WSLCB - Board Caucus
(February 25, 2020)

Here are some observations from the Tuesday February 25th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Policy and Rules Coordinator Kathy Hoffman presented two petitions for rulemaking to board members before briefing on the status of open and projected cannabis rulemaking projects.
  • Hoffman’s last rulemaking update was on February 4th. The February 11th Board Caucus was the last time members reviewed petitions, all of which were denied.
  • On February 17th, accredited cannabis laboratory True Northwest, Inc. submitted two petitions for rulemaking “regarding the same issue,” Hoffman told the Board. She referred to the documents as “petition A” and “petition B” and brought them to the Board comparatively quickly as they “have to do with open rulemaking under the quality control (QC) rules” (audio - 7m).
    • Petition A. Regarding Washington Administrative Code (WAC) 314-55-101(6) “Quality assurance sampling protocols,” True Northwest asked that the language be amended to require “immediate disciplinary action against any licensee or certified lab that fails to comply with provisions of the chapter.” The proposed language would dictate that “within 72 hours of receiving a credible complaint take disciplinary action against a lab.” Hoffman outlined that “as a procedural matter...this is already a rule that’s in progress” and therefore the agency couldn’t open a second rulemaking project to modify the same part of the WAC. “This petitioner, and her client, didn’t participate in any of the listen andlearn sessions or offer any comment,” she added. Hoffman explained that “True Northwest did file a complaint against another lab that we investigated and weren’t able to substantiate” and the subsequent petition for rulemaking was described as necessary because of “LCB’s inability to act.” Hoffman said a second complaint from the lab was still under investigation.
      • Hoffman noted that the QC Testing and Products Requirements rulemaking project (WSR 20-03-176) had been scheduled for a public hearing during the WSLCB Board Meeting on March 18th.
    • Petition B. Hoffman described True Northwest’s second petition as a request for WSLCB to “repeal” the same section of WAC altogether. “It’s unclear to me,” she said, “how we could both amend and repeal a rule at the same time.” Hoffman noted that in the changes proposed in the open rulemaking project, subsection (6) was already slated for removal as it was “redundant.”
    • Due to the ongoing rulemaking project and the conflicting nature of the petitions, Hoffman advised denial of both. She did plan to add the petitioner’s comments to those collected for the QC rulemaking project. Board members agreed with Hoffman's advice and denied both petitions without further questions.
  • Cannabis Penalties (audio - 1m). Hoffman reported the new penalty matrix adopted by the Board in January had been implemented and monitoring of impacts was "in progress right now." She segued while noting other agency rulemaking projects had begun to be “influenced by the penalty rules.”
  • Voluntary Compliance Program (VCP, audio - 3m). Hoffman reported that the final meeting on the program with licensees occurred the day before. "We were supposed to have licensees and their employees," at the meeting to develop the VCP, a requirement of enacting legislation SB 5318, but she was “not sure how many employees have been in attendance.” Hoffman was scheduling a listen and learn session on the topic for March 11th and hoped to “broaden the net and bring in more employees to contribute.” She pointed out that "Enforcement’s been invited to speak at that session because we learned yesterday...our licensees weren't aware” of WSLCB officers’ “extensive training before they went out in the field.” Hoffman anticipated presenting a CR-102 with the agency’s proposed rules for the VCP in “mid-April” followed by adoption of a CR-103 to finalize the new program “shortly thereafter.”
  • True Party of Interest (TPI, WSR 18-22-054, audio - 6m). The final external work group meeting on the rulemaking project was hosted on February 18th. Though the project had “been in play for about a year," Hoffman was still planning a listen and learn session on the topic. She said the rules had been “changed substantially,” including the removal of a spousal vetting requirement for licensees that had been debated for months.
    • Though an earlier draft had structurally removed financiers from WAC 314-55-035 in an effort to “distinguish” between TPI and financiers, the language was now back. Hoffman told the Board to do otherwise would necessitate changing the cannabis penalty rules again “for one number.” Instead, financiers would stay in the rule language “for now...at a later date when we do what I’ve been calling ‘rule hygiene’ we can go in and separate out financiers.”
    • Board Member Russ Hauge restated his position that it was an “excellent idea to separate financiers” from TPI and expressed a desire for the agency to “hold to that course” long term.
    • Board Chair Jane Rushford appreciated Hoffman’s effort and asked about spousal vetting for alcohol licensees. Janette Benham, WSLCB’s Policy and Rules Coordinator on alcohol, said it “wasn’t anything different than on the cannabis side, and we talked about TPI at the same time...and it's on the radar” for future alcohol rule revisions. Rushford agreed it was “not urgent” but expected alignment “at some point.”
  • Incremental Expansion of Tier 1 Canopy (WSR 20-01-171, audio - 6m). Hoffman remarked that she’d “not received any additional comments” beyond the seven they already had. She’d “tentatively scheduled” a pair of listen and learn sessions for a "deliberative dialogue" on changing the canopy rules.
    • The first listen and learn forum on March 26th would cover WAC 314-55-075 sections (1) through (5).
    • The second, planned for April 9th, would deal with sections (6) to (11).
    • Hoffman planned for the definition of “canopy” to be a key part of those discussions since different people had “different understandings of what canopy means.” Was canopy “the space in which the product grows" or was it actually “the plants, the overall space of the plant?” Hauge expressed some surprise this was not yet settled policy for the agency’s staff. Hoffman said she’d be meeting with Cannabis Examiner Matt Harper on Thursday to review documents, including a memorandum he prepared on different interpretations of canopy. Hoffman noted the issue came up after Harper shared confusion from “people in the field” and licensees. She specifically mentioned the challenge of measuring canopy---a value defined in square feet---in circumstances where plants were vertically stacked in a grow area. Rushford and Hauge called for “consistency” and asked that Hoffman present her findings at a future board caucus. Hauge conceded that "short of counting leaves, we're always going to have some slop in the system."
  • Vapor Products (audio - <1m). Hoffman said she was “watching what’s happening with the legislature” on the agency’s vapor regulation request bill, HB 2826, which was heard and advanced by the Washington State Senate Labor and Commerce Committee (WA Senate LBRC) the day before. Its senate companion, SB 6254, was heard by the Senate Ways and Means Committee (WA Senate WM) on February 20th. Hoffman indicated “we’re well positioned to...engage in rulemaking” if either of the bills were to become law.
  • Rulemaking Forecast (audio - 1m).
    • Hoffman stated, “We want to review our advertising” rules and planned to start with a “deliberative dialogue approach to bring in stakeholders and find out what the concerns are.”
    • She planned to apply the same method for a cannabis transportation rulemaking project. She noted Cannabis Alliance Executive Director Kristin Baldwin had reached out with “some concerns from transportation licensees.”
  • WSDA Certified Cannabis Program (audio - 4m). At the end of her rulemaking updates, Hoffman noted she had spoken with Washington State Department of Agriculture (WSDA) Organic Program Manager Brenda Book the previous Friday about the Department’s development of an organic-equivalent “Certified Cannabis” program.
    • Hoffman said Book described it as "a fee-for-service program, like all of the organic programs are for WSDA” however circumstances had "gutted their resources to move that program forward." Book claimed WSDA intended to raise existing organic fees in part to fund development of the Certified Cannabis program, a rulemaking project which would take time to be approved by the Department.
    • Hoffman explained that WSDA was only now “able to take that rulemaking out of the pause that it’s in right now and move it into production.” She called it “likely” WSDA would have Certified Cannabis rules in place “by 2021.”
    • Hauge inquired if WSLCB and WSDA could “conduct something like a listen and learn [session] with our licensees” to gauge “how this proposal might impact our own rulemaking?” Hoffman was “happy” he asked, saying that she and Book talked about this and Book planned to “reach out to some of the folks that had talked to her about this.” Hoffman was scheduled to “re-connect a couple weeks from now and talk about how we can move this forward collaboratively.”
  • Cannabis Commodity Commission (audio - 1m). Rushford asked whether legislation to create the commission, HB 1974, had advanced following its hearing in the Washington State House Appropriations Committee (WA House APP) on February 8th. Hoffman said it appeared unlikely to advance further and “we’ll wait for next year.”
    • While a second substitute to HB 1974 was passed out of WA House APP on February 11th, the legislation was not moved out of the House Rules Committee (WA House RUL) to be voted on by the chamber prior to the house of origin cutoff deadline on February 19th.

