WSLCB - Board Caucus
(January 4, 2022)

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

My top 5 takeaways:

• Policy and Rules Manager Kathy Hoffman gave a status report on the public response to the Quality Control (QC) Testing and Product Requirements rulemaking project.
  • QC Testing and Product Requirements (Rulemaking Project, audio - <1m, video).
    • Hoffman stated that the public hearing on the CR-102, which was approved for filing on December 8th, was scheduled for February 2nd. She added that they were “still on track” to present a CR-103 to the board with final rules for adoption on March 2nd (audio - <1m, video).
    • Hoffman sought clarification from Policy and Rules Coordinator Jeff Kildahl about comments pertaining to the proposed changes, with Kildahl indicating several had come “directly to me instead of to the rules inbox.” He mentioned public input on “testing for other substances like radioactive isotopes in Eastern Washington. There was one comment about testing for benzene which we already do as part of the current rule.” A licensed producer shared concerns about “possible delays to getting product tested in the labs,” Kildahl mentioned, as there were “fewer labs that perform pesticide testing” as opposed to the established testing requirements (audio - 1m, video).  
  • Board Chair David Postman voiced his hopes that “the labs are watching” as they “all know it’s coming.” While the Washington cannabis sector lacked pesticide testing “capacity” at the moment, he hoped “by the time this becomes final” it would be “a better market out there.” Hoffman confirmed that five accredited cannabis testing laboratories could conduct pesticide testing out of 11 labs overall (audio - 1m, video).
    • Further changes for labs and testing standards had been recommended to lawmakers by the Cannabis Science Task Force (CSTF).

• Hoffman then turned to the tetrahydrocannabinol (THC) rulemaking project which elicited several comments from board members about prospects for legislative action.
  • THC (Rulemaking Project, audio - 1m, video) 
    • Hoffman reported that a CR-103 finalizing proposed changes would be presented at the January 5th board meeting, having only received two comments since being opened by the board in October 2021. One request to change a “may” to a “must” around the “board’s ability to determine whether or not they’re going to prohibit the entry of a product into the market” wouldn’t be implemented as board members “need flexibility to be able to make those kinds of decisions.” This approach was similar to how the agency approached vapor product regulation, indicated Hoffman.
    • Hoffman reported another comment “from a hemp producer” indicated they were selling synthesized cannabinoids from their hemp crop in “retail establishments” and opposed “any sort of a restriction on THC compounds regardless of origin” (audio - 1m, video).  
    • Postman had Hoffman confirm that the hemp producer wasn’t selling synthesized cannabinoid products in licensed cannabis retailers. She said their letter and concern was cited specifically in the concise explanatory statement of the CR-103 "for the public to see." If the CR-103 was adopted, it would take effect on February 5th, Hoffman added (audio - 1m, video).
      • Public comments in the concise explanatory statement include a letter from Rick Dimmer, owner of the Happy Cafe LLC in Auburn.
  • Board Member Russ Hauge remarked that he was surprised by the minimal comment response on the package. “In some ways, yes,” Hoffman responded, but she felt there’d been “a lot of focus on our request legislation” on cannabinoid regulation and the absence of input could indicate the “amount of work that we put into working on this issue.” She believed “our intentions” to restrict synthesized cannabinoids through rulemaking and a request bill had “been pretty clear” to stakeholders for some time. Hauge commented that while he was “leaving soon,” he remained concerned. While proposed rules were “a great step forward,” the lack of feedback could be connected with “lobbyists saying explicitly that they are going to forego engaging in the rulemaking process because they think they can get what they want better in the legislature.” This was “basically cutting us out” of policymaking, he asserted, and was concerned that the “good, hard work” of staff may end up “undercut by actions of the legislature” (audio - 3m, video).  
  • Postman concurred, saying meetings with legislative leaders evoked “good support” in recognizing the "existential” threat of synthesized cannabinoids and wouldn’t pass legislation impacting the agency without their input. He predicted such a change would “happen late in the session, and it’ll be sold as a small change” but that the work and decisions made by agency staff to this point should be respected. He felt board members’ eyes were “wide open” in regards to the session, and that Director of Legislative Relations Chris Thompson would be keeping them updated (audio