WSLCB - Board Meeting
(June 5, 2024)

Here are some observations from the Wednesday June 5th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Daniels also led a brief public hearing on proposed rule updates to retail medical cannabis endorsements (audio - 4m, video - TVW, Rulemaking Project).
  • SB 5080 Implementation (audio - 1m, video - TVW, Rulemaking Project)
    • Pushing back the timeline for proposed changes to social equity program rules again, following “extensive feedback” from stakeholders Jacobs reported that a survey and revised draft rules would be published in the middle of June. Survey results would inform the CR-102, which he indicated would instead be presented “mid-July.”
      • During the previous day’s board caucus, Jacobs mentioned that the CR-102 was on track for the July 17th board meeting.
  • HB 1453 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • According to Daniels, the CR-102 with proposed changes based on the 2024 law exempting registered medical cannabis patients from a 37% excise tax on cannabis items was expected at a special board meeting on June 18th.
    • He subsequently noted that interim guidance and an “infographic” on the project were also distributed via GovDelivery (audio - 1m, video - TVW).
  • SB 5367 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • Jacobs relayed that the project relating to regulations for tetrahydrocannabinol (THC) would also have a CR-102 for board members on June 18th.
      • Proposed rules for the project were forecasted for May 22nd, but the day before Policy and Rules Manager Cassidy West announced the postponement until June.
  • Cylindrical Cannabis Packaging (audio - <1m, video - TVW, Rulemaking Petition)
    • A petition requesting to specify what the principal display panel is for cylindrical containers would have a staff recommendation on June 18th, Jacobs told board members.
  • Social Equity License Mobility (audio - <1m, video - TVW, Rulemaking Petition 1, Rulemaking Petition 2, Rulemaking Petition 3)
    • Similar to the other petition, three people submitted requests regarding the ability of social equity licensees to relocate outside of the county to which their license was allotted. Jacobs expected to have recommendations offered on Petition 1 in June, with the other two presented by July 17th.
  • HB 2151 Implementation (audio - 1m, video - TVW).
    • Jacobs stated the law involving the transfer of testing lab accreditation authority would have the CR-101 to start the project presented to board members on July 17th.
  • Payment Flexibility (audio - <1m, video - TVW, Rulemaking Project).
    • A CR-102 with proposed changes to payment options between licensees was due to be presented on July 17th.
    • Jacobs further noted draft rules and a survey related to the project was sent out on June 3rd, with responses accepted until July 8th (audio - 1m, video - TVW).
  • THC Serving Size (audio - <1m, video - TVW).
    • Jacobs anticipated staff would have a recommendation on another petition for rulemaking calling for an increase to the limit of 10 milligrams of THC per serving presented on July 17th.

• Daniels also led a brief public hearing on proposed rule updates to retail medical cannabis endorsements (audio - 4m, video - TVW, Rulemaking Project).
  • Patient John Kingsbury submitted the petition to revise endorsement rules in WAC 314-55-080 in March 2023, Jacobs explained, and the board approved the project that October. He said if there wasn’t “need to make any substantive changes we'll be requesting approval of the final rules during the June 18 board meeting” and the changes would take effect on July 19th.
    • WSLCB staff hosted two outreach events related to the project on March 11th and 14th.
  • Jacobs mentioned that draft changes were sent out in February, and a CR-102 with proposed updates was approved for filing on April 24th. The language suggested three major changes:
    • First, he said it would be “creating a requirement that wherever store hours are currently required to be posted, that cannabis consultant hours also have to be posted. This requirement can also be satisfied by posting a window of time during which appointments with cannabis consultants can be made.”
    • “The second is modifying the in stock requirement,” Jacobs explained. The existing requirement stated “that a medical cannabis endorsement holder has to have [Washington State Department of Health] DOH compliant product in stock in order to hold a medical cannabis endorsement.” After hearing during focus groups that there were concerns over “shipments or just not having product in stock. We're proposing amending the rule language to say that if a medical endorsement holder has DOH compliant product on order, that will satisfy this requirement.”
