WSLCB - Board Meeting
(November 20, 2024)

Here are some observations from the Wednesday November 20th Washington State Liquor and Cannabis Board (WSLCB) board meeting.

My top 5 takeaways:

• Policy and Rules Manager Cassidy West presented a recommendation against a petition requesting an extension of the check deposit deadline introduced in payment flexibility rules.
  • The board approved mailed checks as a payment option between cannabis licensees with stipulations in the Payment Flexibility rulemaking project adopted on September 25th.
  • At the meeting, West advocated for denial of a petition from Fabian Toader representing Green Labs, LLC—makers of Swifts Edibles—requesting an extension on the check deposit requirement (audio - 4m, video - TVW, Rulemaking Petition).
    • During recently concluded rulemaking, “we held robust stakeholder engagement” with a comment period, public hearing, and open survey, West explained.
    • She elaborated that while there had been feedback on “not requiring a deadline for the deposit…there wasn't really any data that was provided regarding that” by Toader. 
    • West further observed when the rulemaking project on WAC 314-55-115 was open, “we received no other comments about the deposit date.”
    • West concluded there was little reason to re-open the rules at this time, and requested the board move to deny the petition.
  • Board Member Ollie Garrett looked for clarification from West about the scope of public input received during the rulemaking process and to confirm the substance of the petitioner’s request (audio - 7m, video - TVW).
    • Garret mentioned the survey responses and comments the agency had received during the payment flexibility rulemaking, wanting to know how many people had brought up check deposit requirements. She was also interested in “what is it that we're trying to do here…did we ever have anything around how depositing the check…in the past, and what it is…the new procedure?”
    • West described there having been “minimal comment only the very few about the deposit date in that timeline, so it was small percent relative to the comments we received otherwise.” She then said, “prior to the recent rule, the original rule required that check payments be made to the seller at the time of delivery, or no later than the time of delivery.” A rulemaking petition was accepted that led to rulemaking which “allows checks to be mailed now one day following delivery…And then now there is a new requirement that those checks be deposited within five days of delivery.”
    • Garrett followed up to learn how their policy for depositing checks compared with other payment types, with West describing how the new rules attempted to create consistency with other payment methods.
  • Postman then sought to understand the petitioner’s argument for the rule change and to contextualize it against the rulemaking process (audio - 1m, video - TVW).
    • Paraphrasing the rationale behind the petition, Postman believed the argument was that “it was potentially a burden to have to get to the bank within five days.” He remarked that “the petitioner’s asking us to…reconsider that one piece of what we had done, but it still is more lenient than it was pre-rule.”
    • Postman indicated he was going to support denying the petition, stating they needed to give the recently adopted rules the chance to work, but asked staff to “look at how this is working practically and see if people are having a hard time.” He summed up that it was “just too soon to change what we just went through with that rulemaking project.”
    • Board Member Jim Vollendroff agreed with Postman’s sentiments, also feeling “we’ve got a process to review it in the future.”
  • The board voted unanimously to deny the petition (audio - <1m, video - TVW).
  • Later during general public comment, Washington CannaBusiness Association (WACA) Deputy Director Brooke Davies referred to the petition in her remarks (audio - 3m, video - TVW).
    • Davies indicated that while Toader wasn’t a member of WACA, she felt the concerns outlined in his petition were “in line with what WACA expressed in our comments and what [Terpene Transit CEO and WACA Trustee] Amber Vaughn expressed at the public hearing.”
    • Although she understood the basis for the board’s denial, she insisted the deposit concern had been missed by staff despite being raised by stakeholders like her members. Davies confirmed “we want transactions to be closed as soon as possible, we just want to make sure that the rules are workable and they make sense.” She mentioned that the original rule required checks to be presented upon delivery, and that this sometimes caused issues if the person authorized to sign checks for the retailer was not present, in which case checks were mailed the next day.
    • Davies explained that WACA leaders had supported updating the rules to address that issue, as “there was never a limit on when the person receiving the check needed to deposit it into the mail or deposit it into the bank.”
    • Frustrated, Davies felt the concern had been broader and well articulated in feedback during the payment flexibility rulemaking, but staff hadn’t revised the rules, meaning “we’re going to eventually have to come back and look at it, and fix it when it would have been better…if we could have done a supplemental or fixed it” originally.

