WSLCB - Focus Group - Retail Medical Cannabis Endorsements
(March 11, 2024)

Here are some observations from the Monday March 11th Washington State Liquor and Cannabis Board (WSLCB) focus group on the Retail Medical Cannabis Endorsements rulemaking project.

My top 5 takeaways:

• Regulators’ inability to provide a list of medical cannabis endorsed retailers compliant with State rules had been a driving interest behind the WSLCB rulemaking effort (audio - 5m, Rulemaking Project).
  • Exactly how many endorsed retailers were compliant with rules established in 2016 was on officials’ radar by the fall of 2022. In 2023, WSLCB staff mentioned a petition requesting “businesses to either surrender their endorsement, or for the agency” to reclaim it if a licensee was unable or unwilling to follow requirements for the endorsement.
    • Endorsement holders also have to follow certain Washington State Department of Health (DOH) rules, as that department’s staff manage the medical cannabis authorization database, medical cannabis consultant certificate, and product standards.
  • Although staff reviewed and accepted the petition in March 2023, the CR-101 to officially undertake the rulemaking project wasn’t presented until October 2023.
    • The project was one of several that had been postponed until 2024 due to staff shortages and leadership changes.
  • In the focus group, Policy and Rules Coordinator Daniel Jacobs referred to draft language which had been shared ahead of the meeting. He said unless the overall response was the “language is all terrible,” he’d be filing proposed rules to initiate a formal comment period “at the end of March, that would put a public hearing on the rules about end of May.” Under this timeline he suggested a CR-103 to adopt changes would come in June, which would then become “effective in July.”

• Policy and Rules Coordinator Daniel Jacobs introduced one of three topics of particular concern to WSLCB: requiring endorsement holders to publicly post medical cannabis consultant service hours.
  • Jacobs indicated these provisions were “based on some feedback that we got that…endorsement holders [were] required to have a medical cannabis consultant on staff…but what does that look like?” While certification of consultants was the purview of DOH, he’d found that WSLCB could set minimums around having “consulting service hours for entering qualified patients into the medical cannabis database posted anywhere that general store hours [were] posted” (audio - 4m).
    • “Because some of the questions that we'd initially gotten were, ‘well, how is that going to be enforced,’” Jacobs shared concerns that Enforcement officers may be overzealous if a consultant wasn’t available during the posted time. “We want the person to be there during these times, but this isn't about regulating when a cannabis consultant is on staff,” he said, insisting the focus was on informing patients so they could better arrange visits to register their authorization or speak with a more qualified staffer about product needs and their condition. “Now, if there ends up being an issue where habitually…these hours are inaccurate that could be a point of further discussion, but” he stressed officials weren’t intending to create a “gotcha” violation with the rule change.
  • Carol Ehrhart, 4:20 Friendly Co-Owner, indicated her store’s staff included four consultants, but having consistent “approximate times” would be difficult. “We generally…just tell people when they come in or they call the store, ‘just give us an ETA when you're approximately gonna be here,’” she said (audio - 4m).
    • Ehrhart wanted a sense of how strictly the provisions would be implemented, suggesting that as an owner also serving as a consultant, she may be precluded from leaving the licensed premises during posted hours. “It's not uncommon for me to get a phone call and I'm halfway across town,” she remarked, expressing her discomfort at “being locked down to specific hours by putting it on there.” She wondered if asking patients to call in advance or schedule an appointment would be acceptable.
    • Jacobs called this an “interesting idea,” but was uncertain how it would be phrased in rule, yet “I see the point that you're getting at…having a firm set of hours may be difficult.” He appreciated the “alternative” option, and explained “we're really just trying to get it so that patients also have the ability to know when someone's gonna be there without necessarily having to call.” Ehrhart noted they received patients from across the eastern part of the state, “because we're one of the few that consistently has somebody available so I just want to make sure that I'm not walking myself into something.”
  • Vicki Christophersen, Washington CannaBusiness Association (WACA) Executive Director and Lobbyist, agreed that enforcement was a general concern throughout the industry. “I know that you said…we're not gonna have Enforcement officers nit picking on this, but” she remained troubled, as “that's not our experience…especially on signage.” Christophersen supported readily available information for patients, “but putting these…very specific requirements in my opinion is too restrictive and really does lead to a situation where we're going to see enforcement in an inappropriate way” (audio - 1m).
  • Jim MacRae, Straight Line Analytics, called the policy a “wonderful idea” because even if compliance proved “a challenge to retailers,” it would be most difficult for stores “faking” an endorsement. He argued the “mission” of this aspect of the rules should be “serving the needs of the patient,” and since the law required patients to interact with consultants to exercise various statutory privileges, rules should require endorsement holders to fulfill their responsibilities. He regarded it as "very, very problematic" if an endorsed retailer couldn’t regularly staff that role. He was always wary of agency enforcement, but any change that wasn’t enforceable would “still allow a high probability of a patient going into an endorsed store and not being able to be served” by anyone but recreational budtenders. Respecting the views of “people that represent a whole bunch of the retailers,” MacRae nonetheless felt patient needs had to be paramount in the rules, concluding, “other than that good to hear WACA involved in patient protection again” (audio - 4m).
  • Cat Jeter, a patient advocate, advised adding the term “by appointment” to the rule revision (audio - 2m). Ehrhart then argued for broader language requiring a store consultant policy to be posted. Jacobs welcomed the input, particularly around language for appointments, and gave his impression that the drafted change might have become “too granular” (audio - 3m).

