WSLCB - Board Meeting
(March 27, 2024)

Here are some observations from the Wednesday March 27th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Several speakers took WSLCB and the Washington State Department of Commerce (WA Commerce) to task for not having distributed grant money available for social equity license applicants.
  • Sami Saad (audio - 5m, video - TVW)
    • Saad last spoke to the board on February 28th.
    • Although Saad’s application to the social equity retail licensing program was among those accepted, he said he felt “bad for those people didn't get their license.” He found that “Ponder [Diversity Group] did a great job” vetting applicants like him, but “we[‘re] having one license, other people in the past they having four and five, actually three and five” at once. Saad questioned whether there was “justice” for those who’d been excluded from the cannabis sector, and suggested the assessment should be “half and half, half the rubric—that one you guys chose—and the other one to meet the expectation of the community.”
    • Saad also mentioned having spoken to someone who worked at a “law office” who didn’t think staff in charge of allocating grant money through WA Commerce “knew what they[‘re] doing.” He further found some of the grant eligibility language confusing. Though among “the top people having highest points,” Saad said he wanted “at the same time to split it all together, that's to build social equity and justice for everyone.” He requested agency leaders “to make it easy for us and to speak to the work on Commerce. We've been harassed by them.”
    • In December 2023, WA Commerce Life Science and Global Health Sector Lead Alison Beason talked with lawmakers about how her agency had approached their responsibilities to distribute grants to social equity applicants.
  • Ricky Lee (audio - 2m, video - TVW)
    • Another "social equity cannabis winner,” Lee was also troubled by how a contract for the vendor for the technical assistance grant program had been awarded to Launch Industries earlier in the month. He’d received an email “late last night from Launch which went over the baseline of the round one and round two. I feel the amounts that are being handed out to the social equity winners is not going to be enough to start up a store.” Still searching for a location for his store, one landlord wanted $20,000 a month in a lease plus bank statements “proving six months of funds now.” For applicants that “all come from…impoverished communities, this is a lot of money,” Lee remarked, wanting board members to “go back and think about…this aspect and do analysis of what it’s really going to take for us to be successful in this cannabis industry.” With grant money having previously been approved, he added that he felt the WA Commerce equity retail “plan was set up in 2022, and I don't think it's up to date in today's times.”
    • Initial technical assistance grant and mentorship funding for WA Commerce was approved in 2020 along with HB 2870 which initially set up the program. Additional funding was approved in subsequent years.
  • Mike Asai, Emerald City Collective Gardens Founder and Black Excellence in Cannabis (BEC) Vice President (audio - 5m, video - TVW)
    • Like the preceding speakers, Asai was also an advancing equity license applicant harboring concerns around how grants were being organized. “I truly believe the powers that be want this program to fail,” commented Asai, laying blame at the feet of the former agency director, Rick Garza, and alleging staff were telling board members “fluff” about the situation. He relayed that WA Commerce Specialist for Finance and Grants Services Elijah Moon seemed unaware of all the grant money which had been set aside for the program as “he assumed Senate Bill 5080 was where the grant funds came from, and this is the disconnect that we're having at the LCB, that LCB has with Department of Commerce.” He wondered why officials had said “‘we care,’ but then when we reached out, we say ‘hey, what's going on?’ It's crickets.”
    • Asai also felt a “reason that we can't find locations right now is because there's fraudulent stores right now that got licenses in 2015” and agency leaders were “hiding behind Launch.” He felt the firm was essentially “using blackface, and this is owned by a White woman. It's a disrespect to the Black and Brown community” and those who’d been waiting for licensure. Since “everybody knows what grant funds are, grant funds are to open up your store, to complete the licensing process that LCB has in their rules,” and having applicants wait multiple “rounds” for Launch was unnecessary. A former dispensary owner who lobbied for SB 5080 when WSLCB was awarded “$12.5 million ‘annually,’” he believed for the grants to not be ready by now, was “no mistake, something was done deliberately.”
      • Wording in RCW 43.330.540(3) was modified by SB 5080 to require 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.” However, grants under the program were specifically earmarked for technical assistance grants and a mentorship program. Many had called for direct financial assistance for equity licenses since HB 2870 was passed, but such support for the businesses wasn’t approved.
      • Section 146(6) of the 2023 operating budget were appropriations related to SB 5080 and awarded WSLCB $1,527,000 from the general fund along with $2,255,000 through the DCA, and in FY 2025 they were budgeted $1,463,000 from the DCA.
      • During a May 2022 hearing by the Seattle City Council Finance and Housing Committee members heard how equity grants had been administered by officials in other states.
