WSLCB - Board Caucus
(December 6, 2022)

Here are some observations from the Tuesday December 6th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• The newest Policy and Rules Coordinators met the board, including the agency’s first hire with prior work in an ancillary cannabis business.
  • “I am really pleased to introduce today Cassidy West and Daniel Jacobs who have joined our policy and rules team,” said Policy and Rules Manager Kathy Hoffman (audio - 1m, WSLCB video, TVW video).
  • West indicated, “I started working in the cannabis industry in 2014, in Colorado, and so I did that for several years. I eventually went off on my own, running my own, basically, compliance firm” for “cannabis and hemp” companies. Seeing the job posting for WSLCB, she considered, “I have a great regulatory background, I know cannabis; this sounds perfect for me” (audio - 1m, WSLCB video, TVW video).
    • West’s LinkedIn profile detailed her work history before joining WSLCB:
      • Vicente Sederberg LLP Regulatory Compliance Department Chair in Denver, Colorado from December 2014 until June 2017
        • “Since its founding in 2010, Vicente Sederberg LLP has been at the forefront of cannabis law and policy,” according to the company’s site.
        • The firm was founded by Brian Vincente, who was “a lead drafter of Colorado's historic legalization initiative, Amendment 64, and he co-directed the successful campaign in support of it. He also served as chair of the Committee for Responsible Regulation, which coordinated the successful campaign to implement statewide excise and sales taxes on adult-use marijuana in Colorado. Previously, Brian served as executive director of Sensible Colorado, a leading nonprofit organization advocating for medical marijuana patients and providers in Colorado.”
      • Schratter Foods, Inc. Director of Compliance also doing business as Anco Fine Cheese in Tampa, Florida from 2017 to 2018
      • C.B. West Consulting Founder in Lafayette, Colorado from December 2017 until November 2022
    • Hoffman affirmed that due to her previous experience, West would assist in cannabis rulemaking “working alongside Jeff [Kildahl, Policy and Rules Coordinator]” (audio - <1m, WSLCB video, TVW video).
    • Board Chair David Postman was “pretty sure you're the first person we've hired who has experience in…the cannabis industry” which demonstrated ”how far this has all evolved…because when we started there was no industry” from which to hire anybody (audio - 1m, WSLCB video, TVW video).
  • Jacobs shared his background as an attorney “practicing since 2015, started off in private practice representing folks denied insurance claims for various types, personal injury, workers comp, social security. And then in 2018 I went to work at the insurance commissioner's office…as a staff attorney doing a lot of regulatory licensee work, administrative hearings, all sorts of different things on the regulatory side.” In 2020, “I moved over to the [Washington State] Health Care Authority when I was also a staff attorney doing administrative hearings and regulatory work.” Jacobs decided rulemaking at WSLCB “looks pretty cool. And I was ready to shake things up a little bit in terms of my legal niche. So, I'm…new to liquor and cannabis, but not necessarily to regulations or rules and figuring out what they mean” (audio - 2m, WSLCB video, TVW video).
    • Postman welcomed Jacobs’ expertise in “what's a good rule look like, and how do you do that in a way that makes sense, and is enforceable which is really…the nut of what we have to do.” He was further “excited that both of you get the staff back up to full team again, and I know…the work will never end” (audio - 1m, WSLCB video, TVW video).
  • Board Member Jim Vollendroff welcomed both staffers, anticipating they “are going to do nothing but enhance the team that we have. And Kathy thank you [for] the work that you've done to recruit such quality candidates” (audio - <1m, WSLCB video, TVW video).

