WSLCB - Focus Group - SB 5376 Implementation
(September 4, 2024)

Here are some observations from the Wednesday September 4th Washington State Liquor and Cannabis Board (WSLCB) focus group on the SB 5376 Implementation rulemaking project.

My top 3 takeaways:

• Policy and Rules Coordinator Jeff Kildahl went over the basics of the SB 5376 implementation rulemaking, including the expected timeline, bill effects, and the preliminary rule text staff had drafted (Rulemaking Project).
  • Signed into law on March 25th, board members approved initiation of the rulemaking related to the law on May 22nd.
  • Kildahl noted WSLCB representatives were looking to update rules on hazardous waste in WAC 314-55-097. He shared the goals staff had for the meeting, which included gaining a better understanding of the topic from attendees, along with motivations behind their existing draft (audio - 1m).
  • Kildahl projected the timeline for the project if the existing draft language didn’t undergo significant changes, expecting a CR-102 with proposed changes would be presented to the board on Wednesday September 11th, a CR-103 to adopt changes would be offered in late October, “and the rules should be effective in December.” He then delved into the specific changes under consideration (audio - 9m).
    • Under SB 5376, cannabis waste was defined “as solid waste from cannabis production and processing that has a THC level of 0.3% or less, and this excludes hemp,” explained Kildahl.
    • He described the conditions for sale of such material:
      • “The waste is not considered dangerous or hazardous, meaning that it is material that hasn't been treated with solvents or had other contamination [outlined in the] real hazardous waste regulations” in WAC 173-303.
      • “The sale has to be reported to the [Washington State] Department of Agriculture and to LCB before the sale, the report has to include the quantity, the price, and the name of the buyer who is buying the waste.”
      • The final condition from the statute was “that the sales must be public and non-discriminatory.”
    • Kildahl offered a qualification that cannabis waste which a licensee did not sell “still must be rendered unusable and disposed of in the same manner…that the waste is ground up and mixed with materials,” a process outlined in WAC 314-55-097(5). He emphasized sales to non-licensed individuals would be perfectly acceptable, provided licensees met all the conditions he’d outlined.
    • Kildahl named four changes being proposed to existing rule:
      • “A new statutory definition of cannabis waste, which was created by the legislation.”
      • The next change “clarifies [it’s] the responsibility of the licensee to evaluate cannabis waste… to determine whether it is dangerous or hazardous.”
      • “Changes also clarify that waste [not designated as] dangerous or hazardous must be made unusable if it's disposed of. That's not a change in the operation of how the rule works now, but that's, that's just a clarification
      • The final modification in rule, “generally clarifies that LCB and the Department of Agriculture [WSDA] must be notified prior to sales and reporting...the seller must provide the buyer information, the date of sale, and the quantity.”
  • Further specifying some of the changes to rule text, Kildahl stated that the title of WAC 314-55-097 would be expanded to include “waste sale to non-licensee” as licensees could sell cannabis material to one another. The definition for ‘cannabis waste’ would make clear it was “solid waste that’s generated during cannabis production or processing” which tested as 0.3% THC or less, and “this waste does not include hemp or industrial hemp, as is defined in RCW 15.140.020.” He reported that any material the licensee deemed hazardous or dangerous still had to be disposed of according to rules in WAC 173-303, and non-hazardous waste not being sold still had to be rendered unusable by mixing with either compostable or non-compostable material. Also, new “methods to render cannabis waste unusable may be proposed, but must receive prior approval from the LCB before implementation,” Kildahl mentioned (audio - 6m).