  • Carmen Rivera, former Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) appointee from the Washington State Commission on Hispanic Affairs (CHA, audio - 3m, video - TVW)
    • Rivera—who had since been elected as a Renton City Councilmember—said she understood the role grants were meant to serve in standing up a business. “I'm kind of curious how [WSLCB] worked with Department of Commerce to ensure that these grant funds would be available once letters of approval went out,” Rivera noted, “and I'm also curious because you know House Bill 2870 passed four years ago…Why has the program continued to be delayed?” Talking about showing priorities “through action,” she felt the delays would result in a “loss of trust” between government officials and marginalized communities that had been harmed by the war on drugs. Rivera felt this missed opportunity for the state agencies was avoidable, and was skeptical of the multi-round process proposed by Launch Industries staff, stating, “time is money.”
    • Hoping her contribution to WA SECTF wouldn’t turn out to be “performative,” Rivera didn’t like what she was hearing from equity applicants. “We did put the cart before the horse when it came to legalizing cannabis in this state and we prioritized money over understanding the historical impacts of how Black and Brown communities have been disenfranchised and impacted by the war on drugs and we're supposed to do an overcorrection here.”
  • Peter Manning, BEC President (audio - 5m, video - TVW)
    • Echoing the skepticism of Launch Industries as the successful vendor, Manning didn’t want the group to be in charge of the grants. He claimed the owner had “close ties to White controlling industry for the last seven years,” questioning the propriety of leaving the business “in charge of doling out funds for the social equity program [who] have fought” against enactment of the program. Manning didn’t feel it was “wise” for the agency to leave grant decisions to anyone “involved with…these entities for” that long.
    • Manning argued that Launch Industries engaged in “blackface to obtain this contract,” including by claiming an affiliation with BEC, “which was a lie. They've never reached out to us to ask us any insight on how they should implement, how they should engage with the community.” He added that he’d spoken to representatives of “nine Black entities” cited by the firm, including the National Association for the Advancement of Colored People (NAACP), who “denied having any communication with Launch.”
    • “There's over 30 retail stores that are in King, Pierce, Snohomish County that did not meet the qualifications by law in 2015 to obtain a license,” Manning alleged, adding agency staff “handed out 30-plus fraudulent…licenses.” He stated that these licensees had “no qualifications to operate in the city, the state that they're in now, this is facts.” Manning protested that these licenses stayed active while qualified social equity applicants were denied licensure, adding “those stores need to be revoked, those licenses need to be given over to the social equity program.”

• Two members of an Anacortes medical cannabis cooperative shared accounts and showed documentation they said proved officials targeted them for enforcement as they were trying to maintain compliance with applicable regulations and stop a series of burglaries they’d experienced.
  • Michael Schermerhorn spoke first as a designated caregiver for Michelle Larson, a cooperative member whose health problems kept her from attending in person (audio - 5m, video - TVW). Schermerhorn also signed up to speak for himself, offering additional details on the situation, explaining how he and Larson had been members of “cooperative 138” (audio - 4m, video - TVW).
    • Schermerhorn said that when their cooperative first attempted to register with WSLCB in 2016 “you had problems with your computers” and a staffer had warned “people are stealing a lot of stuff from cooperatives right now, and you can try registering again, or you can operate how you are just for now. And I said ‘well, we're just going to operate how we are for now, I don't want nothing stolen.’”
    • Since 2017, Schermerhorn said Larson had been a “very sick woman who spends about 250 to 300 days a year in a hospital and has, since 2017…survived about 70 surgeries.” 
    • Their medical cooperative in Anacortes had been burglarized five times in 2019. In May of that year, Schermerhorn said they “went in and re-registered” and were told by WSLCB staff that there were issues due to a “non-compliant location because somebody didn't live there, and its proximity to a [cannabis] store.” Upon following, he relayed they’d been told their premises were 200 feet too close to Anacortes Cannabis which he insisted was established sometime later.
    • When the agency moved to deny their approval, he indicated they’d appealed and “people that I talked to in LCB were very, very conscientious and thorough, I thought, in the way they directed me in how to set this appeal in process.” This led to a hearing scheduled for September 2019, and Schermerhorn showed documents he said were associated with the appeal that “says clearly: Cooperative 138.” Though they’d called the cooperative Flower Kiss, he’d accepted this as a designation given by WSLCB. They’d felt optimistic about the appeal, as Larson was going to be residing at the cooperative following surgery and “we thought 200 feet was something that would be easy to deal with.”
    • As burglaries at the cooperative were occurring in 2019, Schermerhorn claimed to have identified two perpetrators from security camera footage, and said they stole cannabis and a propane tank. He claimed Anacortes law enforcement had not only failed to assist in bringing the suspects to justice, “I think they're participating in the break-ins.” Then, one day before the WSLCB hearing for the appeal, Schermerhorn said the cooperative was raided by an “interlocal drug task force,” and the accompanying warrant included a July 2019 statement to law enforcement by WSLCB Licensing Specialist Shannon Angell that theirs was an “illegal cooperative.”
