survey “about the demographic of the applicants” which was an optional part of the application process. Among those who chose to answer, “the pool of applicants may appear to represent those most affected by the War on Drugs,” he said, revealing a chart that showed the top six responses were (audio - 2m, Video - WSLCB, Video - TVW):
    • Black or African American, 47%
    • Hispanic or Latino, 14%
    • White, 13%
    • Prefer not to Answer, 11%
    • Asian, 6%
    • Other, 4%
  • Washington promised that WSLCB officials would “continue to review this data and share that information with the board.” While “excited” about the new phase of equity licensing, he acknowledged the “number of applicants exceeded the number of available licenses.” He welcomed community members to “provide feedback on the application process as we work to improve and expand the social equity program through Senate Bill 5080.” He explained how the agency website would be updated with additional information, and questions or comments could be submitted via licensingsocialequity@lcb.wa.gov.
    • Postman confirmed the email address was available online (audio - <1m, Video - WSLCB, Video - TVW). He then went over the timeline for successful applicants to receive letters and technical assistance with Thompson (audio - 2m, Video - WSLCB, Video - TVW).
  • Following the meeting, Communications staff released an announcement titled, “Important Milestone Reached Regarding Cannabis Social Equity Application Process"

• Several members of the public provided input on the equity program, from applicants or those supporting them, to a state lawmaker inquiring about the evaluation process.
  • Sami Saad (audio - 5m, Video - WSLCB, Video - TVW)
    • Saad last made comments to board members on July 19th.
    • Providing his history as a medical cannabis collective owner since 2013, Saad said he was “forced out” of the sector, even though he represented “more than 65,000 Washingtonians” of Sudanese descent. He argued that he “fit this program in every single angle,” and vowed to keep moving forward on behalf of a community. Saad wanted WSLCB leaders to acknowledge “we've been forced out,” indicating that communication from PDG representatives told him “good luck, you complete your application successfully, and we already have that, but…they say, the LCB determined who is qualified.”
    • Saad felt the process had caused Washington State to “lose money because the people…used to come to our shop; they don't buy from [his] store anymore.” He was also against products diluting cannabis flower with tobacco, suggesting it “makes people sick.” Saad looked forward to meeting Director William Lukela, hoping board members would hear him out, feeling he’d lost out on economic opportunity, and “this is too much.”
  • Paula Sardinas, FMS Global StrategiesPresident and CEO (audio - 3m, Video - WSLCB, Video - TVW)
    • Sardinas was a former Washington State Commission on African American Affairs (WA CAAA) Commissioner who represented the group on the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) as Co-Chair before resigning from WA CAAA in 2021. She also lobbied WSLCB for retail title certificate holders unable to open their stores due to local government objections to be able to change jurisdictions in September 2020.
    • Grateful for the presentation, Sardinas was attending “on behalf of 100 applicants" she mentored, and liked the “really succinct" timeline laid out by Washington. She stated that where there were multiple applicants vying for a licensed allotment, WSLCB staff had promised a double-blind lottery, and that her questions about title certificate holders had been addressed by the presentation.
    • Sardinas turned to the potential additional licenses which could be issued under SB 5080, and wanted agency staff to “look back at this process and to examine what worked well, what we can do better, on how to move forward.” Noting her WA SECTF background, she believed “we're going to see that the process worked well in that it was consistent with what we expected under HB 2870,” which created the equity program at WSLCB. “I think if we just remain neutral and dispassionate, and allow the process to unfold” there could be “transparent and candid conversations on how we can improve the process” and “the outcome will be what we expected.”
    • She credited Board Member Ollie Garrett for her work “shepherding this process through” among others, then remarked “we look forward to not just these 46 licenses coming out, but improving the process for the other” people who might apply through SB 5080. Sardinas thought “the LCB has done a good job, it doesn't exempt that there might be some issues, but we do think it's important to acknowledge the work that's been done.”
  • Representative Debra Entenman (audio - 3m, Video - WSLCB, Video - TVW)
    • Entenman was appointed to represent the Washington State House of Representatives (WA House) Democratic Caucus on WA SECTF in the summer of 2022.
