WSLCB - Board Meeting
(July 8, 2020)

Wednesday July 8, 2020 10:00 AM - 12:00 PM Observed
WSLCB Enforcement Logo

The Washington State Liquor and Cannabis Board (WSLCB) convenes a meeting of the three-member Board every two weeks to consider formal rulemaking actions and hear public testimony.

Withdrawal of CR-101

Board Approval to File CR-101

Public Hearing

Written summaries for Public Hearings and General Comments are appreciated. Please submit your comments to dustin.dickson@lcb.wa.gov. One can also comment during a public hearing or at the end of the meeting via WebEx. If you wish to speak to the Board during a “Public Hearing” or “General Public Comments”, you must e-mail dustin.dickson@lcb.wa.gov before that agenda item begins, preferably by close-of-business on Tuesday, July 7. Dustin will provide additional instructions and a link to connect to the WebEx through your computer. Comments will be limited to four minutes per person. These instructions are separate from the dial-in number below which is for listening/observation only.

Executive Assistant Dustin Dickson in Email (July 2, 2020)
https://content.govdelivery.com/accounts/WALCB/bulletins/293cc1b

Observations

The WSLCB hosted a public hearing on proposed cannabis product safety rules, opened two new rulemaking projects, and heard the most public comments since the start of the pandemic.

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

My top 3 takeaways:

