WSLCB - Executive Management Team
(December 14, 2023)

Here are some observations from the Thursday December 14th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) public meeting.

My top 5 takeaways:

• Director of Policy and External Affairs Justin Nordhorn detailed how stakeholders from some substance prevention groups were looking at WSLCB rulemaking as an avenue for restricting young adult access to cannabis concentrates.
  • Concentrations of tetrahydrocannabinol (THC)---sometimes called cannabis potency—had been a concern voiced by some in the substance prevention and public health fields for several years, as outlined by a University of Washington Addictions, Drug, and Alcohol Institute (UW ADAI) presentation on April 20th. The most recent legislative efforts to restrict sales of certain cannabis products during the 2023 legislative session were HB 1641 and HB 1642.
  • During EMT, Director of Communications Brian Smith noted that he, Nordhorn, and Board Member Jim Vollendroff had spoken with a writer from the Seattle Times about “about high-THC and cannabis, and concerns around public health.” They anticipated seeing “that editorial or that opinion piece any day now” (audio - 5m, Video - WSLCB, Video - TVW).
    • The opinion editorial, part of the paper’s Mental Health Project, sponsored by a child-health focused Ballmer Group, revolved around arguments of supporters of the most recent bills and pointed the finger at lawmakers who weren’t persuaded to act on their claims. It called for having any 2024 legislation specifically pertaining to the cannabis industry heard in a health policy-focused committee that would be more receptive, chalking up the distinction to being a choice between a “public health crisis or maintaining good manners between legislators.”
    • Nordhorn was quoted as saying it was difficult to regulate “what is too high of a level of THC…If it’s just opinions, then that becomes more challenging to be able to set up regulation around.” He felt the concern over the products was more limited, and policy changes at “would likely be a collaboration between LCB and the public health community, but it has not emerged as an emergency.”
  • Nordhorn’s update included mention that officials were “getting pinged a little bit from a variety of places…around what the board can do as far as rulemaking, particularly around issues like taxation, high-potency THC.” He claimed stakeholders had suggested that the board could “go out and make endorsements and…do something with the tax, and that's even coming potentially as we've heard from legislators…relaying that to other folks who are asking us that.” He was following up with information “where folks understand what we can and can't do in this particular area.” Nordhorn remembered that they had approved some regulations specific to product types and health, pointing to the “public health emergency” in the fall of 2019 when vapor-affiliated lung injuries around the U.S. led WSLCB and state health officials to approve additional restrictions on the manufacturing of vapor products. He wondered if there could be room for WSLCB to set up “a secondary age gate” for high-THC products, and told the board that a legal analysis was underway since “between that and some other policy issues coming before the legislature, it seems like there's an interest to push us into this particular area” (audio - 6m,  Video - WSLCB, Video - TVW).
  • When Board Chair David Postman asked about gathering extra information on the topic Nordhorn concurred it was “really ripe for some research” by the Research Unit agency leaders had established earlier in 2023. Their team was still getting “access beyond pay gates or pay walls,” he said, so staff could look at public and non-public information. They were searching for software to assist with data analysis, Nordhorn indicated, and thought they’d have the necessary tools in place to look at specific product policies “after the first of the year.” He and Postman agreed UW researchers and lawmakers had been raising concerns on the issue “for several years,” and WSLCB staff could look at “what kind of things can we, or should we do, or where should that policy discussion go, legislatively, or to us” (audio - 4m, Video - WSLCB, Video - TVW).
    • Postman felt there hadn’t been “a ton” of discussion of the issue by legislators. Director of Legislative Relations Marc Webster noted the two bills in the prior legislative session both focused on tax rates, but one had some cannabis industry backing, while another bill to "limit or eliminate" concentrated items was mainly backed by prevention or public health interests. “I hope the legislature will engage in it,” Postman commented, wanting WSLCB and others to “have those conversations because…taxation issues are not in our bailiwick.”
    • Postman stressed this was less about underage cannabis access and more about young adult use, asserting “science is showing that the developing brain is going up to age 25” and regulators could take a more active role given concerns over “the effect on people and should we be protecting young adults in a different manner than we are right now.” A tax change on high-THC products seemed to try to sidestep an “ongoing debate about how…the state taxes alcohol,” which wasn’t based on a drink’s concentration. Postman thought that it was less tenable to change the tax on THC concentrations without addressing alcohol, stating the “alcohol industry has changed dramatically” in the past decade as the cannabis market was regulated.

