WSLCB - Board Caucus
(April 11, 2023)

Here are some observations from the Tuesday April 11th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Staff alluded to prepared emergency rulemaking on an environmental pesticide action, but offered few details to supplement an announcement the previous week that a decades-old pesticide contaminated a specific area of one Washington county.
  • On April 6th, Director of Enforcement and Education Chandra Wax distributed an announcement to all licensees titled “Notice of Pesticide Contamination in Region of Okanogan County” indicating that random pesticide samples revealed the presence of “dichlorodiphenyldichloroethylene (DDE) and many exceed action levels. DDE is a remnant product of DDT [Dichlorodiphenyltrichloroethane] -- a pesticide that was banned in the United States in the 1970s. The Centers for Disease Control and Prevention has a fact sheet on DDT, DDD, and DDE exposure.”
    • The announcement noted that “18 licensees in the geographical area” within Okanogan County would be placed under an administrative hold while officials tested products to determine whether any had DDE traces above action levels.
      • For pesticides without specific action levels in rule, the allowed action level is 0.1 parts per million (ppm).
    • DDE wasn’t included in required pesticide testing since “contamination above actionable levels has not emerged elsewhere,” meaning a producer “may not know the contamination exists unless their location was chosen by the LCB for random testing.” Actions mentioned in the announcement included potential recalls of products with DDE contamination.
    • The Associated Press published an article on the agency action on Friday afternoon which was syndicated nationwide.
  • Policy and Rules Manager Kathy Hoffman mentioned that there was emergency rulemaking language prepared regarding “current pesticides concerns,” and promised additional information would be presented at the Wednesday April 12th board meeting (audio - 1m, video - WSLCB, video - TVW).
  • When Board Chair David Postman asked to see the emergency rule language ahead of the board meeting, Hoffman revealed “the package [was] ready to go” and she would share it with Postman after the meeting (audio - <1m, video - WSLCB, video - TVW).
  • Board Member Ollie Garrett asked whether the board meeting presentation would talk “about what was done to work with the people that was being…impacted by this, what the agency did in advance to notify them.” Postman responded that Wax would be attending the board meeting along with Hoffman, “and that'll be our opportunity…to be brief[ed] by [the] enforcement director and ask our questions” about any actions preceding the announcement in addition to speaking “about the steps forward with the rulemaking” (audio - 1m, video - WSLCB, video - TVW).
    • On April 6th, the day of the announcement from Wax, leadership from the Washington Sun and Craft Growers Association (WSCA) emailed WSLCB Director Rick Garza and others, appreciating their identification of potential “relic pesticide residues,” but expressed concerns that “By describing the affected area as in Okanogan county the LCB has cast a wide net and to the casual observer has implicated all farmers in this very large county as being associated with the finding of the investigation. Many of our members in Okanogan have received calls inquiring if they have been implicated in the investigation even though they were well outside the area identified in the investigation. We are concerned that retailers will out of an abundance of caution cease to purchase from any farm in Okanogan County and farms that were not implicated will still suffer loss of revenue from the association.”
    • The next day, Garza replied, stating that staff recognized “concerns about the impact on neighboring businesses and identifying an area that is well-known for outdoor production…we took care to not treat our message with broad strokes. Instead, we referred to it as a ‘specific region’ of the county and linked a map in our message…we also need to be clear with our communications and took care in how we referenced it.”
  • Later during the caucus, Garza acknowledged the notice to licensees on “potential…pesticide contamination in one specific region of Okanogan County,” and told Garrett they would be “bringing staff forward tomorrow to really get into some details with respect to not only the action that we took immediately, but the actions that we're looking to take” (audio - 2m, video - WSLCB, video - TVW).
    • He mentioned this included sharing “specifically the discussions that have been occurring, and have been occurring…for some time now, and before last week with Department of Ecology, Department of Agriculture, and Department of Health” representatives. Garza suggested Wax and others would be better equipped to answer questions “and I know between myself, and Chandra and others, we've been keeping you apprised daily, if necessary, of what's been happening with respect to this issue.” He interpreted Garrett’s remarks as “alluding to…some of the meetings that we're looking to organize immediately with folks that are impacted” by the “potential…soil contamination issue there in a very small area of Okanogan County.”
  • Board Member Jim Vollendroff was glad to “acknowledge all the work that I've seen happening, keeping people informed of what's happening regarding the pesticide issue, and Director Wax in particular has kept me well informed.” Believing that board members couldn’t attend every meeting staff would organize in the future, he nonetheless “want[ed] to put out there that I am happy as a board member to represent us” in those conversations. Postman reported that he and Garza had already talked about keeping board members in the loop on upcoming stakeholder meetings on the topic, adding “we're scheduling those now, I think I'm gonna do some this Thursday and Friday” (audio - 1m, video - WSLCB, video - TVW).
  • The emergency rulemaking materials were published later in the day, and the board will consider adoption of a plan to place DDT/DDE, as well as Dichlorodiphenyldichloroethane (DDD) action levels at 0.00ppm, below the previous lowest detectable level in rule. It also proposed new definitions and requirements related to “Cannabis production in areas affected by DDT and its breakdown derivatives.” The rulemaking includes requirements for labs to be able to verify that cannabis products meet that level, something likely to take time and effort for cannabis testing laboratories, and increase costs on producers.