• Board members heard another staff recommendation against a petition regarding a new traceability platform (audio - 5m, video - TVW, Rulemaking Petition).
  • Policy and Rules Coordinator Denise Laflamme recommended denying a petition from Peter Peterson, CEO of Inland Empire Growing, requesting that the WSLCB replace the Cannabis Central Reporting System (CCRS) with a new platform. She told the board that besides rulemaking not being required to change their traceability system, “LCB’s traceability project is currently evaluating a long-term solution to replace CCRS.”
  • Laflamme addressed background about CCRS, which had been used since late 2021, remarking that staff at WSLCB were “currently evaluating options for replacing CCRS as part of the agency’s traceability project, which began last year.” She set out several phases and approximate timelines that would need to be completed:
    • “Phase one is planning and requirement gathering [and was] currently underway and will continue through June 2025. This phase focuses on gathering comprehensive input from the stakeholders, including industry representatives, government agencies, and public health, to identify system requirements.”
    • “Phase two is the supply chain implementation, and that is scheduled for June 2025 through June 2026. This involves implementation of the traceability system across the cannabis supply chain.”
    • “Phase three is supply distribution and control, that is tentatively scheduled from June 2026 through June 2027, and this includes expanding the traceability system to cover distribution channels and regulatory controls.”
    • “And phase four is retail sales implementation, tentatively scheduled June 2027 through June 2028. This phase extends traceability to retail outlets, enabling a comprehensive tracking system from production to the point of sale.”
  • Postman recognized that rulemaking could be used to speed up projects, but regarded it as unnecessary for the traceability transition since staff were already looking for alternatives to CCRS. He was confident that they could deliver a traceability solution, but “we got a worst case really out there to make sure we have time. But I think everyone’s interested in trying to move it a little further” (audio - <1m, video - TVW).
  • Vollendroff moved to accept the recommendation from staff and deny the petition, with the other board members voting with him for unanimous passage (audio - 1m,  video - TVW).

• West also covered rulemaking activities and on-going delays to rulemaking projects at the agency.
  • SB 5376 Implementation (audio - 1m, video - TVW, Rulemaking Project) and Minors on Wholesale Licensed Premises (Rulemaking Project)
    • West stated that an email message with draft rules for both rulemaking projects would be sent out that week and that “stakeholders will have until December 6 to comment on those proposals.”
      • Agency staff sent out draft language following the board meeting.
    • She relayed that stakeholder responses would help staff determine whether proposed rules would be presented at the December 4th board meeting.
  • SB 5080 Implementation (audio - 1m, video - TVW, Rulemaking Project)
    • West noted that the WSLCB had received two comments on supplemental proposed social equity rules from the same person regarding “license mobility and having issues finding the location.” She anticipated having a hearing on December 4th, with a CR-103 to adopt final rules ready on December 18th.
  • Lab Authority Transfer (audio - <1m, video - TVW, Rulemaking Project)
    • Required by HB 2151, West commented the agency tentatively planned to hold stakeholder focus groups in December.
    • WSLCB staff had projected action on Wednesday towards rescinding lab rules which the agency would no longer have statutory authority over as of January 1st, 2025. In remarks to Cannabis Alliance members during their general meeting on Thursday November 14th, Director of Policy and External Affairs Justin Nordhorn addressed rulemaking delays leading to conflicts in the Washington Administrative Code (WAC) between the Washington State Department of Agriculture (WSDA) and WSLCB. While confident that the authorities established in statute would control matters of interpretation, he suggested delays were in part a result of WSLCB chemists expressing concerns that WSDA rules were not comprehensive enough, but didn’t elaborate further.
  • Captive Insurance Companies (audio - <1m, video - TVW, Rulemaking Petition)
    • West suggested another petition for rulemaking, which could allow licensees to own the insurance company insuring them, would have a recommendation from staff ready on December 18th.

• Public commenters bid farewell to Chair David Postman at his final public meeting at WSLCB, though opinions on his legacy were divided on issues like bias, traceability, transparency, and equity license mobility.
