WSLCB - Board Meeting
(October 11, 2023)

Here are some observations from the Wednesday October 11th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 4 takeaways:

• Policy and Rules Manager Cassidy West gave a quick overview of rulemaking projects, revising the timeline for a previously mentioned action.
  • Product Samples (audio - <1m, Video - TVW, Video - WSLCB, Rulemaking Project)
    • After an initial focus group met on October 6th, West explained there was another “discussion for vendor and educational sampling today.”
  • Retail Medical Cannabis Endorsements (audio - <1m, Video - TVW, Video - WSLCB)
    • West predicted a CR-101 letting board members formally begin the rulemaking project on October 25th.
    • Received in 2022, the petition was discussed at length on March 28th and accepted on March 29th.
  • SB 5080 Implementation (audio - <1m, Video - TVW, Video - WSLCB)
    • According to West, a CR-101 on implementing changes and expansions to the social equity licensing program would also be presented October 25th.
      • In the meeting, West specified October ‘27th,’ for both this and the endorsements project. As that would require scheduling a special board meeting on a Friday, she may have misspoke.
  • SB 5367 Implementation (audio - <1m, Video - TVW, Video - WSLCB, Rulemaking Project)
    • “At the end of the month, we'll be holding stakeholder engagement for the THC [tetrahydrocannabinol] bill,” West reported, indicating delays to her previous timeline forecast on September 26th.
    • Agency officials were expected to propose using Cannabinoid Science Work Group recommendations finalized on October 5th.

• West next went over changes she had begun implementing to the rulemaking petition process at WSLCB (audio - 2m, Video - TVW, Video - WSLCB)
  • West would “review some of the changes that have been made to the petition response format…to improve transparency and accountability.” She said these modifications “to the existing format have been made based on best practices for good government governance that were developed using a variety of academic literature.”
  • The petition process at WSLCB “described in RCW 34.05.330 and [WAC] 82-05” had no guidance on “what should be included in petition responses if petitions are approved,” West told board members. By contrast, there was guidance on what to include if a petition was denied, she commented, so staff “developed some criteria for when deciding when to approve or deny a petition. The following factors will be considered to the extent practicable:”
    • “LCB’s statutory authority and obligations”
    • “Alignment with the agency's policy goals and priorities”
    • “Immediacy of safety, environmental, or security concerns raised”
    • “Availability of LCB resources and priority of the issues raised”
    • “Level of public interest”
    • “Whether the problems or issues are already under consideration by the LCB and other rulemaking issues”
    • “Merits of the petition”
    • “LCB’s relevant past decisions and current policies”
    • “Social equity and DEI [diversity, equity, and inclusion] impacts and potential impacts related to preventing diversion and promoting public safety.”
    • West’s predecessor, Kathy Hoffman, had noted an uptick in rulemaking petitions being submitted to the agency in July 2022. On February 28th, Hoffman shared a plan to modify the agency petition review process towards providing multiple options to board members instead of a singular recommendation for action. She’d outlined a process whereby staff discussed approval, denial, and alternative actions which might accomplish all or part of a petition with board members, ultimately presenting a trio of choices. At that time she applied this approach to the petition for Retail Medical Cannabis Endorsements.

• A presentation on a petition for rulemaking related to cannabis batch tracking resulted in approval by the board (audio - 9m,  Video - TVW, Video - WSLCB).
  • West first identified the petition on August 29th, stating it related to changes to the cannabis traceability process, something agency leaders were contemplating modifying yet again.