    • Finally, Jacobs commented there would be “what we're calling a variable cure period to allow endorsement holders to fix whatever issue they're notified of.” To clarify “what the process looks like we're proposing adding a cure period following notification of a non compliance that will range from seven to 30 calendar days depending on the violation and issue. The range is to accommodate for the different types of violation.” If an endorsement was rescinded after the period expired, any request by the business to reinstate the endorsement would necessitate “additional documentation to the Licensing division to show that the non compliance that was previously an issue is no longer an issue.”
  • Jacobs shared that four comments had been submitted to WSLCB related to the project, “including suggested changes from the Cannabis Alliance that specifically are asking us to make specific rule changes that will be, we can address following the public hearing” in the concise explanatory statement.
    • Board Chair David Postman wanted to better understand how staff handled changes to rule text at this stage. Jacobs replied that they were "non-substantive as well as…minor changes." If there were any new rule requirements “or we're fundamentally…changing, deviating from the proposed rule language, then that raises the question of whether we need to do the whole CR-102 process again.” But he suggested if it was clarifying an existing requirement, it could be done without a new CR-102 (audio - 1m, video - TVW).
  • With no one showing up to offer remarks on the project, Postman closed the public hearing (audio - <1m, video - TVW).

• Public commenters hammered WSLCB officials over the latest round of social equity rulemaking with critiques and suggestions related to licensing, grant funding, and applicant scoring as well as opposition to the Board having accepted a petition on Employee Stock Ownership Plans (ESOP).
  • Sami Saad (audio - 4m, video - TVW).
    • Saad asserted following the equity licensing window in 2023, “a lot of people [were] left” out. Mentioning the revised draft scoring rubric, he urged the board to give half of the additional equity retail licenses permitted under SB 5080 to “pioneers” who had run medical cannabis collectives prior to that market’s mandatory merging with the adult use cannabis sector in 2016.
    • Claiming he spoke for 25,000 “African American and East African American people,” Saad said, “they're not happy” with the equity program outcomes so far. He also felt “disrespected” after not being called at a May 22nd meeting at Highline College. Saad believed everyone presented had agreed with him, but agency officials hadn’t listened.
    • Saad also had gripes about how City of Renton officials had capped the number of retail stores, forcing him to find a different location for his equity license than his former medical collective since Evergreen Market occupied the retail allotments in the city. He wanted equity stores exempt from minimum buffer requirements between cannabis businesses.
  • Christopher King (audio - 4m, video - TVW)
    • King believed board members tried to “minimize my time whenever you can” and wondered if they had ever reduced public speaking time. He remarked that he should be allowed to use his allotted speaking time for dramatic pauses, though Postman insisted the time was to communicate things to board members. King promised litigation was coming over the alleged infringement on his rights.
      • Board members had planned to reduce public speaking time in 2019 before receiving public pushback.
    • Turning to the appeal of the social equity application of Libby Haines, King said, “all of a sudden she can't get the information that she needs, that was promised,” calling this a “discovery problem.” He said her scoring had also failed to include a previous cannabis conviction, “another intrinsic flaw in the whole system that you've got there.” King further claimed that no equity applicant had won an appeal yet (“they all get tossed out”) and heard applicants were being told by the Washington State Office of the Attorney General (WA OAG) “even if the case can be proved that they're still not entitled to get a store, making the whole appeal process illusory.”
  • Damien Mims, Black Excellence in Cannabis (BEC) Executive Treasurer (audio - 5m, video - TVW)
    • Bringing up the social equity grant process “that we were supposed to get nine months ago,” Mims read from a “contractor build out” list with supplemental questions, and requests for quotes and documents on what grants would be spent. He concluded “all these nitpicky items that they have in here are all based on what I'm going to spend money on when I get the money,” but were dependent upon his finding a location. Absent a finalized lease, he felt as though officials “want me to essentially find a contractor to make up an imaginary quote to an imaginary building that I don't even have because I can't get it because the funding hasn't come.”
