WA House RSG - Committee Meeting
(December 5, 2023)

Here are some observations from the Tuesday December 5th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 4 takeaways:

• Leadership from the Washington State Liquor and Cannabis Board (WSLCB) gave committee members a status report on the cannabis social equity licensing program before outlining how a second round might be different.
  • Director of Licensing and Regulation Becky Smith previously reviewed the status of social equity program applicants on October 31st. She added new details around the progress of social equity applicants and responded to comments by agency leaders on local authority and disproportionately impacted area (DIA) mapping during the November 8th Executive Management Team (EMT) meeting.
  • During the work session, Director Will Lukela wanted to “remind everyone where we are and what I think the important takeaways are.” He mentioned that a “licensure process created after House Bill 2870 passed back in 2020 occurred this summer and we're gearing up with some rulemaking for the second phase created under Senate Bill 5080.” Officials were “trying to learn everything we can from that first process so that we can make the second round better,” he said, and claimed “there were three big questions coming out of this first round” (audio - 1m, video).
    • “First, are we reaching the right people? Did the process and the scoring rubric lead people harmed by the war on drugs to apply or not?”
    • “Second, can we craft and implement a process that doesn't immediately get shut down in the courts, as so many similar programs and other states have.”
    • “Third, are there things to improve and are we committed to improving them?”
    • He asserted, “The answer to all three is: yes.”
    • Announced as the new WSLCB director on June 1st, Lukela had offered minimal public remarks beyond mentioning various internal and external meetings. He professed an interest in the “operations of the division, and trying to figure out where, if any place, we can gain some efficiencies” during the August 9th EMT meeting.
    • A rulemaking project to implement SB 5080 was started on November 8th.
  • Director of Legislative Relations Marc Webster urged lawmakers to use the WSLCB presentation as a resource. He provided a summary of HB 2870, the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF), and the rules WSLCB had already implemented following the bill, plus a second law modifying the program in 2021. Webster mentioned WA SECTF recommendations officials had incorporated, highlighted agency-led outreach events in 2020, and higher traffic to their online resources (audio - 6m, video, presentation).
    • Webster talked about how the application window for available retail allotments was opened “in the spring….of 2023, from March through April [27th].” Based on task force recommendations, applicants were initially vetted by a third-party firm, Ponder Diversity Group (PDG). SB 5080 added a requirement for an external vendor to vet applicants into statute.
    • “40 people right now advanced through…that process and are looking for locations right now. Two have them and are just about ready to open,” he said. Webster described how successful applicants “could move that license anywhere in a county, but they had to stay within the county boundary.” Overall, “King County had the most [applicants] and several had zero,” he explained. As many people were competing for the same allotments in a county, “the minimum score you needed to get a license differed wildly by by counties.” King County retail spots were only possible for the highest scoring applicants while “at the other end of the spectrum, there were three counties in which no one applied,” he noted. Applicants with matching scores in a county with limited allotments went through a double blind lottery, Webster told lawmakers.
    • “With 500 applicants for less than 50 licenses, most applications were withdrawn or did not move forward and those applicants have a right to appeal,” Webster stated. He explained a bit of the appeals process for applicants, and said at that time there were “28 at the Attorney General's Office, 27 are…in pre-hearing stage at the Office of Administrative Hearings, some who withdrew are in those ‘board final orders’ or ‘appeal withdrawn.’”
    • Turning to the racial demographics of applicants, Webster said a PDG survey found “a plurality of applicants, 47%, are Black/African American, 14% were Hispanic, and 13% Non-Hispanic White.” Applicants passing the initial allotment stage were working with a WSLCB Licensing Specialist to finalize their applications by securing financing and a business location, he remarked. He acknowledged that some applicants were reporting difficulties with both of those requirements.
    • The producer/processor licenses to be issued under the program due to passage of SB 5080 would go through a “very different process,” Webster said. In addition, equity retail licenses could be moved statewide, provided a local government allowed it. There were also new criteria for DIA maps which determined some eligibility, and revised maps “should be done very, very soon,” he indicated.
    • Webster welcomed not just lawmaker, but public feedback about the equity licensing process, before taking questions.
  • Representative Kristine Reeves wanted to know if WSLCB was looking into the racial demographics of those financing equity businesses. Webster responded that PDG had surveyed applicants, rather than the agency, but “I'll see what we have” as financiers should be listed on a license application. Reeves encouraged him to follow up if there were any differences in the racial makeup of applicants and financiers. She also asked about the criteria in law for determining DIAs. Webster noted that factors such as median income, percentage of an area’s population in poverty, and utilization of government benefit programs had been used (audio - 2m, video).
  • Representative Melanie Morgan welcomed Lukela, mentioned her previous role as Co-Chair of WA SECTF, and noted that a technical assistance grant and mentorship program had also been created in law. “So, I'm a little disappointed to hear today that we have some applicants that didn't make it through because of this,” she said. WA SECTF members had recognized the challenge funding would pose, so Morgan was curious how WSLCB staff were “taking this information that you have now with these applications that came through, and how you're connecting that back to the very program that we put in place.” Webster replied that this money and aspect of the equity program had been the responsibility of the Washington State Department of Commerce (WA Commerce), but noted WSLCB staff had “definitely been working with Commerce to say ‘we've got our applicant pool, now these are the people who who need that funding’” (audio - 2m, video).

• Washington State Department of Commerce (WA Commerce) Life Science and Global Health Sector Lead Alison Beason went over the resources and events her agency had organized to help social equity applicants (audio - 13m, video, presentation).
  • In June 2022, Beason took over representing WA Commerce on WA SECTF midway through the group’s work producing recommendations and a final report in December 2022.
  • At the work session, Beason explained that she was the lead staffer for the technical assistance grant and mentorship efforts at WA Commerce. She reiterated a bit of the background about the social equity program and WA SECTF, stating she hadn’t been part of the development of the law, but “I volunteered for this assignment because I worked five years in equity offices with the City of Tacoma creating the equity index” and then a similar effort at the Port of Seattle which involved technical mapping which she compared to determining DIAs.