• Feedback centered on expenses of rendering waste material with almost no tetrahydrocannabinol (THC) unusable, possible allowances for licensees to give away cannabis waste or use different disposal practices based on cannabinoid content, and one person suggested other types of waste related to cannabis manufacturing warranted greater regulatory attention.
  • Douglas Henderson, Painted Rooster Cannabis Company CEO and Bio Fiber Industries Lead Scientist (audio - 3m)
    • Henderson asked whether transferring cannabis waste without charge could be allowed, offering the example, “if there's a recycling center, someone doing green waste that can pick this material up and not have to have it adulterated, being that it's not hazardous…are we going to have to exchange funds in that way, even if we are charging for that service?” Kildahl answered that staff hadn’t decided that, but SB 5376 had explicitly required reporting of “whatever the purchase price is.” He suggested it might only have to be “a token amount,” but would need to be a “correct figure.”
    • Henderson emphasized that he was paying to render non-hazardous cannabis waste, and would “much prefer if there were a service that could simply come and pick it up and charge me the farmer and not need to pay me for that material.” Kildahl acknowledged that disposal costs were an understandable concern of cannabis licensees and promised to follow up with Henderson.
  • Jason Lammers, 420WholesalePack General Manager and Cannabis Alliance Board President (audio - 1m)
    • Lammers asked through the chat box why regulators needed plant material with less than 0.3% THC to be blended with anything before disposal as it added cost. Kildahl admitted, “I'm not sure why…that's in the bill, but that is a requirement,” and the statute was explicit: “the material still has to be disposed of if it's not sold.”
  • Henderson noted that licensees with cannabis waste were being given a choice under the law: “we're required to commodify it with a financial exchange, or it still needs to be destroyed with the 50% inert material.” Kildahl affirmed that impression, finding the change to offer potential savings by commodifying an existing expense. Henderson then “reiterate[d] that I'd like to buy any quantity for a single penny to make this all work” (audio - 2m).
  • Kildahl briefly showed proposed WSLCB/WSDA reporting requirements for waste sales (audio - 2m).
  • Mitchell Colbert (audio - 5m)
    • Colbert established that he’d completed “a study that will be published in the ASTM International's Journal of Testing and Evaluation, which…analyzed California's consumer cannabis waste stream, and I compared that to other major waste streams, and I found that in California, our consumer cannabis waste stream, so that's packaging from sales, was on par with the household hazardous waste total for all batteries, car batteries, and all others combined, about 13,000 tons.” He observed this waste stream was “considerably large, yet it lacks any of the recycling infrastructure we have in place for other hazardous waste, like batteries, like oil, like pharmaceuticals.”
      • California regulators expect cannabis businesses to follow state regulations related to waste management, as well as specific policies such as the California State Water Board cannabis-related discharge requirements published in 2023. However, reporting in California had shown a lingering concern over the environmental impact of commercial cannabis.
    • Citing specific concerns with the language, Colbert listed possible improvements to the rules. In Section 1(1)(a), he encouraged using the term “entity,” rather than “people,” to be sure and include businesses rather than individuals.
    • Colbert offered cannabis waste management in Oregon as the only legal cannabis state “which currently allows the sale or gifting of cannabis waste.” He then argued, “if hazardous waste is not to be included in the scope of this bill, then you are specifically not including vaporizer waste and all the batteries, which, in my opinion, since that's e-waste, is the most critical waste we should be talking about recycling and keeping out of the landfills.”
      • Via chat, he remarked, “as someone who is heavily involved in vaporizer recycling around the US, any waste bill that doesn't include PAX pods, cartridges, or batteries is a non-starter.”
    • Furthermore, Colbert viewed the rules as treating cannabis licensees like they were also waste management experts when it came to evaluating cannabis waste, even though being a licensee didn’t require any training in that regard. “Many operators are not aware of what constitutes a hazardous or dangerous waste, let alone…proper methods of disposal for e-waste and other universal wastes. That's not their job.”
    • Colbert also didn’t see a reason to differentiate between hemp waste material and cannabis waste with less than 0.3% THC, speculating that the only explanation might be a “legal barrier.”
      • RCW 69.50.326(3) limits WSLCB power over the WSDA hemp program, noting “rule-making authority does not include the authority to enact rules regarding either the production or processing practices of the industrial hemp industry or any cannabidiol products that are sold or marketed outside of the regulatory framework established under this chapter.”