    • Mims conveyed that “every step of the way through this entire process everything has been a challenge, [and] consistently drug out, delayed and stalled out and made difficult.” He said that equity applicants like himself “aren't being given the tools and the assistance necessary, or that was allocated to us through the law through the legislature.” Grant money explicitly for applicants had “roadblocks and all these nitpicky questions” put in place, Mims argued, stating the “burdensome” requirements hurt applicants.
  • Paul Brice, Happy Trees Owner and former Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) advisory member (audio - 4m, video - TVW)
    • Mentioning the scoring rubric discussion on May 22nd, Brice felt the conversation "felt like a complete cloak and dagger.” He said that Social Equity Manager Aaron Washington had provided a rubric with “negative 30 points if you are a pioneer,” and that Policy and External Affairs Director Justin Nordhorn had “a piece of paper saying that is correct.”
    • Brice claimed equity applicants “all have the ability to take part in any new license type coming throughout till 2032. Whether it be mushrooms, delivery, consumption lounges, and I can do any of them, can make Washington State look good doing any of them.” But he believed WSLCB leaders “want to take what left value we have for cannabis.”
      • Although WA SECTF had recommended consumption lounge and delivery licensing be established and initially exclusive to social equity businesses, the legislature had not acted on this. Additionally, nothing in statute at time of publication gave preference to equity applicants when it came to sales of any other controlled substance.
    • Brice mentioned that “title cert[ificate]s are a major concern,” and believed agency leaders were attempting to “push this rubric through while it's flawed and going to let this social equity program get…further away from…people that it was intended to help.” He believed WSLCB representatives would “let in all their friends and everyone that's not most harmed…get these shops going as competition even before the next round of licenses are, are even awarded.” Identifying as a “pioneer” for “Pierce County and Kittitas County back in the medical days,” Brice still couldn’t get a “license in my own hometown,” and “in a sense, I had to buy my way into a flawed system that now this loophole is trying to be exposed so all the good ol boys can get into this club.” He argued rubric changes amounted to “trying to take away the one thing that really is protected for our value and that is the new license types.”
    • “Coincidentally, I'm also being audited by LCB right now while I'm trying to do my build out…and I'm wondering how many other, other social equity people you guys are attacking…I'm in the most fined pot shop in the state,” which Brice considered a sign of his being “attacked, hunted and targeted by the LCB.”
      • Brice shared this letter detailing his concerns with the successful first round social equity applicants, WA SECTF members, and Cannabis Observer.
  • Mike Asai, Emerald City Collective Gardens Founder and BEC Vice President (audio - 4m, video - TVW)
    • Reiterating an objection he’d raised on May 22nd, Asai regarded a petition to allow ESOPs “by [the Washington CannaBusiness Association] WACA that would basically allow out of state investment without legislative action,” a change which “threatens to undermine the principles of social equity that we have fought so hard for.” He insisted the trade group was “completely against social equity” and had engaged in “backdoor tactics for years now,” with ESOPs being “nothing more than a disguise for out of state investment.” He stressed that board members shouldn’t pursue the petition out of respect for the social equity process. “To the current White retailers, I implore you to stop undermining social equity efforts. Your actions have, have far reaching consequences,” he said. Asai agreed with the sentiment others expressed that “pioneers” from the medical market deserved priority in equity licensing.
    • Asai pointedly said, “you owe us” following the licensing changes approved in SB 5131 (Concerning marijuana with respect to privileges for research licenses, local authority notifications, the retail licensing merit-based application process, certain transfers of plants and seeds, licensing agreements and contracts, advertising, and jurisdictional requirements). He indicated that litigation and future legislation were possible, and pressed board members to change the rubric so that cannabis convictions would continue to be the only prioritized drug charge. Asai also felt “certificate holders should be excluded” from the program as they “would dilute the retail license market…and enable them to benefit from the hardship experienced by Black and Brown communities.”
      • At time of publication, agency rules in WAC 314-55-570(1)(j) defined "Social equity title certificate holder" to mean any “title certificate holder that meets the requirements of a social equity program applicant as determined by the social equity contractor, and is unable to open for business in the city or county where the cannabis retail license is located.” Additionally (3)(b)(iv) explains some differences in the application process: “An application to reinstate the license of a social equity title certificate holder will not be considered a new social equity license application. [They] may submit an application for a social equity license and an application to reinstate their existing license through the social equity program.” But inclusion of retail title certificates wasn’t always a point of contention in the development of the social equity program. 
