WSLCB - Board Meeting
(November 8, 2023)

Here are some observations from the Wednesday November 8th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 2 takeaways:

• More than six months after being signed into law, board members formally voted to start rulemaking to implement social equity program expansion legislation, SB 5080 (audio - 4m, Video - TVW, Rulemaking Project).
  • The legislation was approved by Governor Jay Inslee on May 1st, but turnover and absences among Policy and Rules staff at the agency had stymied progress on several rules projects.
  • Less than a month earlier, on October 11th, West had expected to introduce the CR-101 to begin rulemaking on October 25th. She explained the background and steps her team would follow under the revised rulemaking timeline during the Tuesday November 7th board caucus.
    • In reviewing the handout materials for the CR-101, Jim MacRae of Straight Line Analytics noted a discrepancy in some dates mentioned and notified staff the morning of the meeting.
  • In the meeting, West provided “corrected dates” for the SB 5080 implementation project:
    • “Notice will be published in the register on December 6th,”
    • “The deadline for informal…public comment period for the rule project will be on…February 4th, and so that gives people 60 days.”
    • A CR-102 with proposed rule revisions was “still tentatively…planned to be filed on April 10th with the public hearing to be held on May 22nd”
    • The CR-103 to finalize changes was set “to be tentatively filed on June 6th, with an effective date of the rules on July 21st.”
  • The rest of her presentation was similar to her comments in the previous day’s caucus, addressing the reason for the equity program, changes to applicant qualification, license mobility under the program, and a process for considering local government objections. She remarked that the law would now permit “up to 52 new retail licenses to be issued over time, up to 100 processor licenses to be available immediately, and beginning January 1st, 2025 up to ten producer licenses to be issued in conjunction with the processor licenses to social equity applicants.” West mentioned the rulemaking project could incorporate other changes “to align the current rules with the scope of legislation.”
  • Board Chair David Postman said there would be “plenty of opportunity to discuss and ask questions between now in July,” adding the rulemaking was “going to be a big job” (audio - <1m, Video - TVW). Board members then voted to approve the CR-101 (audio - 1m, Video - TVW).
  • West also provided updates on other rulemaking efforts slightly condensed from what she’d told board members the day before while clarifying a petition on cannabis certificates of analysis (COA) would have a recommendation presented on December 20th.

• Two commenters brought up aspects of the social equity licensing application process, one sharing a mea culpa for prior criticisms, and another questioning the transparency of scoring and approval of applicants.
  • Other members of the public had commented on the social equity process at WSLCB during board meetings on September 27th and October 11th.
  • Sami Saad (audio - 4m, Video - TVW)
    • Saad last spoke to board members on October 11th and indicated he was among the applicants who were eligible for one of the equity retail allotments.
    • Grateful to be moving ahead in the process, Saad brought “much respect to the board.” Though he’d disagreed with licensing activities in the past, he felt the current licensing process “did build a trust and this is the community sa[ying] ‘thank you, we can see some progress, but we would love to see work on [Washington State Department of] Commerce to do something,’” a reference to a grant program to help applicants trying to open their stores as department representatives just announced the search for a vendor to administer it on October 27th. “We would love to see the work on Commerce…to progress something faster so those people they can get their shop open,” Saad indicated.
      • Additionally, a 2022 budget allotment related to a community reinvestment project also administered by Commerce officials included money for cannabis business development in the form of a three million dollar grant program “aimed at supporting social equity-qualified license holders to provide early-stage financial support and technical training to cannabis licensees who meet the social equity definition.” 
    • If anyone had been denied “a license because of…not speaking positive at the time—because I didn't trust the board—it would be me,” Saad recognized, adding how previous critiques of agency leaders were “mistaken and I apologize for everyone.” He said he’d been “disagreeing with the board, but I have seen a lot of stuff” and specifically he’d found past accusations of bias by Board Member Ollie Garrett were based on incorrect information about when an individual had received their cannabis license. He was happy to be moving ahead in the equity licensing process, but also wanted to correct his past claims and assumptions. Thanking the board again, Saad hoped to hear other people who had been denied licensure by WSLCB would get opportunities to join the market.
  • David Busby, OpenTHC CEO (audio - 2m, Video - TVW)
    • Busby made comments on October 11th related to traceability and the Cannabis Central Reporting System (CCRS).
    • Rather than traceability, Busby mentioned the Ponder Diversity Group (PDG) who contracted with WSLCB to score and prioritize qualified applicants. “There w[ere] some questions about some of the transparency there, and some of the delays with some of paperwork or notifications that was causing some difficulty for some of the applicants,” he said, calling it “another case where pre-existing open source tools were already available to the LCB that would have allowed the LCB to manage this process internally.” This approach could have increased transparency into the application process, argued Busby, “especially regarding scoring, especially regarding which documents needed to be submitted at what particular time, and what was missing.” He came away with the feeling there were “tools available that it seems like the LCB tries to not use and then runs into sort of problems that were completely foreseeable.”
    • Board Chair David Postman pointed to “the statute that we had a third party do that work at the urging of some of the community to not have the LCB do that,” a requirement which “exists again in 5080. So, we will be looking for any improvements we can make in the process, but we were following the law” (audio - <1m, Video - TVW).
      • Making a third-party firm responsible for vetting equity applicants was part of earlier social equity rulemaking. Staff publicly proposed a “social equity contractor” by March of 2022, and the board codified it as WAC 314-55-570 in October 2022. That December, WSLCB announced through their website that the previously selected law firm Quintairos, Prieto, Wood & Boyer P.A., was “no longer providing government contract legal services. It has reassigned its responsibilities as Washington’s third-party reviewer to the Ponder Diversity Group. The Ponder Diversity Group consists entirely of the original QPWB attorneys and staff who have been preparing to serve as Washington’s independent application review and scoring team.” Mention of a third-party contractor in state law through RCW 69.50.335(3)(a) and (3)(b)(i) was added in 2023 draft agency request language which went on to be SB 5080, meaning PDG vetting of equity applicants pre-dated statutory constraints for providing transparency.