• The next area Jacobs highlighted involved rewording an existing requirement that endorsement holders had to stock products which were considered medical grade by the Washington State Department of Health (DOH).
  • Existing wording for WAC 314-55-080(3)(d) states endorsement holders should “Maintain a representative assortment of cannabis products necessary to meet the needs of qualified patients and designated providers,” whereas the proposed wording would instead mandate they “Have in stock at all times cannabis products that comply with chapter 246-70 WAC.”
  • Jacobs described the new wording as requiring an endorsed store to have a supply of cannabis items which complied with DOH standards for testing and labeling. He said this was “different wording…but it gets the same thing…you have to have some medical cannabis available.” However, since “that in and of itself can be a challenge…we're not overflowing in availability of medically compliant product,” he expected, “this is also going to be a topic of conversation” (audio - 2m).
  • Brooke Davies, WACA Deputy Director, observed that with legislative passage of HB 1453 which created an exemption from the 37% excise tax for registered patients purchasing compliant items, more producer/processors were likely to start manufacturing them. For this reason, she called for holding off on changing rules for endorsement holders while implementing that law. Jacobs asked her if this was an objection to the rule “writ large” or a criticism of the wording. Davies felt the change in the supply chain for medical grade products was “hard to predict” even as she appreciated staff wanted to see the market share of these items increase (audio - 3m).
  • John Kingsbury, patient advocate and petitioner, indicated a “phase-in” of the requirement should be considered so the system didn’t end up "back to where we are today,” where half the endorsed stores “don't think they are” (audio - 3m).
  • Ehrhart suggested “to the best of our ability" may be better rule language than expecting stores to “always” carry medical grade material. She mentioned that some patients didn’t seek out these items, and “some vendors have [purchase] minimums,” however “if I can't sell it and that product's getting old then that doesn't benefit my patients either” (audio - 3m).
  • Chuck Olivier, consumer advocate and Certified Consultant, talked about needing clearer symbols on medical grade products. He further felt consultants should be allowed to sell regular products in place of DOH-approved items if their store didn’t have any available, provided the consultant document the reason a product was substituted (audio - 2m).
    • Olivier also submitted a petition to WSLCB regarding labeling of harvest or processing dates which board members accepted on March 13th.
  • Kingsbury suggested some requirements for endorsement holders were referenced in the medical cannabis statute, “and the reason we don't really have any credible medical system now is because we started to just let things slide.” He warned that any "slack we build into the system" shouldn’t allow businesses to continue to avoid compliance. “I think it's just important to…not fudge what's required too much,” he added (audio - 2m).
    • Via chat, Cannabis Observer Founder Gregory Foster suggested “be clear that stores MUST carry (perhaps with a conditional ‘as available’) DOH compliant products to give processors certainty that there will be a predictable number and published list of retail customers for their products which have been certified to this additional level of testing."
  • MacRae remarked of the additional requirements, “this is all very doable for a motivated wholesaler” or a “processor who wishes to get their medical product to market.” He suggested it “may only take 72 hours to…get that sticker put on the product,” and believed with HB 1453 more patients who had doctor's authorizations but never registered with the State would do so. MacRae stated this would give licensees stronger incentive to produce medical grade items, and DOH had already opened rulemaking on the topic, which he’d heard the department received significant feedback on along with input from WSLCB staff (audio - 4m).
    • DOH staff talked about their intentions for the program and the rulemaking project during a September 2023 webinar and another on February 29th, as well as at a town hall hosted by the Cannabis Alliance in December 2023.
  • Ehrhart felt the “best product for the patient I am consulting” might not be DOH approved, and reiterated a concern that consultants not be limited to only advising sale of such products. She added, “those vendors are selling just fine without having to go through the extra step or the extra money to…put a sticker on it” (audio - 2m).
  • Christophersen felt rules needed to “provide clarity and regulatory framework for everybody to be able to operate under,” taking issue with some of MacRae’s “sweeping statements” that ignored issues like testing laboratory capacity for heavy metals screening, the main difference between DOH and WSLCB approval. She preferred rules on stocking products that would be commonly understood, finding the cannabis sector was “trying to work together to make this happen, but making broad generalizations and sweeping comments about how long it takes to do something is not super helpful” (audio - 2m).
    • MacRae argued the point of the capacity of the two labs already able to conduct heavy metals testing before Jacobs noted the agency had another petition seeking heavy metals testing of all cannabis products (audio - 3m).
  • Kingsbury appreciated that there were differences between heavy metals and other cannabis screenings. He further appreciated that Ehrhart wanted to give patients the best products for them, and that maybe “there's a difference between having an endorsement and serving your patients well.” To Christohpersen’s point, he regarded the medical system as being in “shambles” and that there needed to be some interim between requiring stocking and enforcing it. He respected retailer concerns about a crackdown on endorsement rules, but “I don't see anybody or hear anybody that wants to do that.” Kingsbury said the “whole purpose of this rulemaking is that there's a ton of stores out there that are like ‘we don't…want to do that,’ but enforcement says they have to voluntarily give up their endorsements. We don't have a method by which to pull them away, which was what provoked the petition in the first place” (audio - 3m).

