WSLCB - Executive Management Team
(September 13, 2023)

Here are some observations from the Wednesday September 13th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 3 takeaways:

• Director of Legislative Affairs Marc Webster brought board members up to speed on several topics he expected lawmakers to tackle in 2024 including advertising, excise taxes, and out of state ownership of cannabis companies.
  • The prior day, September 12th, Webster updated the board on a plan to seek amendments to an existing cannabis advertising bill rather than pursue request legislation.
  • During EMT, Webster said he was shifting his attention towards “external issues and bills that we're going to see” in the 2024 legislative session. Thinking about “where we want to push” besides the single alcohol-related request bill agency leaders were moving ahead with, he indicated the “most important group of non-LCB bills include many…that were alive in 2023 that will be back in 2024” (audio - 3m, Video - TVW, Video - WSLCB).
    • “First and foremost,” Webster noted SB 5363, a cannabis advertising bill sponsored by Senator Drew MacEwen, “that we discussed at the caucus on Tuesday.” He said he had a meeting with MacEwen planned “very soon.”
    • HB 1453, legislation to exempt registered medical cannabis patients from the state excise tax, “passed two committees in the house, but died in House Rules” Committee, Webster stated.
    • Some bills which he said the agency “had been neutral on, but merit further discussion” included SB 5377 on “out-of-state investment in cannabis.”
      • Board Chair David Postman asked what the position of the agency had been previously on the topic. Director of Licensing Becky Smith clarified that State law and rule already allowed out-of-state financers for cannabis investment, but not ownership of a business. When Postman pressed on whether the board previously had a position on out-of-state ownership, Smith replied that social equity “ramifications” had been a concern. “Prior to that, it was about being able to vet those folks,” Smith explained, as Enforcement division staff had been unsure how to “hold those that are out-of-state owners accountable for businesses in the State of Washington” (audio - 3m, Video - TVW, Video - WSLCB).
        • Vollendroff wanted to know if Washington was an “outlier” on this policy, and Postman advised a “caucus briefing on the issue,” which Vollendroff was receptive to.
        • Webster stressed the importance of a “social equity lens” when considering that, “if you can say that this will help social equity, that's a very different discussion then if…this could hurt those brand new licenses, and I'm hearing that argument” from some stakeholders.
          • A previous bill on the topic was introduced in 2022, HB 1667.
      • Postman felt the topic was frequently framed in relation to “pending or imminent Federal legalization,” similar to an observation he made in a July 2022 discussion on equity policies. He wondered about making that change “a trigger thing” to kick in with a change in federal policy, akin to successful 2023 legislation on interstate cannabis compacts contingent on certain kinds of federal approval.
    • Webster also expected some perennial “bills that we kind of see every year,” specifically the cannabis commission (SB 5546) “that got fairly close last year.” He also brought up SB 5404, which proposed to “change the distribution of cannabis revenue…they didn't get much traction last year, but there had been some fairly recent changes, so I think that's just going to be one…we'll see.”
      • Postman asked about the sponsor, learning it was Senator Keith Wagoner (audio - <1m, Video - TVW, Video - WSLCB). Board Member Jim Vollendroff also clarified the bill number later in the discussion (audio - 1m, Video - TVW, Video - WSLCB).
      • There was no mention of cannabis home grow, another repeatedly-introduced topic, neither existing bill HB 1614, nor a potential new version from Representative Shelley Kloba, who spoke at a rally on the topic on August 27th.
  • Webster called attention to a possible bid by Washington State Department of Agriculture (WSDA) staff to transfer authority for cannabis laboratory accreditation to that department, which, at time of publication, was scheduled to be assigned to the Washington State Department of Ecology (DOE) in July 2024. “I think we're going to have another round of conversations in the coming months so that we could…prepare to get…the board's position known,” he remarked (audio - 1m,  Video - TVW, Video - WSLCB).
    • Postman wondered whether DOE leaders were suggesting “they're good with this,” and asked “do we have a timeline.” Webster responded that WSDA staff were still checking with other agency officials, and agreed with Postman that they “still need some things” from any new bill on lab accreditation (audio - 1m, Video - TVW, Video - WSLCB).
  • “Do you think that we're gonna hear anything about high concentration THC [tetrahydrocannabinol] products,” asked Vollendroff. Webster didn’t know, indicating that he’d been trying to meet with Representative Kelly Chambers who “had the tax-by-potency bill” in 2023, but “I haven't heard as much about them recently.” Postman remembered there had been two bills on the topic early in the year, “one was much more public health oriented” and another “was more of a revenue neutral approach that came from the industry.” Webster wondered if regulators would be able to “get enough information out of” the Cannabis Central Reporting System (CCRS) “to really know what the ramifications would be.” Postman then asked “what happens to those things if you increase the tax?” (audio - 1m, Video - TVW, Video - WSLCB)
  • Board Member Ollie Garrett returned to the revenue distribution bill, bringing up WSLCB outreach to local governments regarding ending bans or moratoriums, “did we hear from them, that they, they would consider based on that, or that it really didn't matter?” Smith’s memory was that “I remember them saying that…it wasn't about the revenue because they received such a small amount of revenue.” Webster confirmed this, adding that officials in many jurisdictions “didn’t find it persuasive” (audio - 1m, Video - TVW, Video - WSLCB).