    • She recognized that WSLCB public comment wasn’t a forum to pose questions to the board, but relayed that she was trying to find out “what was the criteria for the evaluator,” Ponder Diversity Group, and “if the evaluator subcontracted some of the work out” to another entity who didn’t meet the criteria. “It has been brought to my attention that the subcontractor did not have any experience in working in the cannabis field and so they had a steep learning curve which may have been a detriment to the people who they are supposed to be helping.” Entenman hoped to be “provided information so that I can provide answers to members of the community.”
    • Postman responded that he was “sure somebody from staff will get back to you.”
  • Paul Brice, Happy Trees Owner and social equity mentor (audio - 2m, Video - WSLCB, Video - TVW)
    • Raising concern about cannabis licensees who had long been shut out due to local government bans, Brice argued that some counties were similarly “not gonna allow” equity businesses to open. He suggested as the licensing process moved ahead “there's gonna be more cities that are aware of the situation” and may start to allow businesses, citing the City of Pasco move to change their cannabis zoning.
      • Brice also served as the WA SECTF “community advisory member.”
    • For SB 5080, Brice asked that “pioneer status” from earlier involvement in the cannabis sector allow some equity businesses to get additional licenses, as others “went from one license to all of the sudden were just given three licenses. I don't see any minority that was ever recognized for anything with a pioneer status.”
  • Gregory Carter (audio - 3m, Video - WSLCB, Video - TVW)
    • Framing himself as a pioneer in the cannabis space from “many, many years ago,” Carter remarked: “to a lot of people surprises, a lot of that got people arrested and taken away and broke communities up,” something that “severed” communities. He’d taken time to attend the meeting and learn, but wanted to know if officials “had the chance to really go into these neighborhoods and really talk to…some of these people, influencer people in these neighborhoods, and find out what's really going on and the things that could help.” Carter was concerned about those who “lost out on everything because a lot of people are like homeless…these are people 20 years ago, they were citizens doing good things in the community.” Mentioning he’d mentored high school students, Carter wanted to be able to explain what he was learning, telling the board members “I appreciate…the insight and all that but I just wanted to ask that question because a lot of people don't even know you guys really even exist.”
    • Postman promised to follow up with Carter after the meeting.

• Other commenters brought up concerns about transparency and equity; progress and lingering issues with the Cannabis Central Reporting System (CCRS); plus, a recent government report evaluating legalization in the state and lethargic agency rulemaking.
  • Christopher King (audio - 5m, Video - WSLCB, Video - TVW)
    • King most recently spoke to the board on August 2nd.
    • King described how he was among people “just stating facts and asking for documents which we’re entitled” in a social equity process that “originally” focused on “Black pioneers” who “became an afterthought and that's unfortunate.” He traced this change to “the rubrics put forward by Jim Buchanan”---Washington State African American Cannabis Association President—-”and he and I and Kevin Shelton used to argue with that stuff all the time.” King insisted “you have the guy from the NAACP [National Association for the Advancement of Colored People] come in, originally and said the first lottery was a sham… all those guys seem to disappear.”
      • The last time Buchanan participated in an event covered by Cannabis Observer was a WA SECTF meeting in April 2022.
    • Raising the issue of “openness in government,” King focused on the request for proposals (RFP) and “procurement records” around hiring PDG, which he described as public documents under RCW 39.26.030. “I asked you all for the original RFP that went out, all the applications that came back, including Ponder,” he commented, as well as “the submission from Ponder, the recommendations, because it's all public record.” He referenced a Washington Association of Public Records Officers material stating any “writing that relates to the conduct of government” was public record, even “Post-it notes,” King asserted.
