WSLCB - Board Caucus
(August 13, 2024)

Here are some observations from the Tuesday August 13th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• An update on cannabis product samples included survey results, which prompted a question on efficiencies related to the practice (audio - 5m, video - TVW, Rulemaking Project).
  • Director of Policy and External Affairs Justin Nordhorn said, “we're going to be covering the vendor, educational, and internal quality control sampling rulemaking” in WAC 314-55-096 at the following day’s board meeting.
  • He reminded the group the petition had been “filed by the Washington CannaBusiness Association” in July 2022 and accepted that August. However, the board didn’t formally open the rulemaking effort until March 2023. The petitioners sought to “streamline the current framework for vendor education and internal quality samples,” Nordhorn remarked, in hopes such a change would “enhance efficiencies, reduce costs, and improve safety and transparency in how cannabis samples are handled by the licensees.” He shared that there was interest in being “able to utilize current product that was on the production line as the samples, instead of having to create entirely different subsets and label those and those types of things, which was cost intensive, as well as not necessarily” representative of “what the product would be for a customer.”
  • Nordhorn stated the draft CR-102 published by WSLCB covered several changes to rule language:
    • “The introduction of what we're calling trade samples, and this is going to be merging what's formerly known as the vendor and education samples, so we're going to put them into one category, so we don't have the complexity of having to figure out how many samples of one type versus another type, and what the purpose was for, we're going to categorize them all together into trade samples.”
    • “Other changes…based…on stakeholder feedback include simplification of the compliance requirements, adjustments to sample size to better reflect the industry interest and the product representation.”
    • “Proposed rules also emphasize traceability, ensuring that all trade samples are documented within a state traceability system, incorporate specific provisions for sample storage and distribution.”
  • Outreach to interested parties in the form of “in-person discussions, targeted surveys, and collaborative rulemaking sessions have informed the changes that we're going to be presenting,” he remarked. Nordhorn articulated the benefits as including “reduction in regulatory burdens by simplifying compliance, enhanced understanding of products among budtenders.” He acknowledged the economic implications of the potential change: “while there are costs associated with compliance, such as mandatory sampling language on the labels and record keeping requirements, we anticipate these to be minor and likely to be offset by current costs associated with creating those special package sizes and associated labeling.”
  • Nordhorn added that “our public health program was heavily involved in this during the entire course, and so the balance of representing both the business interest as well as the public health and safety have been identified in this particular rule set.”
  • Assuming board approval of the CR-102, Nordhorn explained a “public hearing will be held on September 25th. If a supplementary CR-102 is not needed following that formal public comment period,” the CR-103 would be presented to board members on October 9th, “and then the rules will be in effect November 9th.”
  • Board Chair David Postman observed, “bottom line is, it's optional for business, right?...we're not requiring anything.” Nordhorn concurred, “a business would argue that they need to be able to provide samples to be able to generate the business with the retailers and such. But there are not mandates that they participate in a sampling program.” Postman also commented on the increased efficiencies of tracking being proposed (audio - 1m, video - TVW).

• Staff briefed on five petitions for rulemaking under review involving social equity license mobility as well as equity retail title certificates, plus a request to allow for the establishment of a cannabis transporter fulfillment hub.
  • Nordhorn mentioned a petition involving social equity retail title certificate holders would be presented at the September 25th board meeting (audio - <1m, video - TVW).
  • Policy and Rules Coordinator Jeff Kildahl explained that on December 11th he planned to “present the agency recommendation regarding a petition to amend WAC 314-55-310 to update the rules regulating cannabis transport by cannabis transport licensees to allow for cross docking of cannabis products, to improve cannabis delivery, safety and efficiency” (audio - 1m, video - TVW).
    • At time of publication, no board meeting had been scheduled for December 11th, meaning Kildahl either misspoke or staff were planning to add or reschedule a meeting that month.
    • A Cannabis Regulators Association (CANNRA) annual meeting in San Diego was scheduled through December 4th, possibly impacting a board meeting set for that day.
  • Policy and Rules Coordinator Denise Laflamme presented on behalf of her colleague, Daniel Jacobs, whom she said would be presenting a petition recommendation to board members at the following day’s board meeting related to another three petitions on equity license mobility. She indicated the recommendation was to “deny the rulemaking petition because the board already accepted identical petitions during your June 18th board meeting. Moreover, Laflamme pointed out that “the social equity rulemaking was filed just last week, [plus] requested language is actually already reflected in the draft rule language” (audio - 2m, video - TVW).

• Officials briefly addressed the status of seven other rulemaking projects open at WSLCB covering previously-approved legislative implementation and accepted petitions.
  • Lab Authority Transfer (audio - 1m, video - TVW, Rulemaking Project)
    • Nordhorn said a public hearing on the CR-102 related to implementation of HB 2151 moving laboratory accreditation powers over to the Washington State Department of Agriculture (WSDA) would be hosted on September 25th, and an “informal comment period ends on the [Friday August] 16th.”
  • HB 1453 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • A public hearing on proposed rule language around a medical cannabis excise tax would be held on August 28th, Nordhorn told board members. Under this timetable, a CR-103 to formally change the rule language would be presented on September 11th, he noted.
  • Payment Flexibility (audio - <1m, video - TVW, Rulemaking Project)
    • According to Nordhorn, the proposed rules presented on July 31st were on track to have a hearing on September 11th, followed by a CR-103 on September 25th.
  • SB 5080 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • Legislative updates related to the social equity program at the agency would follow the timeline of payment flexibility, indicated Nordhorn, a hearing on September 11th and, assuming no changes, presentation for final adoption on September 25th.
  • SB 5367 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • Proposed changes around how tetrahydrocannabinol (THC) content was calculated and listed on cannabis items would also be presented on September 11th, and considered for adoption on September 25th, Nordhorn commented.
  • SB 5376Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • Nordhorn explained that a law related to the sale of cannabis plant waste material would have proposed rule language presented to the board for approval on September 25th. 
    • Later in the caucus, Kildahl described the plan of staff to “have a stakeholder meeting to go over the proposed rules later this month, and If approved by the board…hold the hearing on the proposed rules on November 6th and present a CR-103 on November 20th.” Following this schedule, the amended rules would take “effect…December 21st” (audio - 1m, video - TVW).
  • Minors on Wholesale Licensed Premises (audio - <1m, video - TVW, Rulemaking Project)
    • With a CR-101 accepted February 28th, Nordhorn noted the CR-102 with drafted rule changes would be “scheduled for October 9th.”
  • Employee Stock Ownership Plans (ESOP, audio - <1m, video - TVW, Rulemaking Petition)
    • Nordhorn indicated a CR-101 on an accepted petition for ESOPs was expected to be put before board members on October 9th.
  • ID Reforms (audio - <1m, video - TVW)
    • Another petition accepted by the board related to identification reforms, and Nordhorn mentioned it was on track to have a CR-101 presented for approval on September 25th.