  • The agency hosted a public hearing regarding proposed rules for the cannabis Quality Control Testing and Product Requirements rulemaking project.
    • Quality Control (QC) Testing and Product Requirements (WSR 20-03-176). Policy and Rules Manager Kathy Hoffman provided a thorough background on nearly two years of rulemaking (audio - 12m).
      • Hoffman stated that the rulemaking project was started in August 2018 after “several stakeholders including medical marijuana patients, consumers, and licensees" called for expanded cannabis testing for heavy metals and pesticides, arguing that it would “inspire confidence among consumers, increase access to medically compliant product, and bolster sales.” Existing rules in WACs 314-55-101 and 102 endeavored to “ensure that the products...for sale are safe and have accurate potency levels. Although not precluded from doing so, many producers and processors do not test for pesticides and heavy metals.” In particular, the agency heard that it was “necessary” for the cannabis industry to have "standardized testing for all marijuana products,” with Hoffman summarizing that changes aimed to “reduce the risk of harm, or potential harm, to all consumers." She reminded those in attendance that there wasn’t federal guidance the agency could rely on as well as “limited funding to support research” on the health effects of contaminated cannabis. Nonetheless, WSLCB was committed to “protect public health and safety and to assure that all products sold within the I-502 market are safe for all consumers.”
      • Other jurisdictions which mandate testing for pesticides and/or heavy metals in their medical/recreational cannabis marketplaces include:
      • During the agency’s “protracted work” they collected feedback from stakeholders and Hoffman reviewed the project ahead of the first of two listen and learn sessions in April and August 2019. She remarked that they’d received “over 50 [comments], nearly all in support of requiring pesticides and heavy metal testing for products.” 
      • The Board voted to approve a CR-102 with proposed revisions at the January 22nd Board Meeting. Hoffman composed the CR-102’s memorandum and additionally produced a preliminary Small Business Economic Impact Statement (SBEIS) after hiring an economist through the Washington State Governor's Office for Regulatory Innovation and Assistance (ORIA). She said this was not required by RCW 19.85, the state’s Regulatory Fairness Act, but the preliminary SBEIS, final SBEIS, and a Significant Legislative Rule Analysis aided understanding about projected costs of compliance. The proposed changes include a “phase in plan” intended to help impacted businesses mitigate implementation costs. By the time WSLCB was ready to draft revised language they had accrued approximately 300 comments representing “a very broad, often conflicting, range of opinions and positions, some offering feedback on draft conceptual rules, but again, few offering rules language.”
      • Hoffman noted, “As a result of the pandemic, and our state’s response to it, we had to pause this project and refile the CR-102 in May.” If the rule project were adopted on its revised schedule, licensees would see “nominal” changes in September before being required to test for pesticides starting March 1st, 2021, and “then on September 1 of 2021, licensees would be required to test for both pesticides and heavy metals in addition to the current I-502 suite of tests.” While it had been suggested that WSLCB “wait for the [Washington State] Department of Ecology (DOE) to complete their lab accreditation process before we move these rules forward” Hoffman cautioned that the rules pertained to “product standards” and the agency was “statutorily required to establish and maintain those standards regardless of who performs lab accreditation.”
        • On July 2nd, Hoffman explained that many comments had been submitted “under the assumption that there’s some connection between marijuana product standards and marijuana laboratory testing.” She stressed that the rulemaking project was evaluating changes to cannabis product standards, but was not intended to change laboratory testing standards.
    • Board Chair Jane Rushford said 10 speakers had signed up in advance to offer remarks. However, several speakers were unable to connect to the webinar or otherwise not present and others encountered technical difficulties providing remote testimony. Cannabis Observer requested copies of written comments from all speakers we had contact information for, shared below.
    • Crystal Oliver, Washington SunGrowers Industry Association (WSIA) Executive Director (audio - 1m, position paper from December 2019). Oliver told the Board that WSIA had “submitted more detailed comments” in writing but that their central recommendations were that “arbitrary lot size limits should be abandoned,” “mycotoxin and microbial testing should focus on strain harvest level,” and “pesticide testing should focus on random sampling of usable marijuana and other material at the farm level, similar to other agricultural testing methods.” Oliver felt heavy metals testing “should focus on vape cartridge hardware as the most likely source of heavy metals contamination in concentrates.”
    • Steven McCombs, MC2 Supply Principal. Previously requested to speak but not connected.
    • Lukas Hunter, Harmony Farms Director of Compliance and Government Affairs (audio - 3m, written comments). Hunter was appreciative of the phased in approach the agency was taking as it would “greatly help with the financial burden that industry and labs are going to need to adjust to.” While the agency had a lot of rules changes underway, he said the cannabis industry was dedicated to “fair and well thought out” changes. Hunter felt the current draft addressed “a hole in the current pesticide testing,” and wanted rules to allow for “a higher level of testing...to be available to the cannabis industry.” He asserted that the number of pesticide analytes the Washington State Department of Agriculture (WSDA) Yakima lab could test for was greater than the amount typically screened for at commercial cannabis testing labs. This meant businesses wouldn’t know if cannabis was “truly pesticide free with the same standards the State holds us to if we’re under investigation.” While a “cost prohibitive” standard to mandate, Hunter said “the ability for us to test to [a higher standard] for those who wish to test to that higher standard” would help compliance and consumer safety.
    • Jade Stefano, Puffin Farm CEO. Previously requested to speak but not connected.
