WSLCB - Board Meeting
(October 23, 2024)

Here are some observations from the Wednesday October 23rd Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 2 takeaways:

• A revised CR-102 with proposed rules for SB 5080 implementation was presented by Director of Policy and External Affairs Justin Nordhorn and accepted by the board (audio - 13m, video - TVW, Rulemaking Project).
  • After opening the rulemaking project in November 2023 and focus groups on May 15th and May 22nd, the initial proposed language was released in early August. The text elicited negative feedback, particularly during a public hearing on September 11th, prompting agency leaders to take additional time to redraft the proposed rules. The new rule language was substantively different enough to necessitate board approval of a new CR-102.
  • In the board meeting, Nordhorn explained differences in the rule wording, starting with the decision to open two application windows.
    • Nordhorn said “the first one will be for retail applicants and title certificate holders to register for reinstatement under the Social Equity Program,” and a second one would “be for producer/processors.” Because retail licensing was so limited, if an applicant wasn’t moved forward in the retail process, they had “an opportunity to reassess or reevaluate what they would like to do as far as business, and then apply for producer/processor” licensing, he explained. “You cannot hold a producer/processor and a retail license at the same time. So by separating these, we're hoping to provide additional opportunities for folks that want to get into the cannabis industry,” he told the board.
  • According to Nordhorn, scoring rubric changes—which would impact how applications were prioritized—would “provide point accumulations related to the level of impact to an individual who may have experienced adverse impacts during the war on drugs.”
    • The rubric was “developed and drafted based on general assessment of the direct impacts” on individuals, Nordhorn remarked, and “we are assessing weight to each of the four categories so it's easily understood, and putting it at a 300 point scale, because the first rubric was at 310 so we feel like having the weights and a 300 point scale will create familiarity.”
    • Nordhorn reviewed some scoring changes, which included marginally more points based on living in a disproportionately impacted area (DIA) and slightly fewer points based on household income or past incarceration, and more points based on prior dispensary ownership. He compared the language with existing rules and previous drafts. He offered additional clarification around the proportion each category could contribute to the total rubric score for the applicant.
    • WSLCB published a bulletin on October 22nd announcing that the apparently successful bidder selected to score applications in the upcoming application windows was “Alta Point Consulting…a Seattle-based organization with over 40 years of experience with a nationwide network of over 400 consultants, bringing a deep understanding of federal, state, and local government processes.”
  • “The other changes that we're making [related to] House Bill 2870, applicant mobility” for title certificate holders, said Nordhorn—referring to the 2020 law which established the equity program at WSLCB—in order to “reduce potential additional impacts moving forward.”
    • Nordhorn elaborated that “instead of the previous 90 day registration closing, we are now putting in an effective date of January 1, 2026 so at that time, anybody who is not open with a 2870…license that, that they…would be able to go statewide.”
    • However, there was a specific restriction “in the interest of fairness to the folks who applied under 2870 with high scoring points, we wanted to make sure that if an applicant under 2870 chooses to move, or wants to move…into another county, that they need to be able to exceed the lowest score of the licenses issued in that county.”
    • This approach expanded the potential for license mobility, without “displacing or supplanting” licensees who had gone through the social equity program. “We want to afford the best opportunity that we can to the people who haven't been able to open, however, we don't want to create additional disparities for folks that didn't get a license before under 2870,” Nordhorn said.
  • Following member comments and clarifications relating to title certificates and the application window, the board voted to approve the revised CR-102 for the project (audio - <1m, video - TVW).