• Executive Assistant to the Board Dustin Dickson provided new information about the likelihood of remote testimony at future WSLCB board meetings.
  • Creation of a program to enable remote testimony to the Board was discussed last year and implementation was projected for July 2020.
  • Dickson said he “observed [the state Senate’s] process and protocol for remote testimony...it’s a much bigger project than we originally anticipated.” The Senate was “five years in” to use of the program after “a lot of leg work” (audio - 5m).
    • Hauge commented that, in his experience testifying at the capitol, "when it works it's seamless and wonderful and you bring in comments but there’s lots of things that can go wrong." Community colleges had used “volunteer proctors” to set up and operate remote venues for testimony. Dickson described remote participation from citizens wishing to testify to the legislature as “not a huge response.”
    • Rushford said they’d started by speaking to Brad Hendrickson, Secretary of the Senate, to learn about the the “time it took to stand it up,” the number of dedicated employees needed, and information technology requirements. As she considered what the agency was already undertaking in 2020, Rushford felt that "this is bigger than we have capacity to do." That said, she was committed to finding “other approaches then, to be more inclusive.” She told the group that she’d been contacted by “a representative from one of the Chambers in White Center” who believed that more alcohol licensees might testify if there were “interpreters available.” Rushford had taken the idea up with WSLCB Director of Human Resources Claris Nnanabu and Assistant Attorney General (AAG) Bruce Turcott. Rushford wanted to “manage expectations now.”
    • Another factor was that nearly all of the Senate’s remote experience was with pre-arranged or “invited testimony” rather than enabling "folks over in Okanogan" to offer comment at meetings. Dickson said “except for one” speaker asking to remotely testify on a bill, all of the Senate remote testimony had come from individuals invited to speak as nominees to state positions or as “subject matter experts.”

• Board Members shared upcoming meetings they were having with tribes and members of the prevention community as well as the next Regulators Roundtable in Portland.
  • Hauge reported he’d be visiting the Squaxin Island Tribe on Thursday with the "Tribal Liaison team" to see their cannabis production site as it had “increased in size. We want to look at it, [and] talk” with tribal officials. He noted that the Western District of Washington U.S. Attorney’s office had taken an interest in the facility (audio - 1m).
    • The Tribe entered into a cannabis compact with the state in 2015.
  • Rushford brought up the summer Regulators Roundtable in Portland, scheduled for June 1st to the 3rd, which was last mentioned on February 11th. As Rushford would be “out of state” she wanted to confirm which agency staff could attend in her stead (audio - 2m).
    • Read Cannabis Observer’s coverage of agency discussions on earlier regulator gatherings in Maryland, Alaska, and Denver.
  • Dickson said he’d been “working on some stakeholder outreach in tandem with the prevention meetings.” Rushford added that she and Director Rick Garza planned to arrange stakeholder meetings in relation to prevention advocate roundtables outside of Olympia in April and August (audio - 1m).