TVW - Inside Olympia
(October 10, 2024)

Here are some observations from the Thursday October 10th TVW Inside Olympia interview with Washington State Liquor and Cannabis Board (WSLCB) Director Will Lukela.

My top 3 takeaways:

• TVW “Inside Olympia” host Austin Jenkins began the interview by introducing Washington State Liquor and Cannabis Board (WSLCB) Director Will Lukela (audio - 1m, video - TVW).
  • Jenkins was an Olympia-based political reporter for the Northwest News Network, a consortium of National Public Radio (NPR) stations, for 22 years before becoming a reporter for Pluribus News in September 2022 covering “infrastructure and the disruption industry.”  He began hosting “Inside Olympia” in 2008.  At publication time, Jenkins was also listed as an Adjunct Faculty member in Communication Studies at St. Martin’s University.
  • He began the interview by describing the change in leadership at the WSLCB, noting that "longtime director Rick Garza retired after 25 years" and that Lukela "was hired to replace him."
    • Jenkins interviewed Garza in 2013 and in 2016 in the company of Senator Ann Rivers and Representative Sharon Wylie.
    • In the WSLCB press release announcing the hiring, Lukela attested, “I will continue to build on the impressive work of the agency across all regulated industries and pledge to work collaboratively with staff and stakeholders to build their trust and support through transparency.”
  • Jenkins claimed it was “not an easy time to oversee liquor and cannabis industries” which he attributed to "financial challenges and industry disruption.” He noted that the interview was Lukela’s “first time at Inside Olympia.”

• Jenkins’ questions for Lukela were far ranging—and at times curiously perspicacious—covering topics including cannabis market conditions, ownership constraints, hemp cannabinoid law, federal rescheduling, testing labs, social consumption, and the Cannabis Regulators Association (CANNRA).
  • Jenkins began by asking Lukela why he chose to leave his career in his home state of Colorado to lead the WSLCB, learning Lukela was motivated by challenges (audio - 1m, video - TVW).
    • Jenkins acknowledged that Lukela had been “the Deputy Chief of Licensing for Colorado’s Marijuana Enforcement Division.” He noted that “Colorado, too, has one of the earliest legal cannabis markets in the country,” similar to Washington.
      • According to his LinkedIn profile, Lukela took on the role of Deputy Chief of Licensing Investigations and Operations in March 2018 after joining the division in April 2014 as an Agent in Charge.  Previously, he was a Supervisory Criminal Investigator in the Division of Gaming and a Criminal Investigator in the Liquor Enforcement Division, bringing over 30 years of law enforcement and administrative experience to Washington.
    • Jenkins asked, “what appealed to you about coming to Washington? I understand it was a promotion to lead an agency, but, but, what in particular about Washington, this agency and this opportunity?” Lukela answered that he had worked in Colorado state government for 31 years and “being able to have an opportunity…to take on a challenge of this nature, was intriguing. And so I jumped at the opportunity.”
  • When asked to compare and contrast the regulated cannabis markets in Colorado and Washington state, Lukela responded that the primary difference was that Colorado had an “open market” whereas Washington state was a “closed market ” - though he was uncertain if the latter was an apt descriptor (audio - 2m, video - TVW).
    • Jenkins asked Lukela to better define “open versus closed,” to which Lukela responded that in Colorado, “licenses are set from a cap standpoint at the local licensing level, but the State doesn't cap it,” in contrast to Washington where “you can only have a certain number of producer/processor licenses, retailer licenses.”
  • When asked about the contemporary economic health of regulated cannabis markets, Lukela acknowledged that prices were decreasing in Washington and across the country (audio - 2m, video - TVW).
    • Jenkins noted that Colorado's cannabis market “seems to be really struggling,” citing a June 2024 article in Politico about the state's falling cannabis sales and business closures. Jenkins then asked Lukela: “What's going on there? And how does it compare, kind of, to the economics of legal, regulated cannabis here?”