• Staff provided briefings on cannabis rulemaking projects including a recent canopy world café, advertising, petitions, as well as impressions from the first Cannabinoid Science Work Group meeting.
  • Canopy (audio - 1m, WSLCB video, TVW video, Rulemaking Project)
    • Hoffman called the second world café on cannabis canopy rules on November 29th "highly successful" and more efficiently run than the first world café covering the subject on October 4th. 
    • Kildahl had more detailed thoughts on the feedback, indicating it “continued the discussion and talked about the possibility of regulating cannabis in a different way, regulating production” instead of canopy. He brought up “other possibilities such as plant counts…and having tiers defined by yield rather than…actual canopy,” although “we had a lot of people who showed support for maintaining canopy…but providing more set standards for how canopy…is measured and determined.” Kildahl felt “the takeaway from the second world café was that people are comfortable…with the canopy measurement that we have now…we'll be continuing and I'll be analyzing the notes and the recordings” to further memorialize themes that were expressed (audio - 2m, WSLCB video, TVW video).
    • Postman followed up to ask if “there's an acceptance that this is a tool we need, that it should be done on some canopy-based thing, but we're still talking about exactly what that means, right?” (audio - 3m, WSLCB video, TVW video)
      • Kildahl explained that the November 29th “discussion trended towards the system that we have and…that producers are operating under established footprints and established spaces…that's what's familiar.” There were further “concerns about a weight system because…there was an opinion among some of the participants that having a yield-based system would skew the production towards certain varieties of cannabis, which which may be the, just the ones that are heavier producing, which may affect the market…or consumer demand,” he added.
      • Hoffman commented that she’d heard “a request for standardization” in definition and application of the rules, which she understood could give “stability for producers.” Kildahl concurred that “really is the underlying theme.” Postman agreed that rules for canopy should be “uniformly enforceable and enforced statewide.” He also felt more information on “why is canopy measured and restricted and limited” could prove to be “a little refresher for the agency and our licensees.”
  • Advertising (audio - <1m, WSLCB video, TVW video, Rulemaking Project)
    • Hoffman stated that West was “becoming acquainted” with the topic and would be providing a status update “at the next board meeting in early January.”
  • Minors on Wholesale Licensed Premises (audio - 1m, WSLCB video, TVW video)
    • Hoffman reported that an approved petition for rulemaking “regarding persons under 16 and over 16 on cannabis production facility premises” would also be reviewed by West. She expected West would review “a lot of history with that rule project,” and prepare a CR-101 to present to board members “probably at the end of January.”
  • Dormant Producer License Fees (audio - 2m, WSLCB video, TVW video)
    • Kildahl talked about a rulemaking petition “received on October 13th from Jeff Merryman” that requested reducing “the cannabis producer license fee by 90% for any licensed producer that shuts down production for at least one year or more.” Merryman argued the change was needed “because there is a need for responsible growers to shut down for a few years to help market conditions,” though he suggested dormant producers “reimburse the LCB for the remaining portion of the license if they did resume production in a time shorter than that one year window.”
    • Kildahl described the license fee as “established in RCW [69.50.325]” and said he’d “present the request tomorrow” along with a recommendation.
      • During the December 7th board meeting, Kildahl presented the petition and advised the board since “this amount is set by the RCW a change to this amount is…needed either by action of the legislature, or…by the citizens initiative process.” Board members subsequently voted to deny the petition.
  • Cannabinoid Science Work Group (audio - 1m, WSLCB video, TVW video)
    • Hoffman described the group’s first meeting on December 1st as "a good discussion primarily around members being able to become acquainted with each other." She reflected on the “the diversity of the group,” indicating they all posed questions that were collected and “we’ll be circulating those questions in the coming week.”
    • Vollendroff was excited to see what the group produced, feeling “people were very engaged in the conversation, and enthusiastic, and I was also impressed with the research questions that each of them brought to the table” (audio - <1m, WSLCB video, TVW video).
    • Postman agreed, having heard questions “from all points of view.” Someone had asked about how state officials measured “impaired driving tests,” something Postman himself wondered about when “people talk about public consumption lounges…how do we measure… if you go to a lounge and smoke or ingest, and then is it safe to drive? We kind of know what it is with alcohol these days, not everybody's very well disciplined about it, but we know what it is” (audio - 1m, WSLCB video, TVW video).
      • The third Washington State Senate bill pre-filed for the 2023 legislative session, SB 5002, proposed lowering the blood alcohol concentration (BAC) limit for Washington drivers from 0.08 to 0.05.
  • Product Samples. Although not mentioned during the caucus, the rulemaking petition accepted by the Board on August 31st was addressed by Hoffman the following day on December 7th. She said Kildahl was likely to present a CR-101 on the matter in late January.

• Director Rick Garza and other staff offered their first impressions of the Cannabis Regulators Association (CANNRA) meeting they were attending in-person in Tampa (audio - 6m, WSLCB video, TVW video).
  • Garza estimated that representatives from 36 states, or “about 160 regulators,” were present at the CANNRA event. He indicated that eight WSLCB officials were in attendance.
    • CANNRA counts 40 U.S. states among its membership, in addition to the territories of Guam, the Virgin Islands, and the District of Columbia.
    • At publication time, Cannabis Observer had not identified any public-facing information about the event, similar to when agency leaders hosted CANNRA members and selected industry guests for a two day event in June.
  • Garza brought up “two really good first sessions that we heard,” one with Axel Bernabe, “who's the administrator from New York,” and “someone from Illinois talking about market structures.” He said WSLCB staff faced questions around the impacts of vertical integration and retail license allotment caps on the Washington market. “For us, we didn't get to decide, it was in the initiative, but for states like New York, they got to take the time to learn from states like our own,” Garza stated.
    • Three days later on December 9th, New York regulators released a plan to enable retail cannabis delivery services before opening retail storefronts.
  • Another session covered “hemp cannabinoids,” Garza noted, where Washington was represented among panelists from six states faced with “the difficulty of doing this, and how we're all struggling with trying to deal with delta-8[-tetrahydrocannabinol] gummies.” He called this a challenge “created by the [federal 2018] farm bill” that likely needed a federal remedy, though he mentioned the WSLCB “revised THC bill” agency leaders hoped to advance during the 2023 legislative session. He acknowledged a level of relief that WSLCB officials weren’t alone in finding the topic difficult to regulate. Hoffman shared similar relief that other agencies were “struggling” with cannabinoid regulation, which she suggested had “implications for the 2023 Farm Bill.”
  • Vollendroff was especially interested in hearing about Illinois, since “one of the things that they did right from the very beginning is put aside [25]% of their tax revenues to reinvest in communities that were disproportionately impacted by the war on drugs.” He believed that “it goes beyond communities that have been impacted, but it's also recovery communities, and it's young people, and it's parents, and…I really believe in reinvesting some of the revenue that's brought…back into the system.” Vollendroff then mentioned that “there's something special about being in a national meeting with people who are doing this around the country,” and that he’d reflected upon the hiring of West “showing how far we've come in terms of professionalism and understanding and research.”
    • According to the Civic Federation, Illinois cannabis tax revenue was also earmarked for:
      • “2% to the Drug Treatment Fund for the Department of Human Services to develop a drug, tobacco and alcohol public education campaign and analyze the public health impacts of legalizing the recreational use of cannabis;
      • 20% to the Department of Human Services Community Services Fund to address substance abuse and prevention and mental health concerns”
    • Read a July 25th news story on Illinois’ cannabis tax revenue.
  • Board members were scheduled to host a “Cannabis Regulators Association (CANNRA) Debrief” at the Tuesday December 13th caucus.