• Director of Legislative Relations Marc Webster offered some insight on potential request legislation from the Washington State Department of Agriculture (WSDA) which aimed to take the lead on accreditation authority for cannabis testing laboratories (audio - 1m, Video - WSLCB, Video - TVW).
  • Although a law passed in 2019 law set up a transfer of responsibility for lab accreditation from WSLCB to the Washington State Department of Ecology (DOE) by July of 2024, as WSDA and WSLCB were working with Washington State Department of Health (DOH) representatives to set standards, Agriculture officials came to believe their department may be a better fit for accrediting labs testing the commodity in contrast to environmental-focused labs DOE accredited. WSDA staff began drafting an agency request bill to take on that role. In remarks to a legislative committee on December 12th, DOE staff told legislators they had no objection to the move.
    • Learn more from a June 28th webinar on cannabis lab standards hosted by WSDA, or from DOE-hosted workshops on lab accreditation from August 2nd, August 10th, November 29th, and December 7th.
  • During his EMT briefing, Webster explained that the 2024 legislative session would begin on January 8th, and that when WSDA staff had told lawmakers about their plan to take on lab accreditation, “we just tried to communicate that no matter who is doing that part of it…our enforcement role [was] going to remain.”
  • Postman was uncertain about whether the Washington State Office of the Governor had signed off on the request bill, but acknowledged that it had been included in the proposed 2024 operating budget. Webster agreed that agency staff hadn’t seen drafted language for a request bill on the matter (audio - 1m, Video - WSLCB, Video - TVW)
    • Page 453 of the budget proposal showed a request to fund DOE with $782,000 from the Dedicated Cannabis Account (DCA), which was the sum staff for the department previously argued would be needed to accredit cannabis labs. While funds hadn’t originally been allotted for the regulation, passing on the costs to a small number of cannabis labs threatened the sustainability of those businesses. On page 701, the suggested the DCA appropriation was specifically “to create and sustain a program to accredit cannabis testing laboratories.”
    • The proposed appropriation adds, “If House/Senate Bill No. . . . (Z-0418.1/24) (cannabis lab accreditation) is enacted by June 30, 2024, the amounts provided in this subsection shall lapse,” a likely reference to the yet to be numbered—or potentially approved for sponsorship—WSDA request bill.
  • WSDA staff were set to host a public hearing on December 28th on proposed rules for cannabis lab accreditation standards.

• Director of Enforcement and Education Chandra Wax acknowledged that dozens of medically endorsed retailers registered no patients in the state database for the preceding six months, and some stores were choosing to give up their endorsements.
  • A petition to update rules for retail medical cannabis endorsements was approved by the board as a rulemaking project on October 25th, and staff last discussed the project on December 5th.
  • Wax relayed that after speaking with Director of Licensing and Regulation Becky Smith, she’d learned that the DOH had shared with them that 80 endorsement holders hadn’t issued any patient registry cards in the previous two quarters. WSLCB staff had followed up and learned (audio - 1m, Video - WSLCB, Video - TVW):
    • “35 of those stores that had confirmed that they want to keep their…medical endorsement and they've provided verification”
    • “19 of them that have said they're no longer interested and they want to be removed”
    • “15 that said they're interested and they want to provide us verification”
    • “11 we're still trying to figure out how they would like to move forward with that endorsement”
  • Postman confirmed that DOH staff were taking no action regarding the endorsements beyond notifying WSLCB counterparts when stores weren’t adding patients to the registry. Wax confirmed that WSLCB had the responsibility for checking with endorsement holders whether patients hadn’t registered at their store, or if they weren’t meeting the criteria to maintain a medical endorsement. Postman mentioned he would follow up with Smith’s team directly (audio - 2m, Video - WSLCB, Video - TVW).
  • Postman also wondered if Licensing staff had coordinated with the Communications team to remove stores from the WSLCB map of endorsement holders. Brian Smith answered that they hadn’t, but it would “probably be the logical step” (audio - 1m, Video - WSLCB, Video - TVW).