    • Lukela responded that he believed cannabis and liquor sales in both states increased during the pandemic because they “were considered essential function.” He claimed that in an open market like Colorado, "you still have a certain number of people that are using the product. And you add more businesses to the market, and it starts to thin out the profit margins.”
    • Jenkins asked if Washington had “weathered this better” due to its capped licensing system, but Lukela replied that “we're hearing that the price margins are decreasing, similar to how they are across the country” (audio - 2m, video - TVW).
      • Lukela went on to note that the WSLCB had commissioned Whitney Economics to conduct an economic study of Washington’s cannabis market “to help us guide the number of licenses through [SB] 5080, the social equity program, that we could potentially open up in the future.” Lukela thought “it was telling” as “the goal is to avoid the gluttony of cannabis, right?”  He was hopeful that “we'll be able to land in a, I'll call it a sweet spot, while still allowing entrance to the market.”
        • During the August 24th WSLCB Board Caucus, research staff talked about the report, in addition to reviewing the team’s operating procedures and initial briefs.
  • Jenkins then asked Lukela how the agency supports newly established regulated cannabis markets around the country, and Lukela responded that the WSLCB was “an open book” willing to share its experiences with other states (audio - 3m, video - TVW).
    • Jenkins indicated, “I know New York has really struggled. I guess Minnesota is coming online. In some ways, it's better to go, not go first, because you can learn from others. But what's your observation about, sort of the particular challenges these new states face, versus—Connecticut's another good example of an early, of a new state—like, what's their experience? What are you hearing?”
    • Lukela immediately replied, “So I can tell you that New York has reached out to Washington State,” prompting Jenkins to observe, “I think they need all the help they can get.” Lukela agreed, “I think they've got some challenges ahead of them…we've been able to provide guidance.”
    • Jenkins noted that the Cannabis Regulators Association (CANNRA) helped state officials share information about cannabis regulation and asked if the WSLCB was leveraging this resource to connect “with regulators throughout the country about potential best practices?” Lukela confirmed that WSLCB staff “use that to spend a lot of time talking with regulators throughout the country…and so we're an open book here in Washington. We try to share all the good and the bad.”
  • Jenkins turned to the legal status of intoxicating hemp products in Washington state, and Lukela responded that a new law had effectively made the products illegal within the State borders (audio - 3m, video - TVW).
    • Jenkins noted that the federal farm bill that legalized hemp in 2018 had resulted in the proliferation of intoxicating hemp cannabinoid products that “escape the, the regulated cannabis framework and structure.” He observed this was an issue in many states, including California, where the governor had announced new emergency regulations. Jenkins then asked Lukela: “How is that playing out in this state? I'm not hearing as much about it here as I am elsewhere, but what's, what's the current state of play when it comes to these intoxicating hemp products?”
    • Lukela answered that SB 5367, a 2023 law, “essentially made it illegal here, which is probably why you're not hearing about it as much.” Lukela observed that “there are certain states that have, I'll call it a conflict between the cannabis and the hemp, and they don't have these regulations in place. But the new law that came into effect actually made it a little bit easier for us in that regard.”
      • SB 5367 made it unlawful to sell products with “any detectable amount” of tetrahydrocannabinol (THC) outside of the regulated cannabis market.  Following 16 months of regulatory activity to implement the law, WSLCB Policy and Rules staff presented new rules for adoption on October 9th - the day before the pre-recorded TVW interview was published.  Those rules were scheduled to go into effect on January 7, 2025.
    • Jenkins asked Lukela to clarify whether full-spectrum hemp products that were not intended to be intoxicating were legal in Washington. Lukela seemed uncertain but replied that such products were theoretically legal in the state, concurring with Jenkins’ observation that “anything above [0.3% tetrahydrocannabinol (THC),] they're just not allowed.”
    • When asked if he had “heard from the hemp lobby? Are they pushing back on this?" Lukela simply answered, “No.”