  • Using WA SECTF recommendations in 2022, “I hit the ground running,” Beason stated. Staff “started the online business plan…in September and then in 2023 the window for application opened up…and so we launched March 11th on helping with those technical assistance and mentorship programs,” she stated.
    • WSLCB leaders confirmed the licensing period began on March 1st.
  • She explained how it had long been the intention of WA Commerce staff to launch mentorship and technical assistance programming in 2023 while waiting on grants for equity businesses until 2024. Beason told legislators that she’d also conducted market research by talking to regulators handling equity programs in other states, as well as collaborating with WSLCB representatives in designing a mentorship roster and series of free educational video modules produced by Make Green Go!, a minority and woman-owned business. “We launched that in September and I think we had some good outcomes” in helping people see hurdles in the process, Beason claimed, adding, “I felt like that gave everyone [an] even playing field to understand before you even get into this business.” There were “over a thousand people that enrolled in that and 40% completed all 17 modules,” Beason mentioned.
  • WSLCB staff also retained Make Green Go!, Beason said, to organize “seven modules that talk about the application program and social equity program.” She indicated “over 922 people registered…between the live webinar or the webinar that was recorded and posted later on that website,” adding that in the live webinars there’d been “60% engagement…between asking questions, seeing what, what they can get additional information about, and I think it was really a positive experience.”
  • Mentorship had been the next stage, and had been organized through an online portal from one of the mentors which allowed all of them to post information about their expertise and any events they hosted for equity applicants. “We had around 274 active people on that portal,” she reported, feeling, “we got everything to a point where I think it was very transparent, allowed people to have someone ask a question and then have a response from one of the mentors who specialized in that.”
  • A March 11th Cannabis Equity Summit at Highline College allowed most mentors to introduce themselves in person, Beason relayed, and “we had almost 400 people enrolled. Again, this was a free event” with “over 250 people” attending in person, plus more viewing it remotely. She praised how some mentors had worked to bring specializations like real estate or accounting to prospective applicants, pointing out one “took a PowerPoint presentation…screenshot by screenshot of how to do the application on their own will and time - this was not in their contract.”
  • Only once the first round of retail allotment applications were done did Beason begin to seek a vendor to handle grants for businesses on October 27th. She noted that support in “cash and taxes, securing funding, capital budgeting” were top concerns, but many applicants wanted “generalists” who had experience in the cannabis sector, legal consultation, and “software came up for every category.”
    • Wording in RCW 43.330.540(3) had required WA Commerce officials be able to issue grants to “cannabis license applicants and cannabis licensees holding a license issued after April 1, 2023, and before July 1, 2024.”
  • Following a brief reminder of the schedule from Co-Chair Sharon Wylie (audio - <1m, video), Beason quickly emphasized some points in the timeline for WA Commerce grants. The October 27th request for proposals (RFP) had been issued and Beason wanted a “holistic approach…because I did a one-off with the online technical assistance, a one-off with the internship program. We got feedback that people wanted a better flow of information…not duplicate information.” The RFP was set to close “December 11th, and then hopefully be able to launch a program in February” of 2024 (audio - 1m, video).

• Black Excellence in Cannabis (BEC) Co-Founder Peter Manning and Vice President Mike Asai shared criticism of how WSLCB had handled the equity licensing process so far.
  • Manning and Asai had regularly offered public comments on the social equity licensing process at WSLCB. Manning last spoke to the board October 25th about SB 5052, a 2015 law opening a second cannabis licensing window for merging the medical and recreational cannabis markets which had been implemented quickly compared to the length of time between when the equity program was passed into law in March 2020 and when licenses started to be issued at the end of 2023. Asai’s preceding public comments to WSLCB came on September 27th and October 11th when he communicated difficulties being experienced by some equity applicants.
  • During the work session, Asai established that their “hearts [were] heavy” over news that former WA SECTF Co-Chair Senator Rebecca Saldaña had been diagnosed with cancer, saying, “we're praying for you” (audio - 1m, video).
  • Manning expressed that the “Black and Brown community, we're just kind of like fed up at this point,” accusing regulators of offering “fluff” about helping equity applicants when “it's not rosy for us out there in the cannabis industry” (audio - 5m, video, handout).
    • Financial obstacles were no surprise, Manning believed, as Morgan and many others had established grants as part of SB 5870. “The funding was supposed to be available now,” he said, but now WA Commerce “is telling us that they want to push that back until they merge with 5080. That wasn't in 2870; this is something new.”
    • Such treatment by WSLCB was “typical of what they do to the Black and Brown community,” suggested Manning. Calling Webster an “honest guy,” Manning alluded to “other elements that they, LCB, that are just not cool for social equity. They do not recognize the Black and Brown community’s voice.” His example was how their organization had “reached out to LCB on September 15th…we said ‘hey, we don't think it's fair for you guys to tell the applicants that they have to do a record request to obtain a rubric score.’” Manning said the written response from agency staff amounted to “hey, that's the way it is. Too bad.” BEC filed a lawsuit “on the 26th against the LCB” but by September “27th the LCB sends out a notice, telling everybody ‘now you can see your rubric score.’” Manning felt that only because BEC was “proactive” with litigation for a “legitimate complaint” was there a fair resolution.
    • Manning insisted “2870’s not here because the LCB had a thought of morality that day and said ‘Black people were closed out.’” Instead, he’d filed a “federal lawsuit against the state” and then WSLCB had offered HB 2870 as request legislation, “that's how that happened.” Manning commented, “the program is not what we anticipated for our community. We're still being treated as criminals because we're applying and we're asking…to be a part of this industry. They still treat us like…we're breaking a crime, like we're doing something wrong,” concluding “we're not happy with the LCB at all.”