    • Schermerhorn stated he’d next filed a complaint with the city mayor’s office, following which he claimed to have been “ambushed by three Anacortes police officers who broke my shoulder, hip, and foot.” He said these were the same officers who would later use Angell’s statement in securing a warrant to raid them. That same day, a letter to the cooperative from WSLCB talking about their hearing had also been sent, he asserted.
    • Now, Schermerhorn was being told they were never a licensed cooperative and can’t file a complaint, despite having documents about his registration from WSLCB and the Washington State Office of the Attorney General (WA OAG). He concluded with a request for “help from the board here to settle this.”
  • Christopher King (audio - 5m,  video - TVW)
    • King told the board “this man is my neighbor, and I used to live in Arlington” near Schermerhorn and was familiar with the circumstances around the actions taken against his cooperative. He asserted that Angell’s statement about the status of the cooperative cited a different license number from the one on Schermerhorn’s materials. King further felt agency staff had a bias against patient cooperatives as well as African Americans.
    • King brought up a 2015 payout by the agency to settle litigation over a series of board quorums held in violation of open public meeting laws following the legalization of cannabis in 2012. Agency leaders were “running around down there in the south [Seattle] and finding out ways to shut Blacks down and all the medical down there,” he said. King explained he was familiar with disenfranchising people from mortgages, and saw similar tactics at play with how officials were keeping certain people from getting cannabis licenses, “and that's what you do as an agency, you want all our money.”
    • King argued that the first equity retail store to open, Cloud9 in Arlington, was owned by Dennis Turner who was hailed as “some kind of new messiah, golden child of the social equity era,” but had been involved in litigation. He believed Turner was liable for hundreds of thousands of dollars, “I showed you that, you got no comment about that.”
    • “It's just the continuing pattern of abuse and instead of trying to help Michael Schermerhorn…I already know that you're in litigation to fight him and run him over, too. It's what you do.” King also mentioned previous criticisms he’d made around transparency of agency actions, reflecting, “when I think about how many lives you've wrecked and continue to wreck with this money now on the 2870…I've never seen an agency this corrupt.”
    • King had also discussed Schermerhorn’s situation during a December 2023 medical cannabis town hall hosted by the Cannabis Alliance. Schermerhorn previously offered support for HB 1453 in testimony to lawmakers in January 2023.

• Bailey Hirschburg, speaking as a member of the National Organization for the Reform of Marijuana Laws (NORML), lauded new education resources offered by WSLCB and urged dedicated consumer outreach by the board in the face of suggestions by researchers to disregard input of consumers, journalists, cannabis licensees, or their employees (audio - 5m,  video - TVW).
  • Hirschburg pointed to the launch of new cannabis educational materials from WSLCB, specifically the Cannabis Basics and Consumer Use and Safety pages which he’d weighed in on as a member of the WSLCB Public Education Work Group in 2023. He stressed the importance of not just posting the information but putting “effort and time into making people aware of…appropriate social behavior, civic standards around cannabis consumption and around what we think should be normal.” Hirschburg wanted board members to talk about such norms with the public and fellow regulators.
  • Mentioning a survey agency staff disseminated at the beginning of the year, Hirschburg encouraged the board to make the responses to that survey public,
    • Board Chair David Postman agreed with the suggestion to make responses available following prior comments by Hirschburg in December 2023.
  • Hirschburg mentioned that another member of the work group, Research Scientist Bia Carlini, leader of the Cannabis Education and Research Program (CERP) at the University of Washington Addictions, Drug, and Alcohol Institute (UW ADAI), revealed in emails to the agency she “didn't want anyone…considered a cannabis advocate to be weighing in because [she] didn't really see a difference between advocacy of the issue and being a member of the industry with the direct financial stake in the outcome.” He’d since found Carlini was involved in a January 2024 study seeking to justify excluding anyone from the industry, advocacy, or media fields from influencing cannabis policymaking decisions.
    • Beyond classifying calls for public education and improved enforcement efforts as policy “distractions,” the report advised future research to “explore cannabis industry rhetoric in other states and around other topics…to develop counter arguments and disseminate alternative narratives that protect the public’s health and resonate with legislators and the public.”
    • In remarks to the board on January 3rd, Cannabis Observer Founder Gregory Foster also took issue with the study and the use of state funds to stigmatize certain interest groups.
  • Hirschburg believed, “If you guys are going to be…standoffish about who…can advocate on behalf of consumers in the state, or for their interest, then I hope you guys not only release the survey, you…actually act as leaders in gathering public comment on this rather than just saying ‘well, we're not going to listen to these people,’ or we won’t take them seriously.”
    • UW ADAI staff explicitly endorsed excluding some interests from future cannabis policy making in another paper, Identifying policy options to regulate high potency cannabis: A multiple stakeholder concept mapping study in Washington State, USA. That study concluded that “Future studies should explore non-cannabis industry stakeholders’ willingness to work towards minimizing the influence of the cannabis industry in policy development processes to assure public health regulations prevail.”