    • Jenkins then inquired if WSLCB enforcement personnel were encountering unregulated hemp products in stores.  Lukela replied, “not to my knowledge, but that doesn't mean it doesn't happen.”
      • On September 10th during their weekly caucus, WSLCB board members learned how SB 5367 had been enforced by agency officers. Captain Jennifer Dzubay reported that since SB 5367 had become law in July 2023, “we had 11 locations, we've seen about 880 items” seized that year. She said “about seven months into [2024]…we've checked about 381 locations for this” and seized “almost 1500” cannabinoid items (audio - 1m, video - TVW).
    • Jenkins asked if Lukela had a sense of how the issue would ultimately be resolved, and he responded, “I'd say everybody’s split…I think no one really knows kind of, what, where, where this is going to end up.” Jenkins confirmed, “But it was unanticipated.” Lukela agreed: “This is absolutely unanticipated. Yes.”
  • Jenkins asked Lukela about the WSLCB social equity program, which was intended to expand participation in the regulated cannabis market by individuals who had been harmed by the war on drugs. Lukela felt that the program was a step in the right direction but more progress was needed (audio - 5m, video - TVW).
    • Jenkins noted that SB 5080, a 2023 state law, had authorized a new round of social equity cannabis licenses and asked, “what is your sense of how effective this is…can you put the 40 [successful social equity applicants] in context for us is that, is that a significant moving of the ball down the field and improving in access for people who have…historically been harmed by laws making marijuana illegal?”
    • Lukela responded: “I'd say we're moving the ball forward. Is it moving as fast and as large as potentially some would want? I think it depends. I think it depends on who you ask. Me personally, I think it's a great step in the right direction. I think that as we come out now with the licenses in [SB] 5080, and we're still going through rulemaking right now…we'll know more. But I think it's a great step forward. I'm excited to see more licenses.”
    • Lukela acknowledged, “I think one of the challenges that's always come up, or one that I hear is the locations, is finding a location.”  Jenkins interrupted to ask, “is that because of local zoning?”  Lukela responded that local zoning rules, including restrictions on the proximity of cannabis businesses to schools and other sensitive uses, made it difficult for social equity licensees to find suitable locations.
    • Jenkins wrapped up his inquiry by asking if Lukela believed social equity licensees could succeed in Washington’s cannabis market. Lukela responded: “can they make the money? Some of it depends on the business plan. Some of it depends on the location. I'd like to think that if you're in the right location, you've got the right business plan, you can make money.” Lukela added: “We want them to succeed. That's what I'm gonna say, is we want the social equity applicants to succeed. And we're giving them everything we can, at least at the agency level, to help them.”
  • When asked if the WSLCB was considering proposing changes to Washington’s cannabis tax structure, Lukela responded that agency leaders did not believe it was the agency’s place to make tax policy recommendations, but they were discussing cannabis tax issues with some interested parties (audio - 2m, video - TVW).
    • Jenkins noted that there had been “pushback” about the high cannabis tax rates and asked, “Is the board thinking about, is the tax level right? Are the licensure fees correct? Is the, are the gates to entry and to operation aligned with what the market will bear?” Lukela said, “we're having that conversation all the time, and the agency, just within the last year, put together a research team. It's a three person research team which is going to help us get the data that we need to be able to make more informed decisions.”
    • Jenkins asked if Lukela anticipated that the WSLCB would eventually propose cannabis tax changes to the legislature. Lukela responded, “I don't know that that's our place…we know that the industry is talking with the [Washington State] Department of Revenue and the legislature.”  He amended, “but we do have the conversations. Even the most recent one was surrounding high potency THC and whether or not, you know, there needs to be increased taxes with those particular products.”
      • During the August 22nd High THC Products focus group organized by WSLCB Public Health Education Liaison Kristen Haley, participants discussed the viability of a tiered tax structure for products of concern which was represented in a Strengths, Weaknesses, Opportunities, and Threats (SWOT) matrix.