    • He urged lawmakers to review the documentation in their handout, and said “you know what? I believe the LCB needs to be audited…We need to see what they're doing…something's wrong with Licensing. They have…a race meter there.” Manning was confident “it's only an issue with Black and Brown people when it comes to being licensed by the LCB.”
  • Representative Michelle Caldier, a new member of the committee (audio - <1, video), asked if applicants got feedback on the point “process” in the scoring rubric. Manning replied that the “LCB told Ponder Diversity Group under no condition were they to converse points, on how to obtain points, what the points look like, and all that” (audio - 1m, video).
  • Asai, noting his history as a “pioneer” medical dispensary owner, laid blame at the feet of Lukela’s predecessor: “under former Director Rick Garza, the social equity program [was] a failure.” He felt he’d been “unjustly shut down by the City of Seattle and unjustly…shut out by the LCB” (audio - 5m, video).
    • Asai considered the program to be about helping “the Black and Brown community affected by the war on drugs. It's about the medical cannabis pioneers” with convictions but no equity licenses. “I know of several pioneers whose rubric score was high enough to obtain a license, but did not. Peter Manning's one of them.”
    • Mentioning SB 5052 from 2015, Asai argued that it had been implemented “without creating rules” and officials had posted that there should be “no rush to apply.” Instead, he said “emergency rules were out in place creating a very quickly pathway for retailers, who were predominantly White, to obtain a license.”
      • Beyond emergency rules related to medical cannabis regulations in 2015 and 2016, additional rulemaking was adopted in June 2016 related to the implementation of SB 5052.
    • Asai listed his concerns about the more recent application process:
      • “The DIA map in this past January was leaked out to the White retailers before the community”
      • “The March 1st application day went live prior to the mentorship program started on March 11th”
      • “Applicants needed more one-on-one help prior to applying…everybody needed that direct one-on-one communication with somebody, not through the computer”
      • “Ponder Diversity Group closed an application window a day prior to the due date with no explanation, causing applicants to have anxiety and no hope”
    • Asai was also unhappy about the initial refusal of agency staff to more easily deliver the rubric scores from PDG, and that after their legal filing the “very next day—as Peter stated—the LCB retracted that, and then said ‘rubric scores are now available online.’” Close to four years after HB 2870 was passed into law, “grant funding has not become available,” he noted.
    • “With all due respect to Director Lukela, he just got here,” said Asai, adding, ”I think it's sad for the LCB to not show up, and I mean Rebecca Smith,” Deputy Director of Licensing Jeanne McShane, or “somebody from the board.” Asai felt “they popped him up and put him up here as if that's gonna make us happy. They've hired some Black and it's great, but it has not changed what's going on internally in the LCB.”
    • Claiming BEC was “solution based,” Asai complained that agency officials “refuse” their options. He had wanted dedicated scoring for medical dispensary “owners, not someone that had a business plan, or name was on a stock,” but a BEC petition for WSLCB to change that scoring criteria “was denied” earlier that year.

• The panelists responded to questions from committee members on the application process, measuring outcomes, and how agencies communicated information or used their expertise to give applicants the best chance of success.
  • Reeves noted the scores of applicants were calculated for each county and wondered if committee members could see that information. Webster promised to get that. Reeves then said since BEC had alleged “those rubric scores aren't going to match the potential demographic data that you've shared…will you be able in…the presentation material that you present back to us, the demographic correlation to the applicants based on their score?” Webster answered that they’d received everything back from PDG, “so we'll be able to do that” (audio - 1m, video).
  • Representative Greg Cheney was curious if applicants lost out on available retail allotments in heavily populated areas when they might have qualified in counties where no one had applied, and asked whether WSLCB staff had told applicants about this. “Because it's troubling if we have these licenses available in counties where no one is applying, that somehow that information wasn't shared,” he added. Webster retorted they “weren't going to open it back up and say ‘hey, by the way…if you move to Skamania County you might have a better chance.” He mentioned this had been one of the reasons SB 5080 had allowed licenses to be portable to other counties, “so you're not going to do that anymore for the second round.” Furthermore, “we also didn't want to…tell these folks ‘it's fine, we'll give you a license, just uproot your whole family’” to a more remote jurisdiction. Cheney pursued “respectfully, isn't that their decision to make not not the LCB's decision,” and presumed there may have been opportunities “denied by not advertising effectively…these other open available slots.” Webster understood his perspective, and noted that the allotment maps had been available before applicants began the process (audio - 2m, video).
  • Reeves inquired whether agency staff would “take all of the applicants who went through this first round and…were not successful” and notify them when “the second round opens, and will they be told…here are the reasons that your application was deficient, but under the new second round list of criteria technical assistance might be provided?” Webster didn’t have an answer, but expected those who had already gone through the “very, very challenging” application process would have experience that gave a “leg up” in any future licensing window. He promised, “I'll get back to you with ways we can prioritize those folks” (audio - 2m, video).
  • Ranking Minority Member Kelly Chambers called upon Beason, wondering if WA Commerce had offered any help “finding a viable retail space…something live that they can go and navigate and see available properties or, or even zones if those municipalities have…limited areas where you could select to operate. Is that currently available, or going to be available to those licenses?” Beason replied that there was a video module dealing with real estate, and that one mentor had that experience while another “focused on…the schematics of the building that you need on that property” (audio - 2m, video).
  • Reeves hadn’t heard “a clear correlation that the outcomes that you are taking credit for right now actually correlate to the interventions that you deployed.” She wanted particulars on how the technical assistance and mentorship mentioned by Beason “was absolutely critical to them to be successful in getting their actual license,” or evidence that “the outcomes that you accomplished were directly tied to the inputs that you provided?” Beason hoped to gather more data, “to get a list of all the LCB people, the 46 applicants, to understand, did any of the people that received our mentorship or online technical assistance” actually get selected. There was “quantitative data that I would like to do analysis on in the future,” she stressed, but she hadn’t collected it from the agency so far. Anecdotally, “we had email where people gave praise,” added Beason. Reeves regarded her answer to be “no, that you do not have clear correlational data that the outcomes of those 46 or 42 applicants… clearly connect” (audio - 3m, video).
