WSLCB - Board Caucus
(February 26, 2019)

Here are some observations from the February 26th WSLCB Board Caucus.

My top 3 takeaways:

• The Board publicly met the new Deputy Director of the Washington State Liquor and Cannabis Board (WSLCB) (audio – 6m).
  • Megan Duffy has joined as WSLCB Deputy Director following the departure of Pat Kohler.
  • Board Chair Jane Rushford asked about Duffy’s background.
    • Duffy most recently worked as the Department Supervisor at the Department of Natural Resources (DNR), reporting directly to the Commissioner of Public Lands.
    • Prior to that, Duffy was Executive Coordinator for the Governor’s Salmon Recovery Office.
    • Duffy explained she had a B.A. in Law and Policy, was a trained attorney and former law clerk, but is not a current member of the Washington State Bar Association.
    • Duffy said she was glad for the opportunity to learn about a different “substantive area and content.”
  • Board Member Ollie Garrett asked why Duffy had an interest in WSLCB, wanting to know if it was “the liquor or the cannabis?” Duffy replied that the conflict with federal law the agency confronted was “fascinating” and called cannabis an “interesting area, and an evolving area, a growing area.” She acknowledged a “steep learning curve” since starting at the agency the week before.
• A legislative update from Chris Thompson, WSLCB’s Director of Legislative Relations, covered a wide array of bills (audio – 1m).
  • Thompson’s last legislative update was at the February 6th Executive Management Team meeting.
  • On Tuesday, he began with the agency’s requested legislation:
    • HB 1626 on Enforcement Uniformity (audio – 1m) and HB 1430, the Systems Modernization Project (SMP) account extension (audio – 1m), had both passed their first committees and are awaiting further action by the House Rules Committee.
    • HB 1370, the Budtender Permit Bill, passed the first committee and was assigned to the House Finance Committee. It’s companion, SB 5678, did not meet the cutoff for further consideration. But if HB 1370 is passed by the House, the Senate could consider it (audio – 1m).
    • SB 5677, the Alcohol Promoter Permit, has passed it’s initial committee and been referred to the Senate Rules Committee (audio – 1m).
    • Thompson summarized his current focus as working with the Rules and Appropriation Committees to “get pulls or get hearings where that’s appropriate.”
  • Although technically not an agency request, Thompson opened conversation about HB 2052, “Clarifying marijuana product testing by revising provisions concerning marijuana testing laboratory accreditation and establishing a cannabis science task force” (audio – 8m).
    • Late to session on February 14th, HB 2052 was quickly scheduled for a public hearing on February 18th in the House Commerce and Gaming Committee, chaired by Representative Derek Stanford. On February 19th in executive session, the committee was unanimous in passage of HB 2052 out of committee without amendment (audio – 1m, video).
    • Thompson said the bill was part of what the agency wanted, but the sponsor of the bill—Representative Derek Stanford—had modified a Department of Ecology (DOE) 5-year timeline to “phase in” authority on laboratory accreditation to a 3-year timeline.
    • Garrett noted a report on Q13 Fox titled, “State board considers requiring pesticide testing on pot after California recall.” Thompson said pesticide testing had come up in testimony advocating for HB 2052 and noted the news story “isn’t directly related, but people have used it” when arguing for the bill. Thompson also said that concerns about product safety from pesticides had “come up in the context of home grow legislation” (HB 1131 / SB 5155).
    • Board Member Russ Hauge asked if there was any conversation at the legislature about “blind [proficiency] testing.” Labs anticipated proficiency tests because they are required to purchase the proficiency test kits, a situation which Hauge said, “creates—for me at least—the opportunity for gamesmanship.” Thompson indicated those operational details were “beyond my level of knowledge” and were not being discussed at the legislature.
    • HB 2052 is next scheduled for a public hearing on Wednesday February 27th before the House Appropriations Committee at 1:30pm. Thompson felt the bill could be defined as “necessary to implement the budget” thus making it exempt from the Friday March 1st cutoff for movement out of the fiscal committee.
  • Thompson said the Senate Labor and Commerce Committee “addressed concerns” on SB 5298, a product labeling bill, including the addition of a “liability shield” for WSLCB (audio – 6m).
    • The substitute bill was adopted during the committee’s February 20th executive session.
  • Thompson hailed HB 1794, legislation on “agreements between licensed marijuana businesses and other people and businesses” regarding “intellectual property,” as an example of the agency working with the cannabis industry (audio – 1m).
    • A substitute bill was adopted by the House Commerce and Gaming Committee in their February 14th executive session.