      • At publication time, WSLCB staff had not permitted Cannabis Observer to directly observe the high THC focus groups whose participants included cannabis sector and prevention advocates as well as public health officials.
  • Jenkins followed up to ask Lukela about high THC cannabis products, and Lukela responded that the products were concerning but he hoped the WSLCB, the cannabis industry, and public health stakeholders could find common ground solutions (audio - 2m, video - TVW).
    • Jenkins framed his inquiry by asserting the Washington State Legislature had decided to study the impacts of the products rather than add more regulatory oversight despite concerns about their effects on youth mental health. Jenkins asked: “Let's start with what is your level of concern about these products? From where you sit in this regulatory role?”
      • In 2024, legislators passed HB 2320 (“Concerning high THC products”).
    • Lukela responded: “Oh, it's concerning. It's concerning. So we spend a lot of time with health prevention behavior, behavioral health community talking about impacts and, and as we work through this, I'm hopeful that we can come to a successful resolution between the industry and in the agency, which will help Washingtonians.”
    • Jenkins asked Lukela about the timeline for the state’s study of high THC products and whether the study would result in policy recommendations. Lukela demurred, “I don't recall offhand.”
      • Section 5 of the HB 2320 session law regarding the responsibility of the Washington State Health Care Authority (WA HCA) to “issue a request for proposal and contract with an entity to develop, implement, test, and evaluate guidance and health interventions for health care providers and patients at risk for developing serious complications due to cannabis consumption” included reporting deadlines in 2025, 2027, and 2028.  At publication time, it was unclear if WA HCA staff had issued the RFP.
      • In section 6, WSLCB staff were obligated to “collect data on…cannabis products sold within Washington state” and submit a report to the legislature by November 14, 2025.
    • Jenkins then asked if Lukela would “state whether you support some further regulation, or some initial regulation on these products? To, essentially…whether that's a limit on THC levels, or some other way of managing this emerging right type of product.” Lukela said officials were “open to everything…I mean, it'll be the Board at the end of the day that makes that determination. I think that, as an agency, as a board, we're all concerned by the high potency THC products.”
      • The high THC products SWOT analysis from late August detailed evaluation of additional regulation via “Packaging and Labeling,” “Tiered tax structure,” “Age-gating high THC,” “Advertising restrictions,” and “Capping high THC amount.”
  • Jenkins was curious about the potential for the federal government to reclassify cannabis or permit interstate commerce, and Lukela responded that he did not believe reclassification would be a “game changer” for Washington’s cannabis industry (audio - 4m, video - TVW).
    • Jenkins noted, “Another question that's very much in the news is this potential for the federal government to reclassify cannabis and not make it a schedule one drug anymore. I know this has been talked about over the years. It hasn't happened, but there does seem to be sort of renewed energy around it.”  He inquired, “based on the signals you are seeing or receiving and what you're hearing…what are you thinking about this and how significant would it be to the- or would it not be much of a game changer?”
    • Lukela responded: “I don't know that it's going to be much of a game changer for Washington. I think it'll help in the medical arena. But…it wouldn't make recreational cannabis legal, not at a federal level, it would just be a reclassification.”
    • Lukela said that he and other state cannabis regulators had discussed whether reclassifying cannabis could allow pharmacies to sell cannabis, specifically “in CANNRA, in the last meeting, we talked about pharmacies, and [the potential] for patients to obtain it through pharmacies.”  Jenkins countered that could open up “another then potential avenue of competition for the regulated market.”
      • CANNRA hosted a second annual external stakeholder meeting in June, aiming to bring together “a diverse array of national and international stakeholders in cannabis and cannabinoid policy.”  Cannabis Observer sought entry to the meeting but was not selected among a limited group of media representatives granted access to a pre-event press gaggle, nor among the handful of press representatives granted access to the event itself under strict conditions.
      • As a private association, there was no obligation for CANNRA meetings to be opened to the public nor for the organization to respond to public records requests - even though the organization was publicly funded by membership fees and entirely composed of public officials with the exception of staff members.