    • Shawn DeNae Wagenseller, Washington Bud Company Co-Owner (audio - 5m, written comments). Wagenseller was in agreement with the ambition for “clean cannabis products for consumers” and patients by including testing for pesticides and heavy metals, but felt “the devil’s just in the details.” Her company already sought pesticides and heavy metals testing to earn the Washington State Department of Health (DOH)’s medically compliant logo for their products and her comments drew on that “history participating in the process.” Wagenseller said WSDA guided the development of DOH’s testing rules towards “harvest-level testing” which she wanted the WSLCB to adopt. “We could practically cut-and-paste that WAC” so that the “larger the harvest, the more quantity of samples” would be tested. She claimed a harvest batch testing process was endorsed by the National Cannabis Industry Association (NCIA) and utilized in Colorado and Maryland. Wagenseller’s view was that “lot-level testing of any size will automatically make recreational testing extremely more stringent and significantly more costly than it is to qualify for medically compliant products,” which she said conflicted with SB 5052, 2015 medical cannabis legislation that required medical testing “be more stringent than recreational testing.” She stated it was “common knowledge” that the State’s medical cannabis program was “a disappointment in serving patients” due “in large part to the fact that the medically compliant rules demand that growers have to destroy crops” which fail medical testing. Given the risk of “total loss” of crops and no option for remediation coupled with “skepticism in the labs’ processes,” Wagenseller suggested it was “easy to see why the program never really got off the ground.” She recommended modifying sample size and allowing for resale “to the oil market for distillation” while continuing concentrate testing. Wagenseller’s final advice was to allow for potency ranges for usable cannabis instead of a set percentage which would “put a damper on the high [tetrahydrocannabinol] (THC) holy grail.”
      • Section 2 of SB 5052 states “testing standards for medical products meet or exceed those standards in use in the recreational market.”
    • Jim MacRae, Straight Line Analytics (audio - 4m). Pointing to section 6 on “Sample Rejection or Failure,” MacRae called attention to removed text which required WSLCB take “immediate disciplinary action against any licensee or certified lab that fails to comply with provisions of this section.” He noted the language was unique to that section and its removal could minimize the agency’s latitude to enforce rules, which MacRae said was “relatively lacking over the last few years anyway.” He backed the proposed change in WAC 314-55-102(3)(c)(i)(A) on “water activity and moisture” that would revise the ‘and’ to read ‘or’ allowing licensees to choose which standard they wanted tested. As for a "purported arbitrariness" of action levels for pesticides, MacRae said they were “arbitrary only to the extent that they were created out of some mish-mosh.” Though WSLCB received input from DOH and WSDA in setting pesticide action levels, MacRae argued that WSDA staff had since claimed that “they did not feel that the existing levels were protecting health.” The WSDA staffer making the assertion, Erik Johansen, was “removed from pesticide responsibilities and cannabis responsibilities within a week of making testimony to this body.” MacRae advised the agency to look to the California Department of Pesticide Regulation (CDPR) for guidance. While Washington state had “been enjoying a windfall" of cannabis revenue, MacRae felt the agency shouldn’t emulate medical testing standards which patients had "turned their backs on."
    • Mark Ambler, Breeze Trees Owner (audio - 4m, written comments). Ambler started off by criticizing the rulemaking project’s economic analysis, saying it didn’t include cost impacts of the subsequent coronavirus pandemic and only 341 out of 1441 licensees were included in analysis. His own business wasn’t included, he said, as he’d lost his entire harvest in 2018. Ambler believed the current “sample collection procedure results in false negatives” due to an insufficient sampling size which missed partially-contaminated cannabis crops. He suggested it was a “big problem” worthy of emergency action by the Board. Additionally, he was concerned the rules would still permit two parts-per-million (ppm) of benzene, a cancer-causing substance, in dabs and vapes. He suggested that action level might endanger consumers, “especially when we know for a fact that kids are getting these vapes and taking them."
    • Jeremy Moberg, CannaSol Farms Owner. Previously requested to speak but not connected.
    • Chris Marr, Marr Government Affairs Principal (audio - 5m, written comments). Marr began by saying he supported “the breadth of proposed testing requirements as well as the phase-in" for changes. Though he was open to shifting the period for phase-in, Marr asked the Board to “oppose efforts to significantly delay their implementation. The industry has operated too long without robust product safety testing.” Marr stated that the “major concern” he had was “keeping the five pound lot size requirement which will have huge cost impacts on the industry with no tangible public safety benefit.” He explained, “We were told lot size was not increased because there was no consensus among stakeholders during the rule development process,” but he felt cannabis labs were “over-represented in the process” and treated cost mitigation as “a threat to their revenue stream.” He said that the SBEIS projected a “higher testing cost per-sample” which could lead to “costs ranging from $12,000 to $832,000 annually” depending on the resulting cost per sample and the number of samples tested per year. Marr doubted the document’s claim that costs wouldn’t be passed on to retailers and consumers. He concluded that the state was “an outlier in both lack of product testing and lot size.”
    • Gary Green, Vancouver Weed Company Principal (audio - 5m). Green told the Board that increased costs resulting from the proposal wouldn’t make the public safer but could “lower the availability” of products. He was unsure that the danger the rule change addressed had actually been demonstrated for usable cannabis flower, though it “seems to be more of a concern when it's a concentrated product.” Green suggested testing of grow sites occur "a couple times a year" to ensure pesticide products were being used safely by licensees. He agreed with calls for labeling THC ranges rather than exact potency values. He felt potency testing could eventually be phased out once prior testing had established a particular cultivar’s potency range which “would allow more money for other types of testing.” Green also suggested that WSLCB “subsidize some of the industry with tax dollars” as a mitigation and reinvestment strategy. He asked board members to “delay implementation of this process until you get more input from everybody involved.”
  • The Board opened two new rulemaking projects to implement 2020 legislation, formally withdrew permanent rulemaking for retail title certificates, and heard updates on other open rulemaking projects.