  • Cheney remarked that he worked with small businesses and knew the value of a good mentor, but with finance an obstacle in many other industries, he wondered if WA Commerce staff had taken advantage of business development expertise they already had at the department. Beason answered that WA Commerce had “sector leads in maritime, in aerospace, in clean tech,” and that she had “a small incubator in life science in Tacoma.” So the cannabis equity program resources were already helped by a diverse set of experience at the department, and she suggested “looking at incubators, maybe when it comes to cannabis, as they expand the licensing to processing and producing” (audio - 2m, video).
  • As Wylie brought the discussion to a close, she recognized “big changes never come easy in government. And in some of the most important work we do, doesn't get done right the first time.” But that wasn’t a reason to give up, she stated (audio - 1m, video).
  • Asai spoke up to say WA Commerce wouldn’t tell them an exact sum for equity grants, but they’d heard it would be $3 million, adding, “that's not enough. We need 20 to 24 million for businesses” (audio - <1m, video).
    • The RFP published by WA Commerce acknowledged, “through RCW 69.50.540, the Legislature appropriated $6.0 million in state general funds over fiscal years 2024-2025 in support of this Program. An additional $3.0 million as described in the Community Reinvestment Plan to invest in communities disproportionately harmed by the war on drugs will also supplement this funding. At this time, the available total funding for this Program is $9.0 million dollars.” The document notes that after costs to implement the program, “$8,100,000 [was] budgeted for distribution as grant funding awards.” On October 31st, department officials published their “Community Reinvestment Plan Report” and announced their “plan to invest $200 million to address disparities created by the war on drugs.”

Here are some observations from the Tuesday December 5th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 3 takeaways:

• After representatives of the Washington State Department of Health (DOH) and the Washington State Department of Agriculture (WSDA) gave introductory remarks on cannabis lab testing and a program to address legacy pesticides in an area of central Washington, they faced a number of questions from legislators.
  • A law passed in 2019 defined a timeline to transfer responsibility for lab accreditation from the Washington State Liquor and Cannabis Board (WSLCB) to the Washington State Department of Ecology (DOE) by July of 2024. A subsequent law signed in March 2022 required the creation of an interagency coordination team to set lab standards needed in the transfer. Led by WSDA officials, the Cannabis Lab Accreditation Standards Program (CLASP) included representatives of WSLCB and DOH. However, over the summer of 2023, officials at WSDA indicated their agency may be a better fit for cannabis lab accreditation and began crafting an agency request bill. Members of the WSLCB board subsequently voiced hesitancy at shifting responsibility for accreditation again.
    • On January 10th, WSDA staff began rulemaking to define lab quality standards to be used by DOE in gauging the capabilities of private labs.
    • On June 21st, Ecology staff filed a rulemaking project related to the transition, followed by the release of draft conceptual rules on July 26th.
    • Find out more from a June 28th webinar on cannabis lab standards hosted by WSDA, or from DOE-hosted workshops on lab accreditation from August 2nd and 10th.
    • On November 15th, Ecology staff published a significantly revised schedule which would set rulemaking beyond the 2024 legislative session, published additional draft rule changes, and scheduled additional workshops on November 29th and December 7th.
  • Late in 2022, a Washington State Liquor and Cannabis Board (WSLCB) led investigation into the presence of dichlorodiphenyldichloroethylene (DDE)---a remnant compound of the banned pesticide dichlorodiphenyltrichloroethane (DDT)---which showed the substance above the default action levels in rule of 0.1 parts per million (ppm). On April 6th, an administrative hold was announced which impacted “18 licensees in the geographical area” within Okanogan County, specifically in and around the City of Brewster. In addition to product recalls for some of the licensees, on May 17th lawmakers approved a capital budget appropriation of $5 million from the Model Toxics Control Capital Account for a Washington State Department of Ecology (DOE) pilot program “located in Okanogan county to remediate soil contaminated with dichlorodiphenyltrichloroethane (DDT) and DDT remnants.”
    • Additionally, $200,000 in grants for soil remediation was included as part of SB 5693, the 2023 operating budget. On June 29th, WSDA Director Derek Sandison, sent the legislature a report explaining there had been three grant applicants and “WSDA divided the sum equally between each of the three licensees, for a total of $66,666.66 awarded to each.” As it was expected to take “between three and eight months to grow a cannabis plant, and then subsequently more time to sample and test that plant, the WSDA does not have any data on the efficacy of the grant money in reducing the levels of soil contamination at this time.” But he asserted, “the grants have been effective in relieving some of the economic burden experienced by farmers who are currently experimenting with adding soil to reduce contamination levels on their farms.”
    • On June 7th, WSLCB leadership discussed updates on the topic, released an interactive heat map of cannabis pesticide results, denied a petition related to modifying the action level of DDE, and then heard comments by Cannabis Observer Founder Gregory Foster urging them to look at using hemp plants for soil remediation.
    • On November 20th, a request from DOE showed the department was “looking to hire a qualified Environmental Consultant to conduct a Feasibility Study (FS) to develop and evaluate cleanup action alternatives for pesticide contaminated soils.” Then on December 1st, DOE staff responsible for the soil remediation pilot program published a preliminary legislative report that mentioned their finalizing an agreement with Washington State University (WSU) to study bioremediation using cannabis plants.
  • During the hearing, DOH Deputy Director of Drug Systems Shannon Angell acknowledged the basics of the program and the role the department had in standards for compliant medical cannabis products, consultant certification, and administering the patient authorization database. She mentioned how DOH staff were also working as part of CLASP including “ three FTEs [full time equivalent] and staff that have been allotted to the team.” They’d hired a Chemist and Microbiologist, she told committee members, and an Epidemiologist was expected to be hired “at the beginning of next year.” The CLASP team was “ready to move forward,” meeting weekly with WSLCB and WSDA representatives “to collaborate on rulemaking,” a manual under development, and other issues, reported Angell. She said they also met directly with partner agency officials to provide “information, as well as bring in the Department of Health medical cannabis perspective” (audio - 2m, Video - TVW, presentation).