• The third subject Jacobs brought up related to enforcement of endorsement rules, and alternative approaches to encouraging compliance.
  • Jacobs relayed that existing rule language specifying “suspension or revocation” of an endorsement was uncommon. As endorsements were “attached” to a license, the term “discontinue” was considered more fitting. Discontinuing could also involve a “waiting period for a certain amount of time before they can apply again,” he remarked. Jacobs said the intent was compliance, but “if they're not going to be able to then…having the endorsement might just not be feasible, might not be the best approach.” He included that if there was a specific area of rule an endorsement holder was having difficulty meeting, demonstrating compliance in that area in the future could lead to an endorsement being reinstated (audio - 4m).
  • Kingsbury argued that the rules should be clear and enforceable, but that the agency staff could also approve a policy statement outlining a phase in period, or requiring education as the first response to endorsement rule violations as a form of “slack time.” He also believed some current product could meet DOH standards if manufacturers had it tested. Kingsbury had heard a variety of responses from Enforcement officers about their power in this area, leading him to conclude clearly communicated policies were needed. Policy and Rules Manager Cassidy West indicated a policy statement would need to stay in place until there were “rules to replace it” (audio - 5m).
  • Foster noted in chat that interim guidance might be better as an agency Interpretive Statement, but staff suggested that was limited to existing rules (audio - 3m).