  • During general public comments, citizens shared criticism and input on the treatment of medical cannabis patients, traceability, and diminished transparency at the agency.
    • Sami Saad, Former medical cannabis grower/dispensary owner at 12Green LLC.  Previously requested to speak but not connected.
    • Jim MacRae (audio - 5m). MacRae congratulated the Board on having reached the sixth anniversary of “retail regulated sales in the state.”
      • He said that as of March 2020 “approximately $507 million dollars of direct tax revenue...benefited...the state from the retail portion of this industry...that’s a pretty good hunk of revenue.” With that in mind, MacRae urged the agency to ask if “the effort adequately met the goal, the stated goal up front of managing this market, regulating this market in such a way that it really did minimize the non-regulated channels of access for cannabis in the state?”
      • MacRae noted medical cannabis patients had been “consumer constituents that were called out in the early modeling work done by BOTEC,” yet the DOH had “fewer than 10,000 active registered patients” (MacRae expected DOH would take issue with his registry estimate). In all, he said “less than 2% of sales in retail” were to patients in the database, or “1/25th of what was expected in the BOTEC work.” If the patient segment was really getting that much of their cannabis from outside the regulated market then “somewhere between 30 and 40% of the potential product flow in the state is not flowing through this system.” MacRae posited that comments WSLCB had heard about recreational cannabis “not being safe” reflected patient sentiment. He requested the Board and agency “take that segment of the consumer population into account very, very directly. Very, very explicitly.” MacRae asked the Board to “leverage” Cannabis Advisory Council (CAC) patient representative Lukas Barfield “and try to fix the mess the [SB 5052] Patient Protection Act had made” of Washington’s medical cannabis system.
        • See Cannabis Observer’s summary of the last CAC meeting in December 2019.
      • MacRae quickly mentioned that LEAF Data Systems “does not allow regular, reliable linkage of lab test results to the product that’s on the shelves” leaving the consumer to “take it on faith” that the product’s label honestly reflected accurate test results. He questioned whether WSLCB had “any sort of enforcement over that at all.”
    • David Busby, OpenTHC CEO (audio - 2m, written comments). Busby said that the agency’s plan to ask the Board to rescind BIP 13-2019 permitting unapproved traceability system workarounds was premature.
      • He noted WSLCB staff had “cancelled the last two” integrator work sessions, the last meetings having occurred on June 4th and May 7th. Busby said, “There’s still some outstanding problems in the system that necessitates some of these workarounds,” and although the agency had been told the interim policy was “aged out...that is not true.” Without the integrator work sessions, stakeholders were limited in their ability to discuss problems and workarounds. Busby asked the Board to encourage agency staff to host the integrator work sessions, especially “when integrators submit agenda items to the LCB.”
      • Expanding on MacRae’s concerns about lab testing results, Busby said that “the reporting system has less than 50% of the product on the shelf with an accurate track in the reporting system proper lab result.” He claimed 80% of products used to have defined lab results before MJ Freeway’s July 2019 release. He concluded, “If we have a mandate to increase access to safe cannabis,” the data indicated “the risk to the consumer has been increased.”
    • Aaron Barfield, Black Excellence in Cannabis (BEC) President. Previously requested to speak but not connected.
    • Gregory Foster, Cannabis Observer Founder (technical difficulties recording audio - 5m, written comments). Foster called attention to a trend of diminished transparency at WSLCB starting just before the pandemic, and offered three recommendations to renew the agency’s commitment to openness in the digitally mediated “new normal” of teleworking and remote meetings.
      • Record Webinars. As the agency utilized the Cisco WebEx webinar service to host remote meetings, Foster called on the agency to consistently record and archive both public meetings and its internal meetings where possible and appropriate.
      • Publicize the Marijuana Odor Task Force. During the 2020 legislative session, the WSLCB received an appropriation of $30K of cannabis consumer excise tax dollars to convene and staff a Marijuana Odor Task Force. Noting the brevity of public mentions of intentions by the Board, Foster called on the agency to make the meetings of the task force public - or at least record and publish the webinars. He wished the agency “good luck on such a curious subject” which would be of interest to producer and processor licensees, their neighbors, farmers of vast fields of pungent hemp, and local and regional authorities throughout the state.
      • Bring Back the Executive Management Team (EMT) Meetings. Foster noted the Board had cancelled its last 21 weekly EMT meetings dating back before the Governor’s proclamation of a state of emergency due to the pandemic on February 29th. After observing the public meetings of the agency for several years, he attested that EMT meetings were host to the most insightful and timely information about contemporary activity at the agency. He had learned that the agency intended to wait until in-person meetings were resumed to evaluate restarting EMT meetings - but that could push mere reconsideration into the next calendar year. Foster asked the Board and agency to renew their commitment to transparency and accountability by restarting EMT meetings.
    • Gary Green (audio - 3m). Green also weighed in on traceability, saying the system was “not up to date and viable currently in any way, shape, or form.”
      • In particular, products had been “given wrong numbers/identification tags ever since we switched from a 16-digit identifier...to an alphanumeric code which was not compatible with our system” leading to “havoc.” 
      • Green also followed up on Foster’s mention of the Marijuana Odor Task Force, saying industrial and agricultural odors were “common practice” and that the state had numerous paper mills and dumps which emitted strong, potentially dangerous, smells. In contrast, cannabis plants were “increasing oxygen and pulling toxins out of the air and out of the ground” causing a “positive impact on our environment as a whole.”
      • Considering medical cannabis patients, Green deemed it a “Catch-22 to increase testing when people aren’t willing to get on a [DOH] list” that could lead to “taking away people’s second amendment rights.”

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