    • Jenkins then asked Lukela about the State’s readiness should interstate commerce of cannabis products be federally approved, saying, “We have not, and correct me if I'm wrong, is it the State of Washington has not yet, or have we passed a law that contemplates or anticipates interstate sales being allowed?”  He acknowledged legislation had been “introduced here…but I don’t think it passed.”  Lukela deferred to Jenkins’ recollection, and indicated agency staff were in communication with officials in California and Oregon who had passed similar legislation.
      • In 2023, prior to the beginning of Lukela’s employment in July of that year, legislators passed SB 5069 (“Allowing interstate cannabis agreements”) which established trigger conditions and a basic framework should interstate sales between regulated cannabis marketplaces become possible.
  • Jenkins asked Lukela about the illicit cannabis market in Washington state which Lukela indicated was difficult to track before discussing his goal to improve the state’s cannabis traceability system (audio - 3m, video - TVW).
    • Jenkins brought up the illicit cannabis market and whether the State’s cannabis reporting system was robust enough to prevent legally-grown cannabis from being diverted into the illicit market. Jenkins indicated such cannabis could come from two sources: legally-produced cannabis that is diverted into the illicit market, or cannabis that is illegally grown and sold outside of the regulated market.
      • In addition, “inversion” of cannabis grown or cannabis products manufactured outside of regulated markets for surreptitious introduction within had become a heightened concern due to overproduction in other regulated state markets and the easy availability of intoxicating semi-synthetic cannabinoid compounds derived from cannabidiol (CBD) extracted from hemp, as well as the delta-9-THC byproducts collected from hemp when distilling and isolating CBD.
    • Regarding illicit markets in Washington, Lukela simply replied, “Difficult to say.”
      • On September 17th, leaders from the Washington State Patrol (WSP) Cannabis Enforcement Response Team (CERT) reviewed their work supporting local law enforcement to identify and undermine criminal organizations growing cannabis in Washington during a Washington State House Regulated Substances and Gaming Committee (WA House RSG) work session.
    • Lukela then steered the conversation toward the related topic of traceability of cannabis products because “I think that one of the things that will probably come up during our discussion today will be data and looking at our traceability data and trying to determine…inversions and diversions of product that go to the illicit market.”
      • In Colorado, Lukela had access to data provided by licensees through the cannabis seed-to-sale traceability platform Metrc, which the company claims to have been “the first track-and-trace system [designed] in close collaboration with state regulators in Colorado in 2011.”
      • WSLCB chose BioTrack as their initial traceability platform, but eventually opted to cut ties with the company.  Metrc was then announced as the apparently successful bidder, provoking backlash from stakeholders who anticipated increased costs of doing business because of the contractual requirement to purchase RFID tags from Metrc.  WSLCB staff changed course and selected MJ Freeway as their next vendor - requiring the emergency provision of an interim reporting solution created by WSLCB staff dubbed the Cannabis Contingency Reporting System.  MJ Freeway eventually failed to meet agency expectations, and staff opted to re-provision and rebrand the Cannabis Central Reporting System (CCRS).
      • During the WA House RSG work session on September 17th, WSLCB Director of Legislative Relations Marc Webster talked about what agency officials were looking for in a new traceability platform, including a suggestion that the system needed to be prepared to handle interstate commerce.
    • Jenkins followed up by asking: “How confident are you that the tracking and tracing of the legally grown products, so that you don't have leakage…do you think that that system needs to be improved upon?”  Lukela concurred it needed improvement: “That's one of my priorities here. Is better tracking, the better tracking of different systems. So the system that we use, CCRS is, was built, as I understand it, as a contingency system, a stop gap in between two other traceability systems for contractual or other reasons, and became a default primary system. And we're actually in the process right now of undertaking that exercise.”