• Director of Legislative Affairs Marc Webster sounded an optimistic note as he explained the status of agency request cannabis bills including social equity and THC regulation, with the caveat that staff were wary of changes to legislation on subpoena powers for the agency.
  • SB 5080 - "Expanding and improving the social equity in cannabis program" (audio - 1m, video - WSLCB, video - TVW)
    • Webster stated the measure “passed the house [on April 10th] by a vote of…60 to 38. I think it was a very comfortable margin for a bill that at times…face[d] some considerable opposition.” He further felt whenever “barriers were in its way, I think your efforts…to overcome them really did pave the way for its eventual success.”
    • Garrett added her thanks for Webster’s diligence in shepherding the legislation through the process, noting she’d communicated her gratitude to legislative supporters, naming Representatives April Berg, Kristine Reeves, and Debra Entenman as well as sponsoring Senator Rebecca Saldaña (audio - 1m, video - WSLCB, video - TVW).
      • Entenman and Saldaña served on the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF), whose recommendations contributed to the bill’s contents.
  • SB 5367 - “Concerning the regulation of products containing THC” (audio - <1m, video - WSLCB, video - TVW)
    • “The THC bill…passed easily last week,” Webster told the board, commenting he didn’t “anticipate any problems in concurrence…the house didn't do a whole lot to the bill.” He promised to update them as the bill moved.
  • SB 5405 - “Modifying the liquor and cannabis board's subpoena authority” (audio - <1m, video - WSLCB, video - TVW)
    • The bill was “not in really good shape thanks to a couple of house amendments, but it is on the second reading calendar.” Webster explained, “I think we're going to be looking for the [Washington State] Senate to not concur” so there would either be a conference committee on the measure, or a request for WA House to recede from the amendment.
  • Gubernatorial Appointment Confirmations (audio - <1m, video - WSLCB, video - TVW)
    • Postman remarked that he’d seen “Garrett confirmed unanimously [on April 7th] and member Vollendroff moved to the on deck circle,” and subsequently approved by senators.
      • Postman’s appointment was confirmed by the Senate on March 29th.
  • Postman indicated he was also following some other legislation he saw “that will impact us directly,” considering them both to be “good steps” (audio - 1m, video - WSLCB, video - TVW).
    • HB 1563, “Concerning arrest protections for the medical use of cannabis,” had been added to the floor calendar for the Senate on April 10th, and Postman felt it “really would be important.”
    • SB 5123, “Concerning the employment of individuals who lawfully consume cannabis,” was passed by the WA House on March 29th and awaits a concurrence vote on changes in the other chamber.
    • Webster called this the "traffic management phase" of the session where bills with “a lot of support that have made it through the fiscal committees and are just kind of in a holding pattern…I think they'll probably pass eventually, but you know leadership has to figure out what bills are gonna run when.”

• Policy and Rules Manager Kathy Hoffman had shorter updates on several cannabis rulemaking projects around advertising, product samples, social equity, and more.
  • Advertising (audio - 1m, video - WSLCB, video - TVW, Rulemaking Project)
    • Hoffman stated the project would be "pausing" because cannabis advertising bill SB 5363 remained active and could impact their draft conceptual rules. She said staff were following the bill and would evaluate “whether or not we have additional implementation to do there” once the session concluded.
      • At time of publication, SB 5363 was in the Washington State House Rules Committee (WA House RUL) and would need to be moved to the floor and passed by Wednesday April 12th under the session cutoff calendar.
  • Minors on Wholesale Licensed Premises (audio - 1m, video - WSLCB, video - TVW)
    • Accepted from a petition in August 2022, Hoffman explained that Policy and Rules Coordinator Cassidy West was working on the project, but cautioned “that does really depend on how much rulemaking comes from this particular legislative session. And as everyone just noted there's going to be significant work for us to do there.” She assured them she’d spend “some time working on prioritization in the coming weeks.”
  • Product Samples (audio - <1m, video - WSLCB, video - TVW, Rulemaking Project)
    • Policy and Rules Coordinator Jeff Kildahl had been working on the topic, reported Hoffman, and would bring forward a CR-102 with proposed rules on June 7th, followed by a CR-103 “completed on or about August 16th.”
  • Cloud Storage (audio - <1m, video - WSLCB, video - TVW, Rulemaking Project).
    • A petition accepted by the board in August 2022, Hofman expected Policy and Rules Coordinator Daniel Jacobs would have a survey “release[d] to all of our licensee types by the end of this week, and then we'll have a better idea of how we're going to proceed with that project.” She thought a CR-102 would be available “by the last part of June with rule adoption towards the last part of August.”
  • Emergency Rulemaking - Social Equity Program (audio - 1m, video - WSLCB, video - TVW).
    • Hoffman remarked that as the emergency extension of the social equity application window approved on March 29th would last longer than the end of the window on April 27th, staff would return to the board “at the May 10th board meeting and ask” for the rule to “be rescinded or withdrawn.”
  • Rulemaking Petition - Statutory Change (audio - 1m, video - WSLCB, video - TVW).
    • Promising a petition response from staff at the April 18th board caucus, who would “then present to the board for final discussion on April 26th,” Hoffman commented it pertained to “making a change to a statute that a petitioner requested that the agency engage in rulemaking to change, rather than a statutory change through the legislature.”
  • Hoffman concluded her report by telling members “our rules update is going to change significantly on the 25th when I provide an update at that time, or the first part of May” (audio - <1m, video - WSLCB, video - TVW).