• The social equity program at WSLCB was mentioned throughout leadership updates, in particular around challenges financing businesses.
  • Agency leadership and Black Excellence in Cannabis (BEC) members offered competing assessments of how the program was doing to members of the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on December 5th. BEC members made accusations to board members during public comments the following day which Postman pushed back on.
  • During Webster’s legislative update Postman referred back to the legislative hearing and the questions he’d gotten from lawmakers, specifically, “our process to select qualified licenses out of the social equity program does not include any hurdle for financing…nobody's rejected because of a lack of financing, or low finance.” He also said “the State of Washington is not in the business and will not be in the business of financing cannabis stores. That's not been envisioned by the legislature,” though there was a technical assistance grant program through the Washington State Department of Commerce (WA Commerce), added Webster. Postman had heard from Becky Smith that Licensing staff were getting questions from applicants on securing financing. Webster noted that there was funding which could be used “to help people find” investors, but it couldn’t go directly into a new cannabis operation (audio - 2m, Video - WSLCB, Video - TVW).
  • Brian Smith provided a Licensing update where he noted “a new color dot has been created and added to the GIS [geographic information systems] map indicating social equity cannabis licenses.” He also said “Sarah Davis, the case manager for social equity, continues to reach out to applicants and although several applicants will be ready in the near future, Sarah has shared that some of the continued frustrations [were] around financing, including a viable location” (audio - 4m, Video - WSLCB, Video - TVW).
  • During his Communications briefing, Smith noted that in working with Licensing staff on social equity he had been hearing there were “concerns about privacy among the people that are being licensed. And so what we want to do is be able to have a broader group that, when we roll this out and explain, that we’ll be able to have a diverse pool of people that may, or may not, want to talk to the media about this. So, some people just want to open a business.”
  • When Director Will Lukela gave his updates, Postman asked whether staffing positions WSLCB had requested in their 2024 budget would be funded. Lukela replied that the proposed 2024 budget from the governor’s office included funds for social equity program staff, among other positions (audio - <1m,  Video - WSLCB, Video - TVW).

• A few mentions of WSLCB staff involvement in the Cannabis Regulators Association (CANNRA) focused on the implications of potential federal rescheduling of the plant.
  • Brian Smith mentioned the CANNRA Annual Member Meeting in Las Vegas which he and other WSLCB representatives attended, stating he’d helped lead “a workshop on crisis communications…with a team from New Jersey, Michigan and Colorado.”
    • At time of publication, the next CANNRA gathering was scheduled for June 2024 in Minneapolis. 
  • Sharing that he’d been among staff at the conference, Nordhorn mentioned “strong connections with some new folks particularly [Craig Prins, Interim Executive] Director of Oregon [Liquor and Cannabis Commission] which I hadn't met before,” along with counterparts from California.
    • A topic of concern he identified was what “impacts look like” given “there's a lot of discussion across the nation around what the feds are going to do” regarding cannabis “rescheduling and the Farm Bill” which legalized hemp in 2018. CANNRA members had called for updating the law, but Nordhorn felt if the US Congress didn’t make changes early in the year, the 2024 federal elections would “put that on hold for a while.”
    • He thought state regulators needed to consider the interstate cannabis compacting bill passed in on May 4th, because if cannabis was rescheduled “we don't all have the same standards, and so how does this really interact and play.”
    • Schedule III status could leave cannabis needing oversight “in some other regulatory areas that I think we don't fully understand at this point,” Nordhorn said. He urged engaging licensees in a conversation around the implications of rescheduling for them, hoping to get an idea of “what their knowledge is, what they're trying to see particularly.”
      • A longstanding Schedule I federally controlled substance, cannabis was at the center of many long and unsuccessful petition attempts to evaluate the plant’s scheduling. In October 2022, President Joe Biden requested a review of cannabis scheduling by US Health and Human Services (US HHS) Secretary Xavier Becerra and Attorney General Merrick Garland. On August 29th, media outlets reported a leak that US HHS staff were advising rescheduling cannabis to Schedule III, which spokespeople for both US HHS and US Drug Enforcement Administration confirmed as accurate, though a DEA rescheduling recommendation had not been made at time of publication.
    • Nordhorn knew WSLCB was implementing “a pretty strong statute…banning” any hemp products containing “detectable amounts of THC outside of our legal marketplace and no synthetics,” but CANNRA members remained troubled by the potential for sales of “impairing hemp products through the US Postal Service….so it seems still readily available.” He remarked that they would continue to watch and learn from other states with legal cannabis systems.