      • WSLCB management and use of technological infrastructure for oversight and control of the regulated cannabis market was a subject of inquiry by the Washington State Office of the State Auditor (WA SAO) in 2018 in the midst of the first traceability vendor transition.  On October 22nd, auditors followed up with the release of a new report “Evaluating Washington State Oversight of the Cannabis Industry.”  Agency leaders and citizens would be granted an opportunity to publicly respond to the report during the Joint Legislative Audit and Review Committee (JLARC) I-900 Subcommittee public hearing on Wednesday November 6th.
    • When asked for the timeline on the transition to a new traceability platform, Lukela forecast 2031 because of a goal to integrate any new traceability framework with more fundamental technology reforms on-going at the agency, eliciting a “wow” from Jenkins.
  • Jenkins accordingly turned to the WSLCB’s much larger and higher priority systems modernization project (SMP), which Lukela indicated was the furthest along it had ever been and was expected to be complete by 2028 (audio - 3m, video - TVW).
    • Asked to describe the project, Lukela replied: “Okay, so the systems modernization project is yet another thing I inherited, and it is the database, which is going to house our licensing, our enforcement, our adjudications, all in one. And it's a multi-year, multi-faceted project in phase two right now. Currently, phase two is set to end, the end of March, and then hopefully we'll get the funding to be able to move on to phase three.”
      • Washington Technology Solutions (WaTech) maintains an information technology (IT) dashboard for the WSLCB Systems Modernization Project.  Since 2016 and at publication time, the agency had spent nearly $34M of a proposed budget of $71M to replace aging, on-premise mini-computers which continued to keep the agency’s core regulatory functions operational.
      • The latest incarnation of the project, developed by consultants at Accenture, aimed to migrate the agency to a Salesforce-based cloud solution.  At publication time, the visible impacts of that multi-year effort were accessible via an agency portal collecting an online application for banquet permits, household move notifications, and a form to request public records.
    • Jenkins then asked Lukela to assess the project’s progress and whether it was on track. Lukela replied: “Sure, I think so. Initially, what I hear is the project has started, started and failed, started and failed. This is the furthest, as I understand it, that this project has ever gone. We've done a great job at the agency level. Deputy Director [Toni Hood] has done a great job managing the project, and so looking forward to finalizing phase two and moving into phase three.”
    • Jenkins drilled down further about the SMP timeline. Lukela responded: “So running right now, it looks like there's going to be four phases. The licensing phase, which is phase two, will allow applicants and licensees to submit applications, permits, special event licenses, special occasion licenses, all online. And so we're really looking forward to that. And so the timeline, you know, phase two, phase three, [20]27? Hopefully fully operational—don't hold me to this—[20]28 maybe?”
  • Jenkins asked Lukela about “navigating…the different interests, the different business interests and the different influence that those groups” in the cannabis industry have, and Lukela responded that his agency tried to understand the pain points of both big businesses and smaller “mom and pop” shops (audio - 4m, video - TVW).
    • Lukela indicated his agency tried to work with all interest groups and understand the concerns of different factions in the cannabis industry, acknowledging that different business models had different needs. Lukela said, “I'd like to think we're navigating it pretty well. We spend a lot of time with the different industries, the different industry groups, understanding the pain points.” He noted, “one of the other pieces to the quote, unquote ‘big business’ in Washington state is the number of licenses you can hold. And so at five, whereas in Colorado, it's unlimited. And so big business here is a lot different.”
      • The U.S. Small Business Administration (US SBA) defines size standards which would likely categorize all cannabis businesses in Washington state as “small.”
    • Lukela went on to add that he was aware of discussions about allowing out-of-state ownership of Washington cannabis licenses, a concept that was “a little foreign to Washington State, but what Colorado already has.” He was unsure if a bill had been introduced in the past legislative session on the subject.
      • SB 5377 (“Concerning cannabis license ownership”) was introduced and advanced in 2023, but x-filed by the Washington State Senate Rules Committee (WA Senate RULE) in 2024.
  • Jenkins asked Lukela about the probability of allowing social consumption cannabis licenses in Washington, and Lukela said that the WSLCB was open to having conversations, but impaired driving was a concern (audio - 1m, video - TVW).
