WSLCB - Board Caucus
(July 2, 2020)

Here are some observations from the Thursday July 2nd Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• The WSLCB Policy and Rules team prepared the Board to take several actions planned for the following week’s board meeting.
  • Cannabis Retail Title Certificates (WSR 18-09-117, audio - 1m). Policy and Rules Coordinator Casey Schaufler confirmed that staff at the July 8th board meeting would ask the Board to withdraw the CR-101 regarding cannabis retail title certificates which had covered “retail locations in a jurisdiction with a moratorium on marijuana retail sales.” He said that the board interim policy, passed in April 2018, was “effectively handling that situation” and that more permanent rulemaking was not “necessary at this time.”
    • Schaufler discussed retail title certificates and the interim policy at greater length during the June 24th Board Meeting.
  • SB 6206 Implementation - Location Compliance Certificates (audio - 1m). Schaufler said he planned to ask the Board to approve opening a CR-101 to implement recent legislation mandating that the agency provide location compliance certificates during the license application or renewal process. He explained that the agency anticipated a “tight timeline” for the new rulemaking project.
  • HB 2826 Implementation (audio - 1m). Another new rulemaking project would enable implementation of legislation extending the Board’s authority over cannabis products and ingredients. Schaufler expected "a little more flexibility" on this new rulemaking project’s timeline.
    • On June 24th, Schaufler commented that WSLCB’s emergency rules banning use of vitamin E acetate in cannabis vapor products would remain in effect through September 24th, and likely be extended again until HB 2826 was implemented.
  • Quality Control (QC) Testing and Product Requirements (WSR 20-07-052, audio - 5m). The public hearing on proposed revisions to cannabis product standards was also scheduled for July 8th.
    • Hoffman explained that she’d sent the Board “a table of comments received” by the agency. She noted several comments appeared to have been made “under the assumption that there’s some connection between marijuana product standards and marijuana laboratory testing.” Hoffman stressed that the changes WSLCB was considering focused on cannabis product standards.
    • Hoffman reminded the Board that the agency has been working with the Washington State Department of Ecology (DOE) on “the lab accreditation process and standards and the associated methodologies.” However, the upcoming public hearing for the CR-102 would address “standards only, for the product, not the labs.”
      • The DOE leads the Cannabis Science Task Force (CSTF) and Cannabis Observer helps document their steering committee meetings. However, we learned this week that a communications mishap at DOE resulted in a failure to send public notice about the Committee’s June 24th meeting. Thankfully, the Committee records their webinars and voluntarily makes the recordings publicly available - albeit with some delay. At publication time, the June 24th webinar recording was not available.
    • Hoffman pledged to take time before the hearing to outline “the extensive work that we’ve done with these rules,” some of which predated her tenure with WSLCB, including an economic analysis and what she termed a “very robust, significant analysis.”
    • Board Chair Jane Rushford inquired as to whether Hoffman was “responding to the comments regarding the CR-102." Hoffman replied that stakeholder communications received after proposed rules were filed became “formal comments, so our way to respond to those is with the ‘concise explanatory statement’” which is part of the CR-103 to adopt any revisions.
    • Still, Hoffman planned to speak “to some of those comments, just to sort of help with...an understanding of what the agency’s requirements are with respect to creating a small business economic impact statement” (SBEIS). She said a central question was “how compliance with the rule will impact businesses that must comply with the rule” as well as “all of the thought that went into creating the phase-in plan” for implementing reforms which “allow for adjustment on a number of levels.”
• The Board received updates on other active rulemaking projects and received a “heads up” about an impending request to withdraw the board interim policy permitting unapproved traceability workarounds filed nearly a year ago in the wake of what would turn out to be the last release of MJ Freeway’s Leaf Data Systems in Washington state.
  • The most recent rulemaking update was at the June 24th Board Meeting.
  • Incremental Expansion of Tier 1 Canopy (WSR 20-01-171, audio - 1m). Schaufler acknowledged stakeholder input from the listen and learn forums held on June 23rd and June 30th was still being compiled. “We think that there will be additional engagement opportunities based on the feedback that we have received” he stated, adding that there may be an additional session “for tier 1 producers only.”
