WSLCB - Board Caucus
(February 4, 2020)

Here are some observations from the Tuesday February 4th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• The Board learned significantly more about the WSLCB’s contract with the Washington State Department of Agriculture for cannabis testing.
  • Board Member Russ Hauge had been after a better understanding of the interagency contract for cannabis testing between WSLCB and the Washington State Department of Agriculture (WSDA). He described what he’d learned thus far on January 28th and indicated he’d asked for a briefing for the Board.
  • Enforcement Commander Jennifer Dzubay and Enforcement Property Officer Patrick McMillan spoke to the Board about the contract. Hauge welcomed Dzubay and McMillan saying that after “talking with them, after talking with people from the Examiner’s program, our rulemaking coordinator, talking with people in the industry, there’s a lot of misunderstanding, I think, about this program.” As the agency was working on Quality Control Testing and Products Requirements rules, he believed it was an appropriate time to “hear about this program from the people who make it work” (audio - 23m).
    • McMillan provided copies of a presentation that covered “three contracts that we built with WSDA on our pesticide testing.” Beyond the original interagency agreement, he provided the Board with an agreement amendment, the contemporary memorandum of understanding (MOU), and the Enforcement Marijuana Unit “Pesticide Collection Protocol.”
    • McMillan explained that the program started in 2016. At the time, Dzubay said the agency was concerned that employees of licensed facilities had “started to get sick" and complained “that their employers were using pesticides and stuff.” McMillan noted the agency was also getting complaints from “individuals that were using the product and the public” and acknowledged that the Enforcement division “continue[d] to see that.” “It generally boils down to ‘There was something that was in the product when it was grown’ and that’s where the pesticide compliance portion of this comes in.” This led to a realization that WSLCB “didn’t have a testing protocol” and instigated WSLCB’s collaboration with WSDA.
    • “We actually purchased the equipment, provided two [full time employee] FTEs for the WSDA lab over there in Yakima, their hops lab is where all our marijuana testing is conducted.” Dzubay was the contract manager on behalf of WSLCB, while WSDA Chemical and Hop Program Manager Mike Firman managed that agency’s side of the agreement. McMillan said that all lab reports from WSDA were sent to him. “I isolate them out based on the case or complaint number and then I send those out to the officer that’s responsible for that particular instance.”
    • McMillan reported the lab was used for “60 to 75 samples a month” which was composed of “an individual test.” However, as multiple samples could be used in individual cases, “there’s a smaller number, but that’s the number of cases.” He said the agency endeavored to send 70-75 test samples monthly “whether it be a complaint-driven, or an investigation, or just random pesticide testing.” Results from tests were transmitted to McMillan “within 15 to 30 working days.” This timeline is slowed “in the fall when [WSDA is] testing hops” as they had to meet federal grading standards on a set schedule.
    • McMillan indicated the need to test for pesticides on other crops meant the Department had developed expertise at detecting an expansive list of compounds, whereas he expected cannabis industry laboratories would only test for pesticides with action limits specifically outlined in WAC 314-55-108 (“which is very, very short”). McMillan claimed industry labs had responded to WSDA results by saying, “well, we didn’t test for that.” He acknowledged that “it is expensive for those other labs to get those compounds to test against.”
    • WSDA’s Yakima facility was also able to detect heavy metals as well as handle concentrates and edibles. However, the Yakima lab did not test for molds. McMillan explained that the agency had used an “independent lab” as “we really didn’t understand how to really do that.” He was now working on another contract for mold testing through WSDA’s Olympia lab. “So, hopefully within the next 60 days,” McMillan added, “we’ll be able to start doing mold testing again.”
    • When cannabis samples tested clean, WSDA kept any unused material to create “cannabis blanks for test matrixes so they have a base knowledge of what it is.”
    • One of McMillan’s responsibilities was transportation of testing samples, though “if I’m unavailable we’ll have an officer do it.” Dzubay said WSDA wasn’t permitted to transit cannabis “at this time.” McMillan elaborated that the Enforcement office in eastern Washington had an on-site freezer to hold samples “and then within a couple days one of them will actually transport it to the lab.” McMillan drove to the Spokane area to destroy contaminated samples or seized products, and on those trips he coordinated to deliver new samples from eastern Washington to the Yakima lab when possible. Though the process could be time consuming, Hauge noted it was “establishing a chain of custody” that was accountable from collection to lab delivery.
    • WSLCB initially paid approximately $755,000 for lab equipment for WSDA. McMillan relayed that the agency was also paying “an annual maintenance fee for the upgraded equipment” which ran “up to $70,000.” The two FTEs under the contract had to “focus” on cannabis testing when samples were delivered to the lab, but were otherwise WSDA staff.
    • In discussing sampling protocols, McMillan said officers conducting random field tests were “looking at about 25% of what a facility’s growing area is. So if they’ve got four rooms in there we’ll just test one of the rooms.” In contrast, during investigations officers sampled “everything possible in that facility at the time.” Dzubay said WSDA had trained WSLCB staff on sampling procedures for over a year early on, progressing from sample collection in “paper bags” to “sterilized jars from Fisher Scientific.”