    • Jenkins framed the question by noting that “California's governor just signed into law a bill he actually vetoed last year, but signed this year with some slight changes to allow for cannabis, Amsterdam-style cannabis cafés, where, in essence, if you run a cannabis shop and you want to serve some food, some non-alcoholic drinks, have live music or that kind of venue, you can do that, and people can also smoke or otherwise take in cannabis.”
    • Jenkins indicated Washington and California had similarly strict clean air laws, which had been a concern for stakeholders in California, but legislators had ultimately decided to license social consumption venues. That prompted him to ask, “you know, if California is going to do it, is that the type of idea that will sort of potentially come up the West Coast?” Lukela replied that there had been some discussion of social consumption licenses in Washington (“There was an industry group that brought that up during the session last year”), but he felt the idea had not gained traction.
    • He added impaired driving as a regulatory concern associated with cannabis cafés “in addition to the second hand smoke.”
      • During their quarterly meeting on October 17th, Washington Traffic Safety Commission (WTSC) members allocated thirty minutes to discuss “Why? 51% Increase in Fatalities Since 2019.”  The WTSC Traffic Fatalities dashboard, incorporating data collected since 2014, indicated an impaired driver had been involved in 49% of incidents reported.
  • Jenkins wanted to know about trends in cannabis and liquor sales and tax revenue in Washington State after the COVID-19 pandemic. Lukela stated cannabis sales were down nationwide, but Washington's cannabis industry weathered the post-COVID economic climate better than other states, such as Colorado, which had experienced a greater decrease in sales (audio - 1m, video - TVW).
    • Earlier in the interview, Lukela indicated “we're hearing that the price margins are decreasing, similar to how they are across the country.” He elaborated, “I think things are down. But across the country, they're down. I'd say they're down, but to a lesser degree than the other states.”
    • Jenkins then pointed out that the relatively strong performance of Washington’s cannabis industry, compared with other states, might make some in the industry hesitant to support policy changes that could result in greater competition. Lukela responded, “right, because then it could cause a slippery slope of sorts. And so we're cognizant of it, and once again, that's why we're really excited to have this report, as well as a research team to be able to help us work through the data.”
  • Jenkins asked Lukela if Washington would consider moving away from the three-tier system for alcohol licensing, and Lukela replied that he believed the tiered system would remain in place for the time being, including for cannabis licensure (audio - 1m, video - TVW).
    • Jenkins asked Lukela about the “three-tier system of manufacturers, distributors, and retailers” for alcohol licensing, noting that the system had been implemented after the end of alcohol prohibition in 1933. He asked, “is anybody talking about moving away from the three-tier system, or is that pretty much here to stay?”
    • Lukela responded: “I think it's here to stay for now, that's what I'll say. I say for now because cannabis, liquor are industries that continue to evolve, and so I can say for now safely, but we'll see what the future has entailed.”
  • Jenkins asked about the WSLCB’s in-house research program, which Lukela indicated was analyzing data and writing research briefs to support agency decision-making (audio - 2m, video - TVW).
    • Jenkins asked Lukela to “help me understand more about the research team. You've actually brought in PhDs.” Lukela replied that the research team was made up of three PhD-level researchers, and that the team had published several research briefs on various topics.
    • Jenkins probed how the research team would contribute to agency operations, asking, “where do you see…this value add, or maybe this sort of new tool or secret weapon that you guys have…how do you see them helping you make better decisions? Like, what are the blind spots that you, that this agency struggles with?” Lukela replied the work would facilitate more objective decision-making at WSLCB.
    • Recalling “when this whole system was standing up, and we had RAND [Corporation] involved,” Jenkins pointed out that the WSLCB had previously relied on university research to inform its operations, but was now bringing research in-house. Lukela agreed, repeating that having a research team would allow the agency to use data to “help us make decisions.”