  • Christopher King (audio - 4m, video - TVW)
    • King commented on Postman’s legacy and the lingering problems he saw at the WSLCB during the Board Chair’s final meeting before moving into the role of chief of staff for Nick Brown, the first African American Attorney General in Washington State history. King viewed Postman as having “inherited a broken, racist agency - and you’ll be leaving a broken, racist agency.”
    • Disappointed in the reduced public speaking time which had been instituted by the board earlier in 2024, King termed Postman’s leadership as “one of benevolent skepticism” when the public had criticized the conduct of staff King believed behaved with racial bias in their jobs.
    • King stressed that he continued to have doubts about Director Will Lukela’s qualifications, arguing he’d come from Colorado where the “market out there is also saturated by conglomerates, Whites, who have a lot of money.” Postman had “overseen the process whereby Will Lukela refuses to provide his CV [Curriculum Vitae], and I’m going to be harping on Governor-Elect [Bob] Ferguson, to issue…a declaration that that’s not permissible.”
    • Still calling for transparency, King regarded Lukela as largely propping up prejudiced policies of his predecessor, former Director Rick Garza. King cast suspicion on their collaboration through the Cannabis Regulators Association (CANNRA) before coming to WSLCB.
  • Jim MacRae, Straight Line Analytics Founder (audio - 4m, video - TVW)
    • MacRae thanked Postman for his service and raised concerns about consumer safety issues. Beginning with something “I’ve noticed under Chair Postman’s tenure at the agency,” MacRae relayed how he had initially reached out to him “regarding some confidential data that was unfortunately being released.” They talked over the issue, and Postman “quickly, very clearly internalized the issue, and…leveraging some of your journalistic chops, asked me a number of very direct and appropriate questions.” This left him “truly surprised and pleased at how quickly the fix was implemented [and] to this day that fix lives on and the information in question is appropriately protected,” MacRae said.
    • Moreover, he remarked that Postman acted with “grace and patience in dealing with what have at times been heated, inappropriate, and even at times hostile interactions in the public comment period.” He lauded Postman’s character and said he would “personally…miss your oversight of this agency, and suspect that it will be missed internally as well.”
    • MacRae went on add “on the kind of constructive criticism side, there are a number of ongoing things on, I’ll just start with the consumer safety…there’s enough information available to the agency in spite of CCRS issues, to be able to be able to judge that things are not as happy as they should be…specifically to the vector of consumer safety.”
    • MacRae brought up a heavy metals “petition I made about a year ago” which still had “absolutely no publication of it on the internal systems, whereas all the other stuff seems to be tracked there very nicely.” He wondered if heavy metals were a datapoint “that people want to keep quiet. I don’t know why that is, but it kind of goes against the notion of a culture of trust.”
  • David Busby, OpenTHC Founder (audio - 2m, video - TVW)
    • Busby congratulated Postman about his new position, but focused most of his remarks on CCRS. He was concerned about the short notice given by the WSLCB for licensees to implement required changes to lab results data in CCRS, “and it all has to be done by December 1, which is like six business days.” Busby stated that it was important to “version stuff” and provide “more than a six day notice for changes to a system, especially a moderately complicated one.”
      • On Tuesday November 19th, certified analytical testing lab personnel received an email from WSLCB Lead Chemist Kari Trumbull announcing “LCB has made minor changes to the lab results reporting format that will go into effect starting Dec 1, 2024. This is to better collect and report on lab test data LCB receives to CCRS to be in compliance with state requirements found in 2SHB 2320 concerning high-THC cannabis products.”  Trumbull provided a list of standardized test names and new requirements restricting the reporting format of test results.
      • Following immediate pushback and six minutes before the start of the board meeting, Trumbull followed up by email to acknowledge the compliance deadline had been pushed out to January 15th.  She separately noted labs would be required to incorporate additional changes due to “the upcoming allowance of more cannabinoids (starting 1/7/2025),” a reference to an unpublished list of cannabis compounds not classified as tetrahydrocannabinols (THCs) and therefore exempt from the requirements of rules implementing SB 5367.
    • While he’d “long been a fan of the LCB running their own system—I think more states should be running their own systems, or taking control of their compliance reporting tech stack—” he pointed out there were “free and open source compliance reporting software” options with “lots of the stuff that the feedback groups have told you: real time APIs, better reporting infrastructure, also the stuff that, like the JLARC [Washington State Joint Legislative Audit and Review Committee] group asked you about.”