  • WSDA Legislative Liaison and Policy Advisor Kelly McLain stated that four divisions of the Department were involved in “everything from cannabis infused edibles work, in partnership with the [WSLCB], pesticide regulations and fertilizer regulations on site at grow operations…the hemp production and processing which you’ll hear about today, and then the cannabis lab standards work.” She felt that “we've got seven years of coordinated support with LCB and DOH on both the medical cannabis program, and the recreational cannabis work that's happening in Washington state” (audio - 1m, Video - TVW).
  • WSDA Cannabis Manager Trecia Ehrlich delved into remediation funds in SB 5693. She indicated, “we received $200,000 to distribute to farmers that were impacted by DDT metabolites in their soil. We sent out application forms to the 18 impacted licenses and in turn, we received three applications back from farmers who were looking to amend their soil to reduce the amount of contamination on their land.” While the amount didn’t cover all the growers reported costs, “we were able to divide the sum evenly across the three farmers to distribute those funds for soil reimbursements and the labor associated with that soil” (audio - 5m, Video - TVW)
    • Looking at the cooperation on CLASP work, Ehrlich noted that WSDA had hired “a Supervising Chemist, another Lead Chemist, and a Lead Microbiologist who have developed our cannabis lab standards.” Besides weekly meetings on the issues, she said staff “provide[d] scientific support to the LCB as it relates to defining detectability, and doing their work related to [SB] 5367, and continue to engage in opportunities to support our proficiency testing challenges.” She pointed out that a CR-102 with proposed rules for lab standards was filed on November 22nd, “and we will have our public hearing on December 28th at 11:00am,” with the expectation staff would “finalize the rules before the end of January.”
      • Learn more about how WSLCB has approached defining “any detectable amount” of tetrahydrocannabinol (THC) from the WSLCB Cannabinoid Science Work Group, which last met Thursday December 7th.
    • For hemp, Ehrlich said in 2023 there were “47 hemp licensees and of those 47, we conducted 27 inspections.” She compared this to “three years ago, we had 322 licenses, so this is a pretty steep decline.” She remarked how officials had seen that they’d “about halved” the number of hemp licenses each year for several years.
      • Testimony on SB 5367 from WSDA officials on March 13th predicted changes in the bill had the potential to reduce the number of hemp licenses “by as much as 90%.”
    • “Of the 27 inspections that we had, five farms had hot hemp on them,” which Ehrlich identified as “hemp that tests greater than 0.3% THC, which shows us that…a reasonable portion of our licenses still struggle to find compliant seeds.” She did anticipate “a minor increase in the number of licenses” once SB 5367 rules were finalized, rationalizing that “we've already gotten just about as low as we can go. Of our 47 licenses a lot of folks are, are licensed because they're engaging in research.” Others “might export their hemp to other states where they're able to sell for ingestible products, but” many licensees had “waited to see how 5367 was going before they got licensed and chose not to license last year already. So I think we've already seen a significant portion of that drop.”
    • Ehrlich commented that licensed cannabis producers and processors would be expected to obtain a hemp license if they planned to directly cultivate plants with “0.3% THC or lower,” as that was part of the plan WSDA officials had filed with the US Department of Agriculture (USDA). “Should that market space grow, within the [legal cannabis space] we might see a slight increase” in hemp licenses in 2024, she said. Ehrlich added “we have proposed a study of infrastructure needs in 2024 for climate smart hemp building materials. And as of now, the current Farm Bill was extended through September of 2024, which means there will be no significant immediate policy changes for the hemp program at this time.”
      • Find out more about how federal agencies viewed regulation of hemp consumable products and cannabidiol (CBD) from the July 27th hearing of the United States House Committee on Oversight and Accountability Health Care and Financial Services Subcommittee.
      • On November 25th, Politico reported that USDA authorities had been “revoking hemp licenses for some farmers who have also chosen — in states where it’s legal — to grow hemp’s federally illegal cousin: marijuana.”
  • Ranking Minority Member Kelly Chambers inquired about DDx remediation, wondering about the costs for the 15 cannabis licensees who hadn’t applied for the grant, specifically asking panelists to “give us an idea of how much it would cost for…their complete remediation” (audio - 2m, Video - TVW).
    • Ehrlich explained that two of the grant applicants had sought $95,000, and the third “significantly more than that,” relating the cost variation to the size of the farm. She brought up that DOE staff might “conduct a study that might be better able to assess how much it actually costs because it's also important to remember that these farmers were essentially guessing how much soil they needed...They might need plastic sheeting or things like that to separate their existing soil from new soil, so they had their own estimates of cost, but it is possible that we'll see changes.”
  • Co-Chair Shelley Kloba, recognized seeds might be at fault for some of the “hot hemp” regulators had found, but wondered how much growing conditions could affect THC content (audio - 2m, Video - TVW)
    • “There were five farms that were hot, but within those farms there were oftentimes multiple lots,” responded Ehrlich. Identifying nine such lots, she said “three to four of them would be what I would consider borderline meaning that they need to be inspected 30 days prior to their anticipated harvest date and that is a date that they give us because we have only 47 licenses.” Acknowledging a “particularly hot summer,” Ehrlich agreed “that did contribute [to] those borderline folks who were at 0.39 or 0.44.” She was confident more standardized commercial hemp seed could help lower THC content, but “we also see that when folks choose a certain percentage of CBD they pretty much end up hot every time.” Once plants had more than one percent, Ehrlich asserted, “I think environmental conditions are not related.”