  • Submitted by Anders Taylor of Sweet Leaf Growers, West said he was seeking to amend WAC 314-55-083(4)(f) which “provides the security and traceability requirements for cannabis licenses…to allow groups of plants that are under the same strain and growth phase [to] be grouped together under a single unique identifier and tracked.” Current rule mandated “once the plants reach eight inches in height or width, each plant must be physically tagged with a unique identifier and tracked individually,” she continued. Following harvest, tagged plants “are once again grouped into lots.” Taylor gave the following reasons for requesting the change:
    • “Simplify the processes for plant inventory management to reduce the compliance burden”
    • Cost savings “that would result from not having to tag and track plants individually”
    • “Ensuring cannabis is traceable from seed to sale is necessary to prevent diversion and promote public health and safety; and the proposed rule change would not substantially impact the current” traceability system “especially since clones and harvest are tracked in batches or lots”
  • West brought up some of the benefits of batch tracking from the perspective of agency staff:
    • “Batch tracking allows inventory to be traced from origin, by location, and through its movement through the supply chain maintaining a…chain of custody for that inventory,” she remarked.
    • After naming some batch tracking technologies, West described how the cannabis industry leveraged different processes “When plants are harvested, the flowers are combined into lots,” she said, “at which point the individual plant can no longer be distinguished.”
  • West acknowledged that it was appropriate to ask “whether there's a continued value by requiring licensees to check each plant individually rather than the quantity within a batch,” and that the change was within the scope of WSLCB authority. She felt it met other criteria to at least be considered by staff in a rulemaking project, and possibly was an “undue burden” without “necessarily providing a greater benefit with regards to preventing diversion; and promoting public health and safety.”
  • Approval of the petition would initiate rulemaking where officials would gather other stakeholder input, plus “assess the compliance burden and any associated regulatory outcomes with the current rule requirements.” Aligning with overall WSLCB goals and past decisions, and acknowledging that the legal cannabis market was approved over a decade earlier, West saw “significant advancements in the industry and technology.”
  • The existing Cannabis Central Reporting System (CCRS) “was designed to be an interim solution…until a more permanent solution can be developed,” West indicated. Although she said rule language required that “inventory tracking software must have…adequate seed to sale capabilities, CCRS does not track all aspects that are required to be tracked by licensees.” Calling attention to “Policy Statement 21-10 issued in December 2021,” West relayed that this included reporting requirements for traceability “identifiers” CCRS couldn’t generate, leaving licensees to enter in an identifier.
  • Additionally, WSLCB staff were developing a traceability project “clearly to define the cannabis regulatory program and provide a vision for the future of cannabis regulation reporting and traceability in Washington state,” West commented. She looked forward to a “successful transition to the long term reporting system that fully supports the reporting obligations and traceability needs” of regulators.
  • Given a “high level of public interest,” West hoped for “robust” conversations on the topic, believing the petition topic “may not significantly impact public health or safety and in a negative way.” She argued that a "robust seed to sale traceability system that would capture where the plant originated" was still needed, along with a “clearly defined regulatory framework for…[a] batch tracking inventory management system that's compatible with a seed to sale traceability system.” West said a traceability framework would need to be able to “identify a specific quantity of plants that would be within a single lot or batch; identify the characteristics for plants that make up that lot or batch; including but not limited to being planted and harvested at the same time” or “being of the same cultivar.” Additionally, licensed producers would still need to tag plants with their unique identifier, and “then require reporting so that there's…adequate chain of custody from seed to sale.”
  • West noted that Washington cannabis traceability needs were similar to those in other states using batch tracking. She detailed, “Colorado's considering a transition to batch tracking, and Oregon will transition to batch tracking system in 2024. Other states, including Maine, which allow both batch tracking and individual plant tagging, have not documented increased penalties on licenses associated with diversion or adverse public health outcomes that…are a direct result of batch tracking inventory management system[s].” West added that all the identified states used Metrc.
    • The Maine Office of Cannabis Policy released a white paper in April 2023, “Batch Tracking Agreement Reached for Maine’s Adult Use Cannabis Program (AUCP),” that detailed outcomes from contract negotiations with Metrc—one of seven vendors to submit a response to the WSLCB traceability request for information. According to a Metrc Support Bulletin from August 1st, the “Flexible Standardized Batch Tracking (FSBT)” functionality was scheduled to be launched in September in Maine. The approach was promoted as reducing the number of tags producers would be required to purchase from Metrc, though without a commensurate reduction in the cost of tags.