    • “I brought this up with the agency, I think the first time in like 2015 and it is disappointing to see the agency ignored” the input, Busby said.
  • Sarah Cherin, UFCW 3000External Relations Chief of Staff (audio - 3m, video - TVW)
    • Cherin expressed concerns about potential disparate treatment in the enforcement around Cantanna Fest, a concert the union helped sponsor.
    • The event, sponsored by UFCW 3000, had presented "an opportunity to talk to potentially hundreds of cannabis workers" about why it was important for them “to have a voice in this industry.” However, her team felt “during the event, there was a particularly high level of enforcement.”
    • Cherin said the union “had a hard time getting the event secured, and this was in large part, in our belief, because of LCB enforcement issues, potentially retaliation, potentially fear that both vendors and sponsors felt.” She said that emails had been requested which showed “potential disparate treatment” in the enforcement of the event, and wanted to know why that was the case. “Why this event? Was it because of our sponsorship? Why this particular event compared to other events that are held, seemingly without similarly situated enforcement? Is it because of our union’s involvement?” Cherin asked.
    • Mentioning a previous report which detailed intense enforcement practices by WSLCB in the cannabis sector from 2019, Cherin wanted to know if treatment of their event was “consistent with recommendations made…and subsequent legislation that has directed the LCB to be more education focused, as opposed to what we perceive was very punitive potential enforcement.”
  • Paul Brice, Happy Trees Owner (audio - 3m, video - TVW)
    • Voicing concerns with the social equity program at WSLCB and his treatment specifically, Brice identified as the person “most targeted, attacked, and hunted by the LCB.” Mentioning the intent of the law which created the program, he compared it unfavorably to equity efforts by other states: “this is a very diverse state. We should expect better from the Pacific Northwest.”
    • Reflecting on his own experiences with WSLCB, he claimed to be “currently going through a lawsuit with LCB because I didn’t get a social equity license, even though I am a true SEA [social equity applicant], don’t feel like I got fair application for many different reasons.” Additionally, he’d just gone through a WSLCB internal audit, noting “I passed with flying colors.”
    • “Going down the road we took to help legalize this industry, we want to see it done the right way,” he continued. “We take pride. I take pride in making sure that I run a very clean ship and hoping to find and support people in the industry that are still trying to make this a better industry.”
    • Considering future equity licensing which would be undertaken by the agency, he insisted, during the prior licensing window “it was taken advantage by many Whites for fake representation of ownership, along with Black people just trying to get…small ownership so they can own the whole thing. You know, this has to be looked into. This cannot roll out and let this next round of licenses go out this way again.”
    • Brice was grateful for others who had advocated on behalf of equity in the cannabis industry, but stressed “we’re not all the same people. We all have different voices” and the board was going to be “seeing more of us because of…all the crap that we need to see change.”
  • Gregory Foster, Cannabis Observer Founder (audio - 3m, video - TVW, written comments)
    • Foster commended Postman for his service and urged the remaining board members to continue Postman’s efforts towards transparency and timeliness in rulemaking.
    • Recognizing the difficulties which awaited Postman in his new post, Foster noted “state attorneys general are the bulwark that the states have against bad actors and bad policies, including from the federal government.” Foster noted that in his role as Attorney General, Governor-Elect Ferguson had spearheaded challenges to the first Trump Administration. He expected Brown might take a similar approach, “and in the face of that, you’re choosing to walk into the fire, and I appreciate and honor that.”
    • Speaking to Board Members Garrett and Vollendroff, Foster encouraged them to keep working through the significant catalog of rulemaking projects they’d initiated. “We’ve seen a slip in [timeliness] over the past several years, and in particular the implementation of rules around laws. That needs to be done before the next session, because the laws can change again,” Foster said, pointing to SB 5080 which became law in 2023 yet still wasn’t in rule. He then urged the Policy and Rules staff to provide precise dates in order to allow for transparency and accountability around rulemaking timelines. Foster specifically asked the Board to make information from other areas more accessible to the public, such as “regular public updates from the research program” and “from the public health education liaison.”
    • Foster hoped the remaining board members would step into roles vacated by Postman, like “representing the board at the internal management team meetings” and public health and prevention roundtables. He also asked WSLCB Director of Legislative Affairs Marc Webster to provide updates during the Washington State Legislature session in 2025.