    • King pointed out a long running request for officials to produce records around a license application for Shelton. Stressing his familiarity with public records law, “I've got three [RFPs] right in front of me I've got to get back to,” King reported that he was unhappy with the redactions in records he’d received relating to the hiring of Director Will Lukela, whose appropriateness for the job King previously questioned. “There's nothing there. You blacked out everything. You redacted everything…Not even the interview questions. I got nothing,” King said. He indicated that he’d take them to court, since the only “lawful” redactions in documents on Lukela’s hiring was “his personal information…I just want to see what qualified him for the position,” a request King argued was “pretty straightforward.” He remarked this behavior by officials wasn’t “giving people much reason to believe the integrity of the system when you won't even identify what it is that you ask the applicant, or anything.”
  • David Busby, OpenTHC CEO (audio - 4m, Video - WSLCB, Video - TVW)
    • Busby’s last public comments about CCRS were on July 19th.
    • Mentioning CCRS, Busby noted a bug had been reported as fixed by WSLCB staff on September 5th, “which I'm excited about.” He said that he and others had been bringing the problem to the attention of agency IT staff, but “it took more than nine months to get this issue addressed.” 
    • Since then, “the behavior of the system has changed, there's less errors coming back,” he told the board, but some licensees, including his clients, were being asked to “re-upload files from like January of this year.” Busby suggested licensees shouldn’t be expected to have “a file from nine months ago.” He further argued that CCRS “wasn’t a files-based system, it's a records-based system…So if a file doesn't work on January 9th and then you make an attempt on January 10th with the same data to update, you would run into the problem there.” Busby regarded this process as “sort of silly because there's been hundreds of days where they would have also re-imported or updated that record in the CCRS system…and any of their other downstream activities would have failed as well.” Finding the effort a “goose chase” for the Enforcement division, he advised they “spot check records that exist in CCRS from January with what exists in a licensee’s system.”
    • Busby highlighted his previous statements suggesting a “lengthy timeline” for requests for information (RFI) and RFPs from traceability vendors, and mentioned the process underway in Massachusetts. He indicated that while a vendor would be announced in December 2023, “they're giving us till December 2024 for that whole implementation to go on,” giving integrators “18 months of information about the updates to their systems, which allows all the licensees and integrators to do a lot of planning.”
    • Postman believed their “CCRS team is listening somewhere” and would “be in touch” with Busby.
  • Gregory Foster, Cannabis Observer Founder (audio - 4m, Video - WSLCB, Video - TVW)
    • Foster’s last comments to the board were on July 19th.
    • First, Foster brought up the Washington State Institute for Public Policy (WSIPP)  third required report on Initiative 502 that Postman noted on September 5th. Foster explained this was “one of the four that they’re tasked with issuing over the two decades after 502 was passed,” and he’d observed the WSIPP Board of Directors meeting that Monday September 11th. “If you'd like to hear the questions that were asked by some of the leading legislators in the state, it was an interesting conversation,” said Foster.
    • Turning to rulemaking, Foster stated WSLCB “obviously had a turnover and change where Kathy Hoffman shifted over to the Research Unit. Ms. [Cassidy] West has taken over as Policy and Rules Manager, they’re understaffed,” and “everything’s sorta been put on hold for months now,” yet “we're not talking about it.” Foster named payment terms, accepted as a petition on March 29th, and minors on wholesale licensed premises, another petition accepted more than a year earlier in August 2022. Advertising rulemaking had been delayed just as long, and he anticipated it would continue holding since WSLCB officials were looking at amending cannabis advertising statutes. Additionally, there was legislatively mandated rulemaking needed for SB 5080 last mentioned as scheduled for a CR-101 in mid-to-late September.
    • Foster continued, “with regards to cannabis lab accreditation…that's being handed off to [the Washington State Department of Agriculture] and maybe the Department of Ecology” by the end of the fiscal year in July 2024. Referencing comments by Postman on August 29th signaling interest at WSDA in filing agency request legislation to take on the accreditation process as well as definition of lab accreditation standards, Foster felt Agriculture would be better suited since “Ecology doesn’t seem to want the job” and their plan would “increase prices” as private labs would have to pay “tens of thousand dollars, effectively a new licensing fee just to operate in the state.” He concluded, “y’all should get behind that bill.”