    • Metrc had faced a lawsuit in Colorado alleging violations of that state’s antitrust law related to being the sole source of required RFID tags. In late September, a licensed business submitted a request for rulemaking to no longer require RFID chips in tags, alleging “no regulatory agency has ever used RFID to read METRC tags in our facility” since its establishment in 2016.
    • California passed a bill in September phasing out requirements for individual plant tagging in their cannabis sector with backers raising environmental sustainability concerns. The bill was signed into law on October 8th.
  • West’s recommendation was that board members adopt the petition. The petition package also included a Batch Tracking Economic Impact document.
  • Board member Jim Vollendroff thanked her for the presentation, particularly the context around the prevalence of batch tracking in cannabis traceability outside of Washington (audio - <1m, Video - TVW, Video - WSLCB). The board then voted to adopt the petition, adding batch tracking to a backlog of rulemaking (audio - 1m, Video - TVW, Video - WSLCB).

• Public commenters brought up concerns about staffing and rulemaking; who board members considered authentic journalists; traceability and equity concerns; and one of the owners of Shawn Kemp’s Cannabis talked about a violation the store was issued.
  • Gregory Foster, Cannabis Observer Founder (audio - 5m, Video - TVW, Video - WSLCB, written comments)
    • “I'm here today to express my gratitude for Kathy Hoffman,” Foster said, encouraging “agency leaders to ensure that her legacy of transformation is carried forward and built upon.” Over five years at WSLCB, Foster had seen as she “dramatically reformed the Policy and Rules program, and had this added capstone of leading the formation of the research program.” He’d found Hoffman “seemed to be driven by a pretty deep sense of responsibility as a public servant,” and was an improvement over her predecessor, Joanna Eide. Foster liked how open Hoffman had been with sharing draft conceptual rules “during the CR-101 phase to help shape her thinking, and she would host pretty novel stakeholder engagement processes.” 
    • Relating the change to petition processes West had just articulated to revisions instituted by Hoffman earlier in 2023, Foster said that Hoffman had briefed board members on petitions “two weeks prior to the board meeting at which you would be required to make a decision.” This timeframe “respected that process and…your power to make those decisions and allowed for feedback to be incorporated,” Foster argued.
    • Foster had a history of involvement in traceability and stakeholder engagement at WSLCB, and he stated he had been interested in providing feedback on the batch tracking petition. “I could have offered perspective if I had heard about it two weeks ago,” he said, or if he’d seen documents a day earlier, “but the caucus had to be canceled yesterday on very short notice.” Even without a caucus briefing on the petition, Foster observed, “I could have probably provided written feedback if there was anything published, but there wasn't in this case.” However, even if he’d had notice to develop input on the petition, “the board positions the general public comments after you take action, and that's not the case with other agencies if there is action that's going to be taken that day.”
    • Foster reflected that “this experience has me considering the implications of…the very different kind of two week notice that you got from Ms. Hoffman, and I just really want to encourage you to please support your staff and your leaders in appreciating, retaining, and building upon that transparency and public engagement.”
  • Christopher King (audio - 5m, Video - TVW, Video - WSLCB)
    • Picking up on comments Board Chair David Postman made September 27th in response to another commenter’s allegations of a board member having a conflict of interest, King wanted clarification “where he said that these people are not journalists,” to know whom Postman was referring to, and what qualifications he expected journalists to demonstrate. “I need to know who he views as not being a journalist,” King said. While Postman wasn’t present, King pressed the other board members to respond “since an affirmative statement was made that impugn the Integrity of my friends and myself.”
    • Though he didn’t get a reply from board members, King moved on saying his experience “going back to the 80s when I managed the Cincinnati edition of the Ohio Call and Post” and “a lot of freelance stuff” should qualify him as a journalist. He then brought up former press credentials issued to him in Massachusetts, and litigation elsewhere to reinforce his point. King continued to take issue with Postman’s inference, suggesting that “journalists that are phony are the ones who work for the old newspaper that Dave Postman worked for.”
  • Sami Saad (audio - 4m, Video - TVW, Video - WSLCB)
    • Saad last spoke to the board on September 13th, as well as offering comments during an October 6th focus group on cannabis samples.
