WSLCB - Board Caucus
(December 3, 2024)

Here are some observations from the Tuesday December 3rd Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• While not publicly announced, Policy and Rules Manager Cassidy West left the agency at the same time as the state government entered a hiring freeze.
  • West began working at WSLCB as a Policy and Rules Coordinator in December 2022, following past work and consulting around regulatory compliance. She was promoted to the Manager position less than seven months later in July 2023. West discussed her background during a focus group that October.
    • A pattern of revising rulemaking project timelines preceded West’s tenure as Manager, but became more common after she took on the role in 2023.
  • Late on Monday December 2nd, the Wednesday December 4th Board Meeting agenda was revised to remove West and add Policy and Rules Coordinator Daniel Jacobs as “Acting Policy and Rules Manager.”  Cannabis Observer reached out to confirm the implication, and Director of Policy and External Affairs Justin Nordhorn indicated West had “left the LCB and we will be recruiting for a new Rules Manager in the near future.”
  • During her quarterly update at the caucus, Director of Human Resources Anita Bingham noted that outgoing-Governor Jay Inslee announced a state agency hiring freeze, following his calls for a “budget exercise” to reduce spending by state agencies (audio - 2m, video - TVW).
    • Inslee’s order does allow agencies to hire positions if the role is “required to meet statutory mandates,” and an exemption for public safety positions meant the directive was unlikely to impact hiring of a Director of Enforcement and Education after the resignation of Chandra Wax.
    • Additionally, the departure of Board Chair David Postman to another agency left a leadership vacuum unlikely to be filled before January 2025.

• Less than two months after being opened, rulemaking for Employee Stock Ownership Plans (ESOPs) was set to be withdrawn by the board according to an update by Acting Policy and Rules Manager Daniel Jacobs (Rulemaking Project).
  • The project was opened by the board on October 9th, following submission of a petition on March 26th by members of the Washington CannaBusiness Association (WACA). Board and staff discussed the topic at length on May 21st, but subsequent critical public comments took issue with how the change might negatively impact those becoming licensed through the WSLCB social equity program.
    • Focus groups on the project for December 16th and 19th were previously cancelled, though with the understanding from Nordhorn that they’d be rescheduled in January 2024.
  • During the caucus, Jacobs stated that the agency would request withdrawal of the ESOPs CR-101 at the December 18th Board Meeting. He said that the withdrawal request would be “the last rule making action for 2024,” and he would “explain more about that during that board meeting and why we're requesting to withdraw” the project (audio - 1m, video - TVW).
  • Board Member Ollie Garrett later asked about the withdrawal request, in particular if staff would speak to the petitioner beforehand, “or you just wait and do it at the board meeting.” Jacobs replied that “WACA has already been informed that we plan to request withdrawal of the CR-101.” He continued, explaining there was “no legal requirement for us to withdraw it,” but “given where we are with it, and also given the legislative session starting next month, we think that the best thing and the best course of action” was withdrawal due in part to “several statutory concerns that we weren’t able to overcome in the rule making process…we don't think we can make reasonable progress on it [absent] statutory instruction or direction” (audio - 2m, video - TVW).
    • WACA leaders, including Executive Director Vicki Christophersen, remotely observed the caucus.
    • Planned for the following day, the first session of the WACA Symposium pertained to “Maximizing Value for Owners and Employees Through ESOPs: A Fireside Chat. An ESOP allows an owner to sell their company to their employees while unlocking significant financial benefits. But why choose this path?”

• Jacobs also discussed the status of four other open rulemaking projects involving minors at cannabis production facilities, cannabis waste, the social equity program, and insurance regulations.
  • Minors on Wholesale Licensed Premises (Rulemaking Project) and SB 5376 Implementation (Rulemaking Project, audio - 1m, video - TVW)
    • Jacobs urged those with feedback on either the draft rule text for minors on wholesale premises, or the draft on cannabis waste rules to contact rules@lcb.wa.gov by Friday December 6th.
  • SB 5080 Implementation (Rulemaking Project, audio - 1m, video - TVW)
    • Jacobs stated that the second public hearing on the project updating rules around the social equity program would take place the following day on Wednesday December 4th, and the CR-103 to adopt the changes was scheduled for December 18th. He indicated that fewer public comments than expected were submitted following the October filing of a supplemental CR-102, “most of them have focused on the license mobility provisions, which we’ve heard a lot about.”
      • The hearing on the prior rule draft was held on September 11th.
    • Jacobs said that interested parties continued to raise concerns about the impact of license mobility provisions on “their application process.” He relayed that Nordhorn gave a “very detailed presentation” on the changes contained in the supplemental CR-102 on October 23rd, but Jacobs planned to review changes again at the public hearing (audio - 1m, video - TVW).
    • Acting Board Chair Jim Vollendroff inquired about the registration process for public comment at the upcoming public hearing, as well as the number of individuals who had pre-registered (audio - 1m, video - TVW).
      • Garrett interjected to clarify that this information would come from Board Executive Assistant Gretchen Frost. Jacobs concurred that “we will typically get an email list from her before the board meeting” mentioning how many people had signed up.
  • Captive Insurance Companies (Rulemaking Petition, audio - <1m, video - TVW)
    • Jacobs announced that he planned to have a staff recommendation on the petition ready by December 18th, calling the topic of licensees acting as their own insurers “super interesting for people who are really interested in the intersection of insurance and cannabis.”
  • There was no mention of the Lab Transfer Authority rulemaking project though prior comments from staff on November 5th suggested a CR-102 would also be ready by December 18th.