  • Peter Manning, Black Excellence in Cannabis (BEC) President (audio - 3m, video - TVW)
    • Manning discussed social equity, criticizing the agency’s progress on the issue and Garrett in particular. “Postman, hey, you came on deck. We were dealing with social equity issues with Black and Brown inclusion. Still haven’t…completed that mission…we come up with rules and whatnot, and it takes, it seems like it’s forever, to get implemented,” he remarked.
    • Manning then spoke about the harm the agency had caused him and his family. He conveyed that Garrett had told him “we can’t live in the past when it comes to past harms. And that’s hard for me to digest, because I looked at how this agency affected me and my family…it really affected us to be…disqualified based on race.” He also remarked that Garrett was telling people not to live in the past while she “owns one of the largest collections agencies. Her job is to dwell in the past. She profits from the past.”
    • Manning continued his call for greater attention to communities of color, stating that people were unhappy with Garrett “telling us that we’re a day late, dollar short, or whatever it is…she’s not attuned or attentive to what the needs of the Black and Brown community are, and it’s troublesome, because she represents us on face, but in action, she represents something else.”
  • Mike Asai, BEC Vice President (audio - 4m, video - TVW)
    • Asai built on Manning’s comments before relating it to his own experience as a dispensary owner prior to legalization. Calling BEC a “solution based organization,” he offered several policies he hoped the board would consider, like not including retail title certificate holders, lower excise tax rates for equity businesses, reducing buffer distances between businesses, allowing vertical integration, and creating social consumption licensing. “And last but not least, we need grants and no interest loans for the next round of licenses,” Asai said.
    • Asai called for Manning to receive a license, saying he was “the reason we have social equity in cannabis in Washington State…yet he didn't get a license...It's a shame this agency continues to attack Peter Manning.” He further felt WSLCB wasn’t enforcing existing laws, as he’d seen emails “from this agency admitting that they were aware in 2015 of the so-called dispensaries not having cannabis or marijuana on their incorporations…but they were granted multiple licenses, stealing opportunities from Black pioneers” like himself.
  • Casey Calhoun, social equity applicant (audio - 3m, video - TVW).
    • Calhoun’s remarks covered proposed rules to implement SB 5080, specifically the issue of license mobility. As “a holder of preliminary letter of approval for a social equity license in Klickitat County,” Calhoun said he had issues with the potential for equity license mobility and had become “concerned that the LCB is constructing rules that are in direct conflict with statute,” 
    • He argued RCW 69.50.335(1)(e)(i) “reads that ‘all licenses issued under the Social Equity Program under this section may be located in any city, town or county in the state,’” but “proposed rules create two different license mobility…structures that restrict mobility for the first round of applicants, which will, in fact, not allow for full statewide mobility, as is the clear intent of the law, the legislative intent the social equity task force final report, and the majority of stakeholder feedback in the last survey.” Calhoun disagreed with the interpretation that there was any difference in mobility processes for equity licenses based on when they were approved and SB 5080 set a mobility policy for all equity program licenses.
    • Calhoun wanted the board to amend the supplemental CR-102 under consideration “and readopt the previous license mobility language [that] 90 days after the next round closes, original applicants may apply for a change in location anywhere in the state.” Even if it didn’t make everyone happy, he considered it the fairest option. “I am not requesting favoritism or special treatment. I am only asking that the board not adopt rules that conflict with clear current statute language,” Calhoun added.

• Postman offered final remarks as chair largely recognizing the work of agency staff and challenged sentiments that prejudice played any role in agency decisionmaking (audio - 1m, video - TVW).
  • “There's great people in this agency who are trying as hard as they possibly can to do good things, and they push each other to do it, and it's hard…but in my three and a half years, again, I've never heard anybody say anything in a closed meeting upstairs, any different than what we say publicly about what we're trying to do here. So I just ask the staff to keep doing that.”
  • “And I also appreciate some of the public commenters over the years who have helped us, help me in particular, shape some things and learn some things…I think the agency is in good hands.”
  • While Postman had used his prerogative as chair to choose when to respond to public commenters, he repeatedly responded to stand up for agency staff and fellow board members.