  • Kloba noted that hemp infrastructure had come up during the 2023 legislative session, and elected officials had an interest “matching up the manufacturers who want to use hemp as a raw product with the producer or the processors in that intermediate step.” She asked for any additional information on the “vision” for the WSDA study, or “are you possibly doing something up in Snohomish County? We have a sustainable…airplane fuels initiative, and one of the potential suppliers is a hemp grower” (audio - 1m, Video - TVW).
    • Although wanting to see that aspect of the hemp sector grow in the state, Ehrlich cautioned, “because we have such a small community of hemp growers, we're limited in what we can get exposed to and fully understand.” Her hope was for their infrastructure study to be “able to investigate all of the climate smart solutions that Washington State could utilize with hemp.”
  • Representative Kevin Waters observed that one reason why the DDx response had been so robust was that “We got lucky that we were still in session. What can we do as a body to help give these farmers the tools, or you guys the tools to help” when lawmakers weren’t gathered to “answer an emergency situation” (audio - 3m, Video - TVW).
    • McLain replied “there is some very interesting work happening in the…global hemp research space both at Oregon State University (OSU) and at Washington State University that I think will help us with some of this work.” She then mentioned how DOE presenters may be able to speak to the use of funding their department received. McLain believed the problem identified by Waters was “always going to be a struggle,” but “there's some interest in doing that in other spaces as well and you'll probably hear about that from, from our agency this session.” She added that “the majority of the land in Washington State that is high quality agricultural land is in agricultural production for…dollar value crops like apples and wine grapes” while lands “available both for hemp and for high-THC cannabis has been what I would call more marginal ground or historic agricultural ground” and “almost all of that is going to have some level of contamination.” McLain stated the farms impacted by DDx were “not going to be the end of where we see this problem. We see it anywhere that historical agricultural activities have occurred.”
      • On July 26th, Washington State University Irrigated Agriculture Research and Extension Center (WSU Prosser IAREC) OSU researchers hosted a hemp field day on “how fiber and grain hemp perform with and without irrigation, nitrogen management, dual-purpose production systems, and current pest and disease issues.”
      • The WSDA Pesticide Advisory Board (PAB) was scheduled to meet on Thursday December 14th. Reestablished by legislation in 2023, the board will advise the WSDA Pesticide Management Division (WSDA PMD). While not having a dedicated cannabis focus, the WSLCB Director or their designee will hold a non-voting membership on the WSDA PAB, and would be represented by Matthew Murphy, Captain of the Enforcement and Education Eastern Washington Cannabis Unit.
  • Waters wondered how the 0.3% THC level had been established (audio - 1m, Video - TVW).
    • Ehrlich indicated it had been established by the US Congress, and that Washington State agencies had gone with that level to meet federal requirements for a state-level hemp plan. “There are a variety of discussions in this next Farm Bill of 2024 about increasing that threshold to 0.7 or one percent, but it is not clear if that will be adopted by the USDA,” she noted.
  • Co-Chair Sharon Wylie was curious how other states managed hemp production and if states were sharing information on the plant (audio - 2m, Video - TVW).
    • “Unfortunately, we've seen a decrease in hemp across the United States,” Ehrlich told lawmakers, to “about 20,000 acres planted across the entire United States in 2023,” and other state programs had experienced “big licensing reductions.” She said she spoke with her counterparts in other states on “about a bimonthly basis to kind of discuss possibilities for the future” and policies varied between jurisdictions. When Wylie asked if the THC threshold differed in other states Ehrlich answered that it didn’t as it was a federal threshold.
  • McLain offered additional details on the infrastructure needs assessment, stating that WSDA leaders were planning to request more funding for the study in 2024. She then mentioned the agency request bill to take over responsibility for cannabis lab accreditation from DOE, remarking it “just crosses ‘Ecology’ out and replaces it with ‘Agriculture,’ and it does not change the date in which lab accreditation would occur.” Instead of delaying, McLain asserted staff would “be using [DOE gathered] information and those resources, but our staff would be doing that work and then maintaining the lab accreditation program as well” (audio - 2m, Video - TVW).
    • Kloba asked whether WSDA staff handled accreditation for other kinds of labs. McLain said, “staff that we hired to do the lab analysis standards or the CLASP program, many of them have experience in accreditation and quality assurance in existing private and public labs, including our…pesticide hops and cannabis lab research space in Yakima.” She mentioned how WSDA had “accredited lab spaces across the state” for other commodities (audio - 1m, Video - TVW).

• Washington State Department of Ecology (DOE) leadership shared updates on cannabis lab accreditation and contaminated soil remediation—including a willingness to let WSDA take on the former responsibility—before taking questions from the committee.
  • DOE Director of Government Relations Adam Eitmann reviewed the 2019 law directing DOE to assume responsibility for accreditation by July 2024. He mentioned the law establishing the Cannabis Science Task Force, whose two reports contributed to a second bill passed in 2022 related to the authority transfer. Between June and July 2023, DOE officials opened a rulemaking project and published draft conceptual rules, and Eitmann expected they would have a CR-102 ready by March of 2024. He said, “thus far, we've heard concerns about the cost of the lab accreditation and the requirement for cannabis-based proficiency testing [PT] where they are not available, and based on those concerns, we've…made some changes that include a reduction in costs as much as possible as well as a waiver process” (audio - 7m,  Video - TVW, presentation).
    • Eitmann testified that DOE leaders were “aware of the [WSDA]'s proposed legislation, and we would be supportive of that.” There were several “remaining challenges to implementing” the existing laws that he noted:
      • “One, there will be a service gap in laboratory accreditation services as we currently have it on July one” of 2024. Staying compliant with testing requirements in RCW 69.50.348 would not be possible as cannabis labs would have to “apply for and demonstrate that they can meet those requirements.”
      • “Number two, funding in 2022, the [20]23-25 operating budget, included a maintenance level reduction for Ecology which removed appropriation from the Dedicated Cannabis Account” which made it “challenging for Ecology to meet the current statutory requirements to implement lab accreditation.”