  • When Board Chair Jane Rushford inquired about the MOU, McMillan responded that WSLCB had “moved” from the interagency agreement to the MOU in 2019 “because in 2017 the Department of Agriculture actually obtained funding from the legislature for a lot of this pesticide testing.”
    • To our knowledge, direct funding to WSDA for its cannabis testing program was secured by the Department in 2019 following a surprise budget request in late 2018.
  • Hauge and Rushford told McMillan and Dzubay that the relationship between the agencies appeared to be one of the better partnerships between state institutions that they’d seen. “We’re always communicating with them,” McMillan agreed before touching on a few of the learnings that had emerged from the alliance.
    • On sample sizes, WSDA initially asked for 100 grams of “dried product” and oil for testing. However, because "that's where the money is," McMillan said WSDA had been convinced to accept 10-20 gram samples for dried flowers and “three to five grams” for oils/rosins.
    • WSLCB collected “amalgamated” samples covering an entire facility, a substantially different procedure from the cultivar- and lot-specific samples licensees are required to have tested.
    • Dzubay told the board they’d scheduled a training for the agency’s new officers and added it to the "LMS System, so any time we have new hires they will be watching our training programs. Pesticide collection and the steps afterwards will be included in this training."
    • Other aspects of the partnership between the agency and WSDA included the addition of cannabis to the Pesticide Information Center Online (PICOL) and the Department’s on-site collection of “chemicals that are used” by licensees.
  • Board Member Ollie Garrett pointed to an increase in “pesticide cases” in 2019 and asked if there was more random sampling. McMillan indicated that a single investigation could involve “anywhere from four and 40 samples in that case.” Dzubay added that the number of random tests “has jumped up quite a bit” in part at the urging of the industry. Their efforts showed that WSLCB “can't be everywhere at one time but we are trying to get out there.”
  • Dzubay confirmed that the state no longer conducted a “Secret Shopper Program” to purchase and test end products for potency. She indicated interest and/or capacity shifted as a result of changes to the Cannabis Examiner’s team and, in effect, “they didn’t understand what to do with the results.” McMillan added it was discontinued largely due to fiscal limitations.
  • Hauge wanted to know if the testing program was “at max gross now” with its protocols and “efficiencies” or was “there some capacity in this system.” McMillan hedged but admitted the program had “capacity to grow still.” Dzubay noted WSDA had developed their own “small marijuana team” to engage licensees and “review pesticide logs.” She’d learned that WSDA’s team was “very concerned about some of our rules” and had provided her with recommended changes which she intended to confer with Policy and Rules Coordinator Kathy Hoffman about.
  • Later during caucus, Hauge returned to the topic to ask about WSDA’s stalled rulemaking project to create a “Certified Cannabis” organic-equivalent designation, which he’d recently mentioned to fellow board members. Hoffman reported talking about it with Research Analyst Trecia Ehrlich and Cannabis Examiner Manager Kendra Hodgson before contacting WSDA “about those rules and I haven’t heard anything yet.” Hauge said he’d “like to see the Enforcement testing program get together with the Examiner program" to find out if the certified cannabis standard “obviates” the need “for pesticide and heavy metals testing, maybe” (audio - 2m).
• Board Member Ollie Garrett brought up the content and progress of the agency’s social equity request legislation.
  • The proposal, HB 2870 - “Allowing additional marijuana retail licenses for social equity purposes” was granted a public hearing in the Washington State House Commerce and Gaming Committee the day before on February 3rd. The board last reviewed the legislation on January 29th. 
  • Garrett said she’d texted Garza over the weekend because so many people were reaching out to her in advance of HB 2870’s hearing (audio - 6m).
    • Garrett sought clarification on questions such as whether “a [retail title] certificate is considered a license" under the bill. Garza said he’d arranged a meeting for Garrett and himself with Licensing Compliance and Policy Manager Nicola Reid to look at that issue and others that emerged during the request legislation’s hearing such as “can we allow folks who hold certificates to move out of the location that they’re at?” Garza noted that he considered issues like changing jurisdiction “separate” from the bill’s equity program.
    • According to Garza, another bill change under review was “the ability for anyone under 51 or 50% to be able to hold a license under the social equity program if they qualify.”
    • Garza indicated Commissioners Paula Sardinas and Will Housa from the Washington State Commission on African American Affairs (CAAA) had offered to help markup the social equity bill before it advanced. Garza welcomed the help as “there seemed to be general agreement from everyone who testified that we’ll need some time to put that program together” whether it was done via legislation or a “task force.”
    • Garza concluded that the bill "looks promising, actually, compared to a lot of bills up there.” His sense was that "everyone’s waiting to see what happens” for proposals like HB 2871, the agency’s request legislation pertaining to tier 1 producers.