• Director of Policy and External Affairs Justin Nordhorn reviewed issues he was handling related to tribal compacts; work groups dealing with public health and education; agency rulemaking; staffing; and presentations to fellow regulators.
  • Nordhorn began with tribal cannabis compacts, mentioning that “we've got four compacts in progress” and were negotiating some “dispute resolution” issues. The annual Centennial Accord event was rescheduled “to the end of October.” There had also been a meeting on Monday September 11th of a work group focused on gathering “consumer perspectives, research perspectives, and recovery perspectives” in order to update educational materials on the WSLCB site (audio - 3m, Video - TVW, Video - WSLCB).
    • Nordhorn said the following week their Enforcement and Education staff would present to a “substance misuse coalition” in Tumwater affiliated with the “Thurston County…Public Health area.”
    • A work group at the Washington State Department of Health (DOH) included WSLCB representation in crafting a “consumer survey for media campaigns” by the department, Nordhorn remarked. “We're thinking about utilizing some QR codes” in cannabis stores, he explained, as an “access point for engagement in those surveys.” He described the survey as seeking to “promote consumer understanding…if you're asking for test results how do you read those, when you're looking at labels on the packaging, labeling, what does it mean?”
    • Nordhorn acknowledged public comments that morning by Cannabis Observer Founder Gregory Foster calling attention to delayed progress on the ample list of active cannabis rulemaking at WSLCB. “We're down to one [Policy and] Rules coordinator right now,” he commented, “we've had to prioritize some of the work, and of course, the legislative implementation was first and foremost.” Nordhorn then conveyed they would also prioritize older projects, and named several on hold (audio - 3m, Video - TVW, Video - WSLCB):
      • Payment Terms 
      • Minors on Wholesale Premises
      • Cannabis Advertising was “slowed down while we worked on the potential agency request bill so we didn't have too much crossover” and staff would “probably be picking that one back up.” Additionally, “the rules are predominantly around the content versus what the statutes are. I don't think there's a lot of crossover that we need to be overly concerned about.”
      • SB 5080 Implementation was being “pushed out farther than initially anticipated,” said Nordhorn, “but that's predominantly, because we want to do lessons learned on the applications that have come in and this process, and how do we improve that in the next rule set.” He forecast a CR-101 to begin the process would be filed “in October,” with proposed changes not expected before March 2024.
      • Though there wasn’t an open lab accreditation project, Nordhorn emphasized that staff had been working with DOE and WSDA counterparts through the WSDA-led Cannabis Lab Accreditation Standards Program (CLASP) and tracking what department staff were looking at in their rulemaking. He said they’d consider “what would that mean for our rule set; do we need to repeal some rules? Do we need to clarify something?”
      • For Product Samples, Nordhorn commented “the predominant survey results that we have” were being reviewed.
      • Medical Cannabis Endorsements were also being studied by the remaining Policy and Rules team, and on September 12th staff told board members a CR-101 to begin the rulemaking project would be presented on October 11th.
  • Speaking to the staffing situation in his team, Nordhorn revealed that Kathy Hoffman—who transferred over to be Research Manager May 2nd after serving as the Policy and Rules Manager since 2019—would be leaving the agency entirely and taking a post at the Washington State Department of Labor and Industries in October. Nordhorn relayed that “we'll be transitioning with our research team” and looking for a new Research Manager. He asserted, “it's an interesting time and opportunity as we look and assess this…and we're already learning in what direction, and what we'd like to see, and what types of background or criteria would be important for a new manager in that position.” He further noted that in addition to looking for a replacement for Public Health Education Liaison Mary Segawa, he would join staff interviewing a potential new hire for a Policy and Rules Coordinator position the following day (audio - 1m, Video - TVW, Video - WSLCB).
    • Postman checked which Policy and Rules spot would be filled. Nordhorn answered that it was West’s former role, stating that there was only one Coordinator at that moment, as Coordinator Jeff Kildahl was on “extended leave” (audio - <1m, Video - TVW, Video - WSLCB).
      • Kildahl’s last rulemaking presentation at time of publication was on March 1st.
  • Mentioning the Cannabis Regulators Association (CANNRA) “medical cannabis committee,” Nordhorn commented that the group heard from “a researcher out of Oregon” on the medical cannabis market, as well as cannabis consumers more broadly. The data pertained to how consumers “prioritize how they picked product. What makes a good product for them, and how that drives some of the market forces,” he said. Acknowledging officials’ concerns over a “trend of high THC” products, Nordhorn told the group the presentation showed multi-state “indications that there are other factors that are actually more important than that.” He said the presenter suggested “medical is typically negatively impacted from that consolidation because of some of the other market forces. People are trying to get those high levels of THC, and that may not be what the patients want.” Nordhorn concluded by saying he’d “reached out to her to see if she might be willing to come to a board caucus and present because I think that would be really interesting” (audio - 2m, Video - TVW, Video - WSLCB).
    • The next CANNRA annual member meeting was scheduled in Las Vegas from December 4th through 6th.

• WSLCB Director Will Lukela listed some of the meetings he’d had since joining the agency and his continued focus on learning internal operations (audio - 2m, Video - TVW, Video - WSLCB).
  • Since being hired on June 1st, Lukela had made minimal mentions of his work at the agency besides attending meetings with various officials and stakeholders. His hiring had also been scrutinized in public comments.
  • At EMT, Lukela again listed some of the meetings he’d been going to as part of his new position, naming:
    • The Washington Fraternal Order of Police
    • CANNRA
    • A “prevention roundtable”
    • Coffee with Olympia Enforcement and Education staff, “talking about labs and proficiency testing,” plus attending a swearing in ceremony for Officers
    • “Introductions and information sessions with a couple of representatives”
    • “Six or seven Washington State agencies”
    • “Community stakeholders”
    • Leadership of the Seattle Seahawks (“it was intriguing for me to…hear what they're looking at”)
    • Representatives of Tribal governments
    • Licensees and trade associations for alcohol and cannabis
  • Lukela mentioned having done two ride-alongs with Enforcement and Education staff, and had “one coming up, tobacco, and then cannabis.” He summed up his efforts as “continuing to focus on the operations of the agency internally.”