    • Having compared California waste policies to other states, Colbert remarked that the requirement for material with such low THC to be further rendered unusable was unique to cannabis in Washington: “it's an unnecessary burden that's not put on other industries, even those perceived as risky, such as pharmacies that also produce drug waste.”
    • Colbert appreciated that there were limits to what WSLCB might accomplish without statutory changes by the legislature, but “it'd be great if we could eliminate or minimize the use of that 50/50 waste rendering burden.”
    • Director of Policy and External Affairs Justin Nordhorn responded to Colbert’s feedback, asking for him to forward any research on the topic he could to staff. He then mentioned that some of the issues he’s raised couldn’t be changed, but others might be achievable with “some further legal analysis.” He also encouraged those with questions or ideas about what should be allowed to raise them with officials, but also be explicit what their preferred outcome was and why, since understanding motivations of licensees was an important consideration in developing rules. Nordhorn acknowledged, “we don't have all the answers to the questions today, but that's because we're still exploring how we want to develop this language” (audio - 2m).
    • Read Colbert’s testimony on cannabis waste to a California advisory council in 2021.
  • Kelsey Holstrom, 4Front Ventures Compliance Associate (audio - 2m)
    • Holstrom got clarification from Kildahl that licensees were already allowed to sell cannabis waste material to each other, and agreed with others that giving the material away without remuneration would be a helpful change.
  • Micah Sherman, Raven Co-Owner, Washington Sun and Craft Growers Association (WSCA) Board Member, and National Craft Cannabis Coalition (NCCC) Member (audio - 2m)
    • Sherman thought the law “creates this situation where cannabis waste has to be rendered unusable, but it doesn't necessarily make it so that rendering it unusable requires that you have the same definition that you've used in the past, which was more about rendering cannabis material unusable.” He advised that the newly defined category of ‘cannabis waste’ could merit a separate definition for disposal: one for cannabis material with 0.3% THC or less, and another for cannabis with more THC which would mandate mixing the waste with another material. “Statute doesn't say that they have to be treated the same,” he stressed, “it just says you have to create disposal rules for both of them.”
    • Sherman also seconded others’ call for requiring only a nominal financial transaction to transfer cannabis waste with suitably low THC.
  • Holstrom echoed Sherman’s concept for different definitions of waste disposal, saying she was particularly interested in transferring cannabis waste to other licensees without going through a process to mix it with any other material. Nordhorn was curious why a licensee might want to acquire plant material with almost no THC. Holstrom believed their interest would be “similar to what a non-licensee would be doing…make textiles, or fibers, or rope, or other kinds of processing that they might have…a facility already set up for” (audio - 3m).
  • Henderson expressed that for him, “the ultimate goal of what we're trying to accomplish here is a way to lock carbon away from the environment.” Calling Bio Fiber Industries a “carbon capture intense business, and we simply are trying to be able to commodify that in a way where we can control a feedstock…that will in some way, you know, better, ourselves ecologically” (audio - 3m).
    • Henderson repeated his view that “a lot of us aren't very keen on how transfers between our own businesses of licensed entities are being handled to begin with.” But overall, “the other waste streams that our industry generates should be addressed,” he said. Henderson felt his company did a lot of work related to sustainability of their practices, and felt many in the cannabis sector “do share the concerns that were aired about physical packaging waste as well as battery waste.”
    • The last point Henderson made involved whether sales of cannabis waste to a non-licensee would necessitate documentation in the Cannabis Central Reporting System (CCRS), “or is it safe to just send an email to an LCB email and a WSDA email” with required information. Kildahl answered that the Enforcement and Education division at WSLCB had already released SB 5376 guidance leading him to believe there was some required CCRS reporting, and promised to follow up with Henderson on that subject.

• Kildahl reiterated a timeline under which rules might be adopted by December, noting there would be future opportunities for comment, and urged people to share their thoughts with staff in writing.
  • Kildahl repeated that the CR-102 with proposed language would likely be presented to board members at the following week’s meeting on September 11th, with a public hearing scheduled for October 23rd under that timeline. From there, he said there was, “a filing date for the CR-103 of November 6, and then the permanent rules would take effect” on December 7th. Kildahl further encouraged people to track rulemaking activity at the agency (audio - 2m).
  • In repeating his concluding remarks, Kildahl emphasized that people could submit comments via rules@lcb.wa.gov (audio - 1m).