• Public commenters took board members to task for problems such as an investigation into a medical cannabis cooperative, implementing a patient excise tax, concerns over social equity and agency transparency, plus complaints over the near-contracting of a White former Minnesota officer convicted of killing an unarmed Black suspect to train WSLCB Enforcement personnel.
  • Michael Schermerhorn (audio - 6m, video - TVW)
    • On March 27th, Schermerhorn complained to the board about how his medical patient cooperative in Anacortes had been treated by WSLCB staff and other agencies during an investigation.
    • In his public remarks, Schermerhorn indicated that their patient cooperative had been raided by authorities in September 2019, one day before “we were in court with you guys on September 6 on an allegation that we weren't registered.” He alleged this was a specific tactic used by former Licensing Specialist Shannon Angell who supposedly contacted a Washington State Patrol (WSP) investigator “saying we weren't licensed and registered.”
    • Schermerhorn argued, “public disclosure documents that show that there has never been an investigation by law enforcement ever into our license and registration, yet they go to a judge and get a search warrant saying we are not registered and licensed…that's a violation of my constitutional rights.”
      • Documents provided by Schermerhorn included logs of medical patient card access for himself and patient Michelle Larson which had been provided by the Washington State Department of Health.
    • Schermerhorn insisted the “Skagit County prosecutor said I'm robbing her when we gave them a video tape showing Tammer O’Conner robbing us.” He felt WSLCB was interfering with patient cooperatives and livelihoods, and didn’t want to have to access medical cannabis through retail outlets exclusively. He begged board members to “come up to bat for us medical marijuana patients that did every single thing you told us to do, and awaited a day in court to decide whether we had to change the location of our cooperative.” Schermerhorn hoped that someone would keep law enforcement agencies “accountable for attacking registered and licensed medical marijuana patients waiting for their day in court and raiding them the day before.”
  • Caitlein Ryan, Cannabis Alliance Executive Director (audio - 2m, video - TVW)
    • Speaking to the confusion around the application of a patient tax exemption law implemented in rule by WSLCB on September 11th, Ryan suggested some endorsed retailers were refusing to apply the excise tax exemption because they regarded it as a “stacked discount” comparable to the way sales and use tax exemptions had sometimes been handled. She indicated “it would be really helpful if there was some official communication from LCB [to] clarify for folks that tax exemptions are tax exemptions, and that shouldn't preclude people from receiving a discount.”
  • Peter Manning, Black Excellence in Cannabis (BEC) President (audio - 3m, video - TVW)
    • Manning was somewhat placated by the proposed scoring rubric changes mentioned by Nordhorn, but had other concerns. He mentioned lingering problems with Director of Enforcement and Education Chandra Wax related to the near hiring of a former cop convicted of manslaughter to train officers on use of lethal force. Stating there was “unequivocally” racist behavior by agency staff, Manning insisted Wax hadn’t been sufficiently reprimanded and that the board needed to take more action against racial bias by their staff which he claimed to have been highlighting for over a decade.
    • Manning insisted that only a threat of legal action by BEC had prompted agency leaders to support a cannabis social equity program, and claimed the lawsuit was connected to the retirement of prior board members Jane Rushford and Russ Hauge.
      • Rushford stayed on as board chair for months after her appointed term before leaving the board in early 2021. Hauge resigned from the board in December 2021. Manning spoke about his concerns with cannabis license equity during Hauge’s final public meeting, but didn’t address the retirement or a lawsuit.
  • Gregory Foster, Cannabis Observer Founder + Citizen Observer (audio - 4m, video - TVW, written comments)
    • Foster implored board members “to maintain and grow a culture of transparency at the agency.” Noting that board members met “a lot more so than any other agency that that we see,” he was troubled by a high rate of Executive Management Team (EMT) meeting cancellations, as “those are the board's regular check ins with agency staff leadership, and it's the way that you keep your finger on the pulse of activity at the agency.” In 2024, 40% of EMT meetings had been cancelled, “which is up from previous years, and so [I] want to just ask, if you do have to cancel them in the future, please make an effort to reschedule them and…keep that dialog and that source of transparency into the agency going.”
    • Referring to an October 10th TVW interview with Director Will Lukela, Foster suggested the public heard “more during that interview than we've heard since you've been here in the past year. And so we'd like to hear more from you.”
    • Praising a Research Program update during the board caucus the day before, Foster said it “was a great example of transparency,” as well as “a great example of showcasing the team's rigor, their impartiality, their ability to catalyze cross division collaboration.” He believed this was what more briefings to board members should be like, and asked the board to “actively engage, to keep it that way, bring them more resources...to make sure that they stay an important resource that's leading to more data driven decision making in the agency and data driven policy making at the board.”
  • Mike Asai, BEC Vice President and Emerald City Collective Gardens (ECCG) Founder (audio - 3m, video - TVW).
    • Asai expressed concern about the reduced speaking time for public comments, but was primarily concerned with progress on the equity program. He acknowledged BEC members had a lot of complaints, but had also offered solutions to WSLCB. Asai objected to "mobility hijacking by a handful of licensees with low scores,” and believed that the board should have approved “emergency rules” quickly following passage of SB 5080.
    • “We need money for the next round of licenses, the process should not be backtracked,” insisted Asai, who called upon board members to request additional money for applicants during the 2025 legislative session. He had the impression there were “maybe 38 or 39” allotted social equity licenses that had yet to open. Asai wanted the board to “slow the process down and break this up and we look at what's been beneficial.”
  • Christopher King (audio - 6m, video - TVW).
    • King told the board how Schermerhorn’s patient cooperative was near where King lived in Skagit County, and asserted he had no financial interest in any cannabis business, “the only reason I'm here is for justice, period. And I'm not seeing it over here.” He seconded Schermerhorn’s claims about the validity of the cooperative and alleged existence of a “hidden video from a court hearing where their lawyer Rob Moody stole $3,000 from them. Lied about it in their lawsuit. I saw the canceled check.” He further said there was a cover up as the matter was dismissed by “pro tem jurists.”
    • “What I want to talk about now, the lack of transparency, the way the board goes after Black and Brown” individuals, established King, bringing up Cantanna Fest at the McMillin Farm and Brewhouse in Puyallup over the summer. Stating he’d seen “hidden emails” from officials about the event which indicated “accusation of impropriety, a quid pro quo that was in there from somebody who sent a text message from somebody else, another producer/processor. It was never documented, but yet, they're on high alert trying to shut this thing down.”
    • King mentioned the possibility of an audit of WSLCB records as one way “to show that this agency is completely biased, and that's how we get results like” Wax’s planned hiring of the convicted ex-officer for an in-service training of Enforcement officers. Alleging a history of biased licensing decisions, he argued, “we know that they gave all licenses unequally…since LCB injected race into this equation on multiple occasions, there's a legitimate reason, now, under strict scrutiny test to use race as a factor in going forward.”
    • “I've asked for Director Lukela’s CV about 1,000 times, and I never got it. So I don't understand that,” King added.
  • Sami Saad (audio - 3m, video - TVW).
    • Saad talked about his history failing to get licensed for a cannabis store before the social equity program. He claimed Board Member Ollie Garrett had given him assurances she could help before asking him not to contact her directly. He alluded to friends of hers being able to secure cannabis licenses, then mentioned news reporting on him, Asai, and Manning’s situation, “they say we've been disrespected.”
    • Saad said he was a representative of the “Sudanese American Justice and Equity Association,” and represented Sudanese and African American communities in the state.
    • Saad was supportive of equity license mobility, “but we don't like on the mobile to come and compete with us in Seattle.” He wanted available equity licenses in the city to be split between previous dispensary owners and program applicants. Despite his concerns and threat of litigation against WSLCB, Saad offered praise for Lukela, “I think he will bring justice. I believe in him.”