  • Jenkins asked Lukela about the transfer of cannabis testing lab oversight to the Washington State Department of Agriculture (WSDA), prompting Lukela to note that testing lab capacity was a significant issue (audio - 2m, video - TVW).
    • Jenkins noted the transfer was initially planned for the Washington State Department of Ecology, but authority was eventually given to the WSDA. Jenkins said, “this is also an issue that, as I understand it, kind of cuts across states…what are the particular challenges around lab testing?”  Lukela responded that “the top one is capacity…just being able to get the products, to get the product in, get it tested in a reasonable amount of time, and then get it back.”
      • According to the list of “Approved Testing Labs” published by WSLCB staff on October 23rd, there were seven analytical labs in Washington state, four of which were certified to conduct heavy metals testing as of June, a service previously bottlenecked between, and subcontracted out to, two labs.
      • However, Cannabis Observer obtained an image of a letter allegedly from vendor Testing Technologies—one of the firms certified for heavy metals testing—dated October 25th which indicated they would be “closing their doors” effective that day.  At publication time, Google listed the company as “Permanently closed.”
    • Jenkins then asked, “how confident are you that the labs that are doing the tests are doing good work? Do we have good quality control?”  Lukela said he would need to consult with WSLCB enforcement staff to answer that question, “but I'd like to think that they are.”
      • On October 18th, the Wall Street Journal published an article examining analytical lab results collected from many regulated state markets showing statistical anomalies for reported mold levels.
      • The cover story of the September 9th issue of Chemical and Engineering News included interviews with analytical lab staff in Washington state who explained the incentives towards, and prevalence of, “lab shopping” for inflated THC results.
    • Jenkins claimed that slow turnaround times in testing labs might give businesses an incentive to operate outside of the legal market before asking “is Department of Agriculture's, one of their mandates, then to sort of figure out how to build more capacity into the system?”  Lukela replied that WSLCB and WSDA staff were talking about the capacity issue “and then as the different types of tests come…you've got heavy metals, you've got pesticides. And so, yeah, it's a capacity issue, and hopefully we'll be able to make some strides.”
  • Finally, Jenkins asked Lukela about robberies of cannabis businesses, and Lukela indicated that he thought robberies were declining (audio - 1m, video - TVW).
    • Jenkins recalled, “for a while, there were a lot of headlines about very brazen and violent robberies of cannabis stores. I haven't seen as many of those headlines recently.” Lukela responded, “Well, I'd like to think it's lessening.”
      • Major regional media reported on a robbery that occurred at Hashtag Cannabis in Redmond in the early morning hours on September 5th - the fifth such robbery at that location.
    • Lukela shared, “At the agency, we have the ability for licensees to come and get a security review, which will help…their footprint in that manner.”
    • Jenkins pointed out that the robberies had been frightening and violent, “that was a pretty, pretty daunting and serious little stretch in there, where it was, in the videos, there were videos, and people could see just how scary and violent these were.”

• Jenkins concluded by asking Lukela what he hoped to accomplish in the next year, including the 2025 State legislative session (audio - 1m, video - TVW).
  • Jenkins asked, “Where do you want to leave us? I mean, again, you're a year plus into the job. A lot of moving pieces and parts, but let's say we talk again in a year's time, what do you hope to be able to report?” Lukela replied that he hoped to report continued improvement in agency operations and “getting through the legislative session.”
  • Jenkins interrupted to ask if the WSLCB planned to make any specific requests of the legislature. Lukela replied “not right now.”
    • At publication time, WSLCB staff were awaiting feedback from the Governor’s Office on two potential agency request bills: a technical cleanup bill in the alcohol statutes, and one concerning data sharing with the Washington State Department of Health (DOH) to validate cannabis excise tax exemptions for registered patients.
  • Lukela indicated staff were waiting to see what bills would be introduced during the session, prompting Jenkins to observe “there are always a lot.” Lukela agreed, “especially with cannabis.”
  • Jenkins thanked Lukela for participating in the interview, foreshadowing, “and we will do it again.”