        • The only cannabis-specific spending for DOE identified when the operating budget passed on March of 2022 was on page 511 in Section 302, and showed the department was set to receive additional money from the DCA, going from $270,000 to $284,000 in FY 2022, and from $276,000 to $290,000 for FY 2023.
      • Finally, “we are not currently aware of any cannabis based proficiency testing available to cannabis labs in Washington State.”
    • Addressing $5 million in DDx soil remediation funds approved in the 2023 capital budget which DOE leaders were also overseeing, Eitmann noted the money was specifically earmarked for Okanogan County, and that DOE was required to give updates in December of 2023 and 2024.
      • “The first step [was] to identify safe soil levels. It's clear that cannabis plants uptake DDT more than other plants. However, not much else is known.” DOE staff were preparing a study that “will attempt to give us an idea of the link between DDT levels in the soil and DDT levels in plants.” A memorandum of understanding (MOU) was being written between the department and WSU, which had long been a “great partnership.” University researchers had “extensive expertise in dealing with crops and pesticides” and would “collect long-term data from the soil and cannabis plants and farms in Okanogan County and compare rates of uptake to those from the soil” with a “long-term goal…to help farmers know appropriate soil levels…that are safe for growing cannabis products. We plan to start this study in early 2024.”
      • DOE officials had begun to explore the “most common cleanup options for soil,” inclusive of “mixing of clean soil, bioremediation and other methods” which had been successful in other projects. “We are currently out for bid, and request for proposals on this. Bids are due January 18th, with an anticipated start date on the contract for April of 2024.”
      • Replacing contaminated soil was “the best short-term solution for DDT and soil” and most of the funds were earmarked for working with WSDA colleagues to get “clean soil” to the impacted farmers. “We've put in a contract with the Okanogan Soil Conservation District exploring a partnership to help us administer a grant program for farmers. We anticipate having about $4 million available for this effort” to run the program “and provide updates to farmers and those impacted.”
  • Representative Melanie Morgan wanted to understand where contaminated soil ended up (audio - 2m,  Video - TVW).
    • DOE Toxics Cleanup Program Manager Barry Rogowski, regarded it as “more than likely the excavation is not going to be a viable cost-effective option,” though it was going to be “evaluated in the feasibility study.” Morgan wondered why taxpayers were funding a study that included excavation if officials suspected it was “not feasible…do you have data to back up that it’s not feasible?” Rogowski emphasized that they didn’t, and that was why a study was needed. Instead, he expected that “soil mixing” would be the best approach, but they would explore the feasibility of excavation, mixing, or cultivating cannabis in separate potted soil, along with a “literature review” of bioremediation. Rogowski felt this would address the earlier concern over farmers having “tools for the future” when confronted with contamination by giving them an idea of feasibility or “unit cost.”
  • Representative Kristine Reeves asked whether the study would look at remediation using cannabis plants, “so that [licensees] can continue growing a product that they're very familiar with” (audio - 2m,  Video - TVW)
    • Rogowski knew about the use of ryegrass for remediation, but not cannabis. “The WSU plant uptake study would potentially provide some information about that,” he said, looking into “a 50% mix of soil with contaminated and clean, and then a control…looking at the uptake and actually where the DDT ends up in the plant…that could potentially answer some of the questions that you're asking.” The research would also cover “some harvest technologies” if DDT ended up in a specific part of cannabis plants, then “those could be removed during the processing,” he remarked.
  • Wylie stated, “we've talked a lot about how cannabis is different in that it uptakes toxins that another plant might not…do we know specifically how much, what plants do and don't get affected? Because I know that that's part of what the surprise was, people didn't anticipate that because other plants are able to be grown on that soil” (audio - 2m, Video - TVW).
    • Rogowski hadn’t seen much research on the topic specific to cannabis, but assured committee members they would “maybe be able to answer some questions about if there is a level of soil that's safe to plant crops and what would that level be so that potentially farmers could test their soil and…have an understanding if they had a chance of successful farming on that soil.” He added that this would allow producers to get “clean soil, if we can't find an absolute clean source,” and allow a safe level of residual pesticides.
  • Chambers was curious how the service gap Eitmann mentioned would impact licensees, “and are those licensees aware?” (audio - 4m, Video - TVW)
    • Annette Hoffmann, DOE Environmental Assessment Program Manager and former CSTF lead, called the gap “an unfortunate reality of the pace” of the law transferring accreditation over the course of half a decade. “While we all wanted to believe that was a very quick lightswitch,” she said, “it has proved to be anything but.” Hoffmann described the gap as a circumstance “we’ve just become more aware of recently” as staff moved ahead with the rulemaking project. She argued the statute mentioned by Eitmann, RCW 69.50.348, set “guidelines” and “didn't leave us a lot of room to avoid the service gap.” The “waiver process” DOE leaders envisioned WSLCB implementing to exempt labs from in-matrix PT requirements, Hoffmann said, “might be an avenue to lessen the issues associated with the service gap,” though not remove the gap entirely.
    • Chambers then asked for clarification about the waiver, “and does that mean there's going to be essentially supply chain issues for product going into the stores that, is that going to impact consumers” in the months that followed. Hoffmann deferred to other agencies “because they have a little bit more closer ties to the industry,” hypothesizing that “optimistically” there could be a lab accredited within “three to six months” of the July transfer deadline, but staff needed to be budgeted for and hired at DOE before accreditation could be deployed. She said laboratory staff would need training “to apply for accreditation and then they have to demonstrate that, so that, that doesn't happen in an instant.” Without statutory flexibility, Hoffmann relayed how the waiver process “in our proposed rule doesn't have a lot of, of boundaries to it,” having been created “for the case of proficiency testing if a cannabis based product was not available,” but potentially, “that process could be used more creatively to help us navigate the transition.” She promised to discuss the matter with staff at the partnering agencies.