• Before and after the discussion, participants posed questions around a prospective law exempting patients from a cannabis excise tax, what rule sections were covered by the project, product donations to patients, and collaboration between WSLCB and DOH on the medical cannabis program.
  • Davies highlighted that HB 1453—subsequently signed into law by Governor Jay Inslee on March 14th—would “require some rulemaking”, and asked if it was possible to add that to the endorsement rulemaking project to “expedite implementation.” Jacobs replied this was a topic of “broader discussions,” but a similar situation had emerged with alcohol, “and we ended up combining those two rulemakings.” However, as part of the team implementing this, he’d felt the combination made that effort “a little unwieldy,” giving him pause. He promised staff would be considering it, but it would mean a longer timeline “on this set of rules” (audio - 4m).
  • Kingsbury wondered if staff would offer any changes to WAC 314-55-020 on “Licensing change requests.” Jacobs said their intent had been to revise endorsement rules specifically before licensing changes were contemplated, though they weren’t ruled out (audio - 3m).
    • The cited section of rule was listed as part of the project CR-101, Pre-Proposal Statement of Inquiry, and Memorandum.
  • MacRae noted when SB 5052 was passed combining the medical and adult use markets in 2015, an increase in licensing had been intended to create broader patient access through endorsed retailers. He mentioned a previous analysis he’d done which suggested “the proportion of stores…that held medical endorsements…was lower in the stores that were granted licensure under 5052.” He felt that licensees who entered the market under the auspices of helping patients should be expected to maintain their endorsement, or potentially “they lose their licenses [which goes] back into the social equity pool” (audio - 3m).
  • Ehrhart emphasized that hers was one of few stores that “consistently provides free product for our medical patients,” as allowed by law. Jacobs suggested updates had been made that “addressed” a bill with regulations on tetrahydrocannabinol (THC) passed in 2023, but the allowance for patient donations remained in place (audio - 3m). Kingsbury followed up to say he knew some stores donated any cannabis product to patients, wondering if this was allowed. Cannabis Enforcement Captain Kandra Tinnerstet chimed in via chat that "i am going to have to take a look at it." (audio - 3m)
    • WAC 314-55-155(5) stipulates that endorsement holders “may donate product to qualifying patients or designated providers who hold a valid recognition card,” without stipulation of type or DOH compliance.
  • Amber Wise, Medicine Creek Analytics Science Director asked in chat, “Can you or someone from DOH give some idea about how your two agencies are collaborating on rules and language?  I've been encouraged with new-ish staff at DOH that seem dedicated to improving the medical patient's access and safety." Jacobs said they’d shared their rule language with DOH colleagues and West indicated there were standing meetings between the agencies. Shannon Angell, DOH Deputy Director of Drug Systems, chimed in to agree there was regular communication and information sharing between her staff and WSLCB (audio - 2m).
  • Jeter raised a question of what cannabinoids were covered by the tax exemption in HB 1453, particularly whether cannabinoid items besides those with THC would qualify. Moreover, she wanted a sense of whether regulators would be  “assigned to keep up with the rapidly evolving science in this area, and what type of assurances are we going to get…that regulation will be quickly brought to bear so that patients can benefit from said science.” Jacobs pointed to the Research Unit set up within WSLCB in 2023, and West promised to follow up with her. Director of Policy and External Affairs Justin Nordhorn made clear that taxation wasn’t going to be part of the medical endorsement rulemaking, and HB 1453 would have separate rulemaking (audio - 3m).
  • Jacobs told attendees that additional comments or suggestions on the project would be accepted via rules@lcb.wa.gov. A second focus group on the project was convened on Thursday March 14th.