      • Certificates were set up through an interim policy in 2018 and were adopted as a more permanent solution through a policy statement in July 2021.
      • In September 2020, title certificate holder Angel Swanson and Paula Sardinas—later a WA SECTF Co-Chair—lobbied WSLCB to allow certificate holders to relocate their license to any jurisdictions which would allow them. In a WSLCB-hosted event ahead of the formation of WA SECTF later that month, Swanson identified herself as having been involved in medical collectives prior to cannabis legalization.
      • Members of WA SECTF continued to consider including title certificate holders in their recommendations on the social equity program in late 2020 and 2021. WSLCB staff gave a presentation covering the certificates in January 2021, and the topic was included in the scope of responsibilities for the task force Licensing Work Group that April, with a conversation on license mobility dealing with the certificates in September. The group ultimately advised including “current title certificate holders who fit the definition” of equity applicants to the full task force early in 2022.
        • Board members also discussed the certificates in May after a local government ended their cannabis business ban.
      • In July 2022, Asai urged WSLCB to prioritize certificate holders “that are Black or Brown” in equity licensing after former dispensary owners of color. Rule language with the definition for equity certificate holders was adopted following presentations and a public hearing in September 2022.
      • When a legislator raised local ordinances restricting cannabis businesses as a concern in a January 2023 hearing, Nordhorn noted the inclusion of title certificates as one benefit of the social equity program. Social Equity Program Manager Aaron Washington gave a briefing to board members which touched on how certificates were included in the program in September 2023, followed by remarks on the subject by Sardinas in public comments.
      • An agency update on the program on January 31st also brought up the certificates, including that the first one to complete the equity licensing process was in Clark County. A subsequent comment by Brice indicated he’d bought a title certificate.
      • Whether title certificates would be limited by the “Additional Provisions” in WAC 314-55-570(4) once reinstated as a license seemed unclear.  Those provisions supported mobility of social equity licenses within the county of assignment but also placed constraints on the resale or transfer of licenses to another qualifying social equity applicant in the first five years after issuance.  Unusually, that rule language was immediately followed by WAC 314-55-570(5) particular to social equity title certificate holders, only going so far as to grant the same county-level mobility.
  • Peter Manning, BEC President (audio - 4m, video - TVW).
    • "I'm impressed, I'm flattered, I'm, I’m happy," said Manning, because "our community is waking up to the shortcomings of the LCB." He claimed lawmakers and others were asking whether the agency was “racist” after “over 30 stores” were given licenses during a 2015 licensing window despite not meeting the qualifications in statute at that time. Manning believed this group had applications handled by “three to four people in this [the Licensing division], Frank O'Dell, Rebecca Smith, Jeannie McShane, or Beth Lehman. Is the LCB racist or do we just have racists inside the LCB?”
    • Manning sympathized with Brice’s frustrations, alleging that “people with dark skin [being] overly enforced by this agency” had been a frequent problem for the limited number of licensees of color already in the industry. Manning called for legislators to “come in, let's audit this place,” excusing Postman and Board Member Jim Vollendroff as they’d joined WSLCB in 2021 and 2022, respectively. He asked Board Member Ollie Garrett for her take on the situation but she didn’t offer a response.
    • Manning’s final issue was with Launch Industries, the company chosen as the vendor for the equity grant program by the Washington State Department of Commerce. He claimed the company was run by “a person that has a profound interest in White retailership here in this state.” He noted that he and others had spoken against selection of the company during public remarks on March 27th after the owner “fraudulently claimed that she had got the support of the community,” and used “our name…which is trademarked.” He asked the board members to remedy the situation, as “this is only gonna grow. We're not gonna let this go.”
      • On April 24th, Postman asked that those concerned over the choice of Launch Industries reach out to WA Commerce officials,  “those are not our projects,” he argued, requesting public comments were for “only talking about things that LCB has anything to do with.”