  • Thompson believed HB 1466, legislation to ban cannabis retail billboards, had moved forward in part because of an increased concentration in Pierce County (audio – 2m).
    • During the Commerce and Gaming Committee’s February 21st executive session, an amendment from Representative Melanie Morgan that would have required a 2,000 foot buffer zone between cannabis billboards was withdrawn. Thompson said some of the changes would have limitations “that were going to be difficult for us from an enforcement standpoint.” He added, “And actually, the industry, at least [Washington CannaBusiness Association (WACA)], said ‘We prefer a ban to this.’”
  • SB 5234, which exempts registered medical cannabis patients from paying the product’s excise tax, had passed to Senate Ways and Means. Rushford said she “likes that one,” however, the bill had gone unscheduled for over three weeks. You can learn more about this bill from our shared documents below (audio – 1m).
  • HB 1236, regarding “the ability of business and nonprofit entities” to get cannabis licenses was discussed. Thompson noted exemptions created for licensees with labor peace agreements was broader than what the agency wanted (audio – 5m).
    • Hauge noted the vetting exemption for licensee spouses “isn’t practical” and that the agency should consider asking for a line item veto of that section by Governor Jay Inslee.
    • The Commerce and Gaming Committee hosted a public hearing for HB 1236 on January 28th. A substitute bill and amendment to it were passed during the committee’s February 18th executive session.
  • HB 1792, on “criminal penalties applicable to licensed marijuana retailers and employees” was mentioned as receiving supportive testimony from the agency (audio – 1m).
    • HB 1792 was unanimously passed out of the House Commerce and Gaming Committee during executive session on February 18th.
  • Referencing two bills impacting “compliance and enforcement” for WSLCB, Thompson said changes to HB 1237 in the House “added to concerns” the agency had, while changes to SB 5318, it’s Senate companion, “addressed them” (audio – 1m).
    • HB 1237 was amended and passed by House Commerce and Gaming on February 21st. A substitute for SB 5318 was passed by Senate Labor and Commerce on February 20th.
  • HB 1945, for social use and direct sales of cannabis, wasn’t moved before the committee cutoff. Thompson said he’d suggested requesting a post-cutoff hearing on the bill to Bailey Hirschburg in his capacity as an advocate for the bill, but wasn’t certain if Hirschburg would take the suggestion. Hauge said the bill “reaches too far” but that some kind of reform for social consumption “should happen” (audio – 2m).
    • See Cannabis Observer’s analysis of HB 1945.
  • Thompson predicted SB 5296, an effort from Senator Karen Keiser to move greater rulemaking authority to WSLCB, wouldn’t pass this session but expected the subject would likely be approached in work sessions held by the Senate Labor and Commerce Committee after the legislative session concluded (audio – 3m).
    • The committee passed a substantially slimmer substitute on February 20th.
• A long discussion about staying abreast of legislation revealed board members seem to be unhappy with the updates so far this session (audio – 22m).
  • There was a general sense among board members that the agency’s stated positions on some legislation this year had shifted without adequate input from the Board. There was a belief that WSLCB’s legislative team, which included Thompson’s staff and other members of the Executive Management Team (EMT), were taking positions on bills without accounting for the board member’s past stated positions.
  • Garrett said positions developed by the legislative team “should be vetted with us.” She also noted that the agency’s EMT meetings used to have more briefings from legislative team members, as well as some “special” legislative meetings.
  • Rushford told Thompson that, despite the frantic pace of legislative changes during a session, the Board needed a “prelude rather than a report” after the fact. Thompson agreed, but reminded members legislative changes proved “really tough for turnaround time” and that WSLCB was attempting to leave “policy calls” to the legislature and governor.
  • Board Members agreed they found themselves in a “reactive session.” Hauge noted the lack of engagement from their own staff “marginalizes us” and he was happy to attend the legislative team meetings more regularly. Garrett said there was a “breakdown somewhere” in updating them. Rushford, saying that Director Rick Garza used to regularly attend caucuses, suggested the Board and staff might benefit from his, or a deputy’s, regular attendance.
  • Though he noted a few exceptions, Thompson felt that several stakeholders didn’t consult the agency before proposing legislation this year, leading to an “ambush style” of policymaking. Rushford theorized that freshmen legislators were partly responsible for abrupt actions. Thompson added that the House Policy Committee staff had significantly changed, creating more need for input from him.