  • Waters returned to the subject of soil cleanup to comment that he’d had to learn a lot about the topic in short order during the 2023 session, and wondered how “plausible” it would be to use cannabis to remove DDx compounds from soil. “Does it pay to have a program,” he asked, “if someone pops up with a high DDT mark and then we go, ‘hey, plant your crops because it's gonna suck it out of your soil, and we'll pay for that’ crop for the year?” Waters added that as a small businessman “it was devastating listening to those farmers last year” (audio - 2m, Video - TVW).
    • Rogowski agreed plant uptake remediation “was used” in the agricultural field, but he wasn’t certain how effective cannabis would be at it. He felt it was “worth looking into and I think the WSU study could probably provide some answers regarding that, and I think we still have some time to work with them to maybe factor in something like that.” He elaborated that the goal of their partnership “with the Okanogan Conservation District [was to] provide 80% of the funding to bring in actual clean soil.” Grants for the “best short-term option” of clean soil were still preferable, Rogowski reasoned, as plant uptake of DDx could “take several cycles or, or many years to actually be effective.”
  • Kloba inquired, “from a consumer perspective the service gap, would mean that…product wouldn't get tested at all, or it would get tested but not by an accredited lab because all of this process hasn't gone into place?” (audio - 3m,  Video - TVW)
    • Hoffmann said they were talking with WSLCB representatives and had the understanding that the contract with RJ Lee, the third-party vendor administering accreditation for WSLCB, was going to be extended to do lab audits through 2024 or “maybe a bit longer.” However, this wouldn’t be a DOE accreditation, she emphasized.
    • Kloba then asked if a “small trailer bill” modifying deadlines for transition of accreditation authority would help the gap. Hoffmann replied that was one of several options under consideration. Kloba wondered if the waiver discussed could be applied. Hoffmann acknowledged “we didn't put…boundaries on it so there might be some, some ability to explore extremes under a waiver process to handle a transition period.”
  • Representative Greg Cheney observed that other states had labs testing to comparable standards, and asked if it was “possible during this service gap period to have Department of Ecology effectively certify, say, a California lab temporarily while one is stood up here” (audio - 2m, Video - TVW).
    • The difficulty was “the pace and the path” used by an out of state lab, Hoffmann said, finding “some of those other states are accredited” to a different “checklist of practices” by the International Organization for Standardization (ISO) which she felt didn’t meet “the same level of rigor that Ecology's model does.” They hadn’t looked at accepting other standards on a temporary basis, she commented, but had wanted “a mature Ecology-level model that we've developed for environmental work to, to apply here to provide the highest level of confidence.” She appreciated “the service gap will need some focused attention, so I do appreciate that recognition.”

• Washington State Liquor and Cannabis Board (WSLCB) Director of Legislative Relations Marc Webster went over “the program of testing that we oversee” as well as imminent “changes under the current law” and potentials “under the proposal that you heard about a little bit” from his WSDA counterparts, before taking a couple clarifying questions (audio - 6m, Video - TVW, presentation).
  • Webster also spoke to the committee about the cannabis social equity program, with Director Will Lukela.
  • Webster went over “three different pathways for cannabis testing, two of them are initiated by us and one of them is initiated by the licensee.”
    • “First is the ongoing, standard, periodic testing, looking at products that say they’re pesticide free, are they actually pesticide free?”
    • “Second are complaints or investigation driven testing where somebody…said ‘hey, there's something on this,’ this particular product.” Both of these pathways involved sending “samples to the WSDA lab in Yakima.”
    • “Third, there's the routine tests that all producer processors have to do to ensure that their products are safe” using “one of the eight accredited private labs for those.”
  • Showing what “the workflow looks like for the ones that we initiate,” Webster described how “cannabis samples that are taken by the LCB. It's an Officer if that's a complaint driven test, or a Compliance Consultant for the kind of periodic random testing.” He displayed some statistics about the number of rests and failures over the previous year when there’d been “about 130 of the ongoing or…standard tests, and almost 290 tests from investigations and complaints.” Failure rates were higher for investigations and complaints, he noted, with standard periodic testing showing samples failing “about five percent on those and…more than a third on those complaint driven ones.” In all, Webster said “a little bit more than a quarter of samples test positive for, test above action limits,” though sometimes samples failed against multiple pesticides.
  • He gave more specific testing results as well as the licensee testing workflow in his presentation, and stated labs had to enter testing results to the Cannabis Central Reporting System (CCRS), with agency officials “looking at that with our chemistry staff as well.” Accredited labs conducted “a couple of thousand tests” in the previous year, “and there's less than 10 failures.” With a pass rate “of well over 99%,” Webster recognized this would be “some of the context for why the legislature has been very interested in looking at accreditation and, and how it might change or improve.”
    • Over the summer of 2023, WSLCB leaders began to take interest in replacing CCRS with a traceability vendor.
  • Webster said WSLCB “certifies and enforces” accreditation by RJ Lee staff, and was prepared to pass that on to DOE, where staff word take over certification as WSLCB retained responsibility to enforce their determinations. He suggested, “if you're accredited you have demonstrated that you can find results accurately and to a specific standard, but we know there are some incentives that make not reporting accurate results tempting.” Webster said this wasn’t, “a hypothetical problem, I think you're all aware that this has happened here in Washington.” Webster remarked WSLCB staff had no problem working with “whoever [was] doing the lab accreditation…that's up to you guys to decide.”
  • Kloba asked what accreditation standards were being used currently by RJ Lee, asking if it was like an ISO “checklist.” Webster answered “it's more robust than that” and “based on hemp, so the proficiency testing is in hemp, but it is not a checklist.” He said conversations on in-matrix PTs for cannabis with other state agencies were ongoing: “I think there are paths forward, but we're going to need to continue working with our partners on that” since “you can't transport that across state lines” (audio - 1m, Video - TVW).
  • Waters was curious about any other testing done by accredited labs, “do they do alcohol testing?” Webster said they weren’t accredited to do that, but “they do test for things beyond pesticides…things like mold” or moisture which were “of interest to public safety” (audio - 1m, Video - TVW).