  • In closing Garza reminded the group that the first cutoff deadline to advance bills through their house of origin policy committee was Friday February 7th. Garrett mentioned looking for a minority "percentage in the industry report" which she had expected would be prepared by Licensing Deputy Director Jeanne McShane. Garza promised to “find out what they’ve got” and bring a copy to Garrett later that day.
• Policy and Rules Coordinator Kathy Hoffman’s preview of rulemaking activity planned for the following day’s board meeting included “round two” of vapor product emergency rules.
  • The last rulemaking update covered by Cannabis Observer was on January 21st.
  • “Round two of emergency rules” for vapor products (audio - 6m).
    • Hoffman started her briefing by confirming that the Washington State Board of Health (SBOH) was expected to allow their emergency ban on flavored vapor products, implemented last October, to expire without extension on February 7th. SBOH’s vitamin E acetate ban, which was adopted a month later, remained set to expire in mid-March. Hoffman anticipated SBOH would “extend that ban until there’s legislation in place” to prohibit use of vitamin E acetate in Washington’s cannabis and vapor supply chains.
    • Hoffman told the board the challenge was “all of our emergency rules are connected to the flavor ban.” As that would soon expire, Hoffman proposed reframing the authority for WSLCB’s emergency rules on vapor products in relation to the SBOH’s remaining vitamin E acetate ban.
    • “But there’s one that we really don’t need to keep in place, that we really can’t support with the flavor ban emergency rule being withdrawn and that has to do with the mandatory signage.” Hoffman said the Board could withdraw the signage rule at the following day’s Board Meeting or let it expire on February 14th.
      • Hauge wondered if new signage language warning about vitamin E acetate was warranted. In Hoffman’s estimation, “the State Board of Health didn’t find that that was necessary in their emergency rulemaking and I think that message has been pretty well broadcast” by federal health officials. She recommended the Board acknowledge the rule’s expiration and not seek to extend it.
    • The specific emergency rules to be superseded and replaced:
      • Mandatory disclosure of cannabis vapor product ingredients (WAC 314-55-1055)
        • Existing Emergency Rule (Oct 16, 2019)
        • Proposed Emergency Rule (Feb 5, 2020)
      • Enforcement authority against cannabis processors (WAC 314-55-077)
        • Existing Emergency Rule (Oct 23, 2019)
        • Proposed Emergency Rule (Feb 5, 2020)
      • Enforcement authority against cannabis retailers (WAC)
        • Existing Emergency Rule (Oct 23, 2019)
        • Proposed Emergency Rule (Feb 5, 2020)
      • “Summary license suspension” and “petition for stay” procedures against vapor licensees (WAC 314-35).
        • Existing Emergency Rule (Oct 23, 2019)
        • Proposed Emergency Rule (Feb 5, 2020)
  • Cannabis Penalties (audio - 1m). Hoffman reported presenting the revised penalties adopted by the Board to cannabis-assigned enforcement officers with Dzubay. Officers posed “useful questions” about implementation of the revised rules which take effect February 22nd.
  • Voluntary Compliance Program (WSR 19-15-074, audio - 1m). Hoffman had received final feedback “internally” on the program framework, which would “be proposed as [WAC] 314-55-013” positioned immediately after that chapter’s definitions. She planned one more stakeholder meeting on the program to “run the draft past them, we’ll do a listen and learn session, then we’ll be ready to move forward.”
  • True Party of Interest (TPI, WSR 18-22-054, audio - 1m). Hoffman announced that she’d gotten “very minimal” final feedback internally and would show the results to stakeholders who had participated in penalty revisions “and a few others.” She expected to host a Zoom meeting with stakeholders as well as organize a listen and learn session on the topic. A wild card remaining in play was the legislature’s consideration of out-of-state ownership, an idea that received a chilly hearing in the House before being pulled from Senate consideration. “If it does move somewhere it is going to influence the outcome of this rule project,” Hoffman said.
  • Quality Control Testing and Products Requirements (WSR 20-03-176, audio - 1m). Hoffman had heard “minimal feedback,” noting comments from the Cannabis Alliance and licensee Micah Sherman. She believed that “the messaging that we set forth at the last board meeting was well received,” and expected stakeholders would be offering “alternatives” on WSLCB’s proposed language. 
  • Incremental Expansion of Tier 1 Canopy (WSR 20-01-171, audio - 1m). Hoffman reported receiving seven comments, which struck her as light. She would be scheduling a listen and learn forum for “the rules as they stand now and invite people to just start commenting.” She continued, “I guess there’s a lot of opposition to considering tier 1 expansion under any circumstances from...our other licensees, tier 2s and tier 3s.” Hoffman was hopeful the industry would “start talking about that.”
  • Petitions for Rulemaking (audio - <1m). Hoffman said she was reviewing three petitions and would be bringing her recommendations to the Board at the following week’s caucus. Throughout 2019, the agency fielded 15 cannabis rulemaking petitions.
  • Advertising Rules (audio - 1m). Due to pending legislation on advertising Hoffman was holding off "before we do anything substantial or even really consider rulemaking in this space until we know a little bit more."