    • Saad commented that he “wanted to be fair” as someone who had previously come to the board “fighting for something I have.” He said he’d met with Postman and others, although “I disagree because I want everybody as [a medical cannabis] pioneer to have their license.” Saad suggested he spoke for “65,000 Washingtonians,” and while he appreciated what the board had done, “we're looking for more from you guys.” He suggested there was a “misunderstanding” but that Postman had talked with him respectfully, “and if you respect someone, of course, they will give you respect.”
    • He talked about a “big happiness” at being an applicant who was advanced in social equity retail licensing, and how he was “looking forward to see the board work with those pioneers” as it was “very important for the community…we look forward to see more licens[ing] for those people, more equity for them.”
  • David Busby, OpenTHC CEO (audio - 2m, Video - TVW, Video - WSLCB)
    • Busby’s last public remarks about CCRS were on September 13th.
    • Supporting the acceptance of the batch tracking petition, Busby commented how “loads of the states have that kind of stuff,” and that batch tracking “saves a considerable amount of time” for producers. “I think that's actually a pretty big deal and I'm excited about that,” he added.
    • Bringing up the size of “immature” cannabis plants, Busby indicated that WAC 314-55-083 specified their size as eight inches, however WAC 314-55-010 “says that an immature plant is something that's below 12 inches.” He felt “like those two sections of the WAC are in conflict with each other,” and advised trying to remedy that difference in any rule changes related to batch tracking. Busby also suspected that CCRS would need to be modified “so that you can include the quantity of trees that are represented” in reporting.
    • Busby said he’d gotten communication from WSLCB staff “a couple days ago that CCRS is gonna do confirmation emails on all the stuff that we upload, and I'm very excited about that, too.”
  • Mike Asai, Black Excellence in Cannabis (BEC) Vice President (audio - 4m, Video - TVW, Video - WSLCB)
    • Asai last spoke before board members on September 27th.
    • Acknowledging the legacy of institutional racism, Asai said “this fight for inclusion’s been going on for a long time.” He noted some of the people who had helped advance the WSLCB social equity program before sharing that “we're hearing rhetoric as if when we speak that we're complaining and it's the old notion of…the victim is not the victim anymore.” He considered the testimony of BEC leaders to be part of holding officials accountable, stating that he’d started to lose faith in elected leaders and regulators when he lost his medical dispensary, Emerald City Collective Gardens. “This is from years of pain for me and others,” Asai said, “when we speak here, we're not complaining, what we're doing is bringing to light that maybe things have not been brought to light…because the community is really intimidated of the LCB, the community’s intimidated of the capital.”
    • Asai said, “right now there's an issue with the IT [information technology], people need to be able to check their addresses that are looking for locations, and right now they're not able to.” He relayed that “people don't need to have to always email this cannabis specialist…it needs to be to where…they can go online and have an address they can check it.” But generally, Asai said BEC members were happy with changes at WSLCB and with the equity program: “we're excited to see…what's gonna transpire.”
  • Tran Du, Shawn Kemp’s Cannabis Co-Owner (audio - 4m, Video - TVW, Video - WSLCB)
    • Wanting to talk about “maybe chang[ing] the penalties for selling to minors,” Du stated that their business had recently received an administrative violation notice (AVN) “for selling to a minor and it's, it was really beyond our control.” As he started to explain their “policies and procedures,” Board Member Jim Vollendroff interrupted to tell Du “we can't talk about specific cases” as the board could be called upon to act as adjudicators.
    • Du continued to suggest actions related to AVNs like his, including an educational penalty rather than a monetary one for a first offense, “that's what I'm asking for…without speaking specifically to the case of our situation.” He went over their employee onboarding process before returning to the specifics of the violation he’d received, which prompted Vollendroff to again say members “can't talk about specific cases, so just keep, continue to keep it broad.”
    • Du emphasized that a first violation “hangs over the head of the business for two years which creates a lot of undue stress. And then…now we're required to spend additional money to make sure that this is not happening.”