    • Hoffman also weighed in on the tier 1 expansion discussion saying that staff had “received a lot of feedback in both of those listen and learn sessions” that needed “curating.” She said a “deliberative dialogue option is something that we’re considering seriously at this time.” (audio - <1m).
  • True Party of Interest (TPI, WSR 20-14-032, audio - <1m). The CR-102 with proposed changes remained scheduled for a public hearing on August 5th with Hoffman adding that no comments had been submitted so far.
  • Voluntary Compliance Program (VCP, WSR 19-15-074, audio - 1m). Hoffman told board members that she’d met with staff from the Enforcement division the week before to consider comments received during the May 28th listen and learn forum “and after.” Saying that “many” of the suggestions had been incorporated into draft conceptual rules that had been delivered to the Washington State Office of the Code Reviser (OCR), she anticipated having a CR-102 for the Board’s consideration on August 5th, and “under that timeline we would have a CR-103 before you on or about September 2nd.”
  • Withdrawal of BIP-13-2019 (audio - 2m). Hoffman announced that on July 22nd she’d ask the Board to withdraw an interim policy intended to mitigate the troubled update to MJ Freeway’s LEAF Data Systems in July 2019 which launched with a multi-day outage. The BIP had granted “licensees, labs, and [software] integrators the flexibility to develop workarounds to the problems that were associated with lab test data and manifest information.” Hoffman said the "policy was aimed at records that were already in the traceability system and were being blocked...new data created related to lab results and transfers do not experience those same challenges.” She concluded that the interim policy had “aged out” as the problems it addressed had “been corrected.”
    • Despite persistent issues and an intransigent vendor, WSLCB cancelled all remaining development within the scope of work outlined in the original 2017 contract and declared the mission accomplished with a dash of mea culpa to the Washington State Office of the Chief Information Officer (WA OCIO) on January 9th. The WA OCIO synopsis stated, “At this point, the vendor, licensees, stakeholders and WSLCB are all in agreement that the risk of further disruptions to the [market] caused by the software outweigh any potential benefit.”
    • WSLCB then shifted its business relationship with MJ Freeway to a subscription. At publication time, WSLCB continued to pay MJ Freeway $50,000 per month ($600,000 per year) for a license to use the Leaf Data Systems software and have the vendor keep it running.
    • After the relationship with BioTrackTHC soured in late 2016 and in anticipation of the need to shift to a new traceability vendor, the Washington State Legislature passed WSLCB’s agency request legislation, SB 5130 sponsored by Senator Ann Rivers, during its 2017 session which substantially increased cannabis licensee annual renewal fees. The law assessed a one-time fee of $480 to be used “for the replacement of the state liquor and cannabis board's traceability system” as well as a continuing $300 license renewal fee increase.
      • Using licensee data from mid-June, Cannabis Observer tallied 1,830 active or pending producer, processor, retailer, transporter, and research licenses. We noted that 1,830 x $300 = $549,000 / 12 = $45,750 per month.
    • See Cannabis Observer’s coverage of the WSLCB Integrator Work Session on May 7th where on-going issues with cannabis product testing results were discussed. At publication time, the last two Integrator Work Sessions had been cancelled after the primary point of contact---a leading subject matter expert---left the agency.
    • After a promising start, the last scheduled meeting of the WSLCB Traceability 2.0 Work Group in March was cancelled due to the pandemic. At publication time, work group members had not been subsequently contacted.
• Board Member Russ Hauge wondered when the Board planned to discuss the WSLCB’s dialogue with the Washington State Commission on African American Affairs (CAAA).
  • Hauge said, “I note the conversations going back and forth between our agency and the African American Affairs Commission and I wonder if we’re going to talk about those sometime - but I think we’ve got time to do that” (audio - <1m).
  • Board Member Ollie Garrett and agency staff had been engaged with the Commission regarding the Marijuana Social Equity Task Force created by HB 2870 earlier this year. Garrett had nothing to report during this particular caucus (audio - <1m).
  • In early June, Director Rick Garza told the Board that WSLCB had signed a contract with Caprice Hollins of Cultures Connecting to assist in the agency’s outreach to communities of color before and during the task force’s work. Cannabis Observer obtained the purchase request and a redacted summary through a public records request to the agency. At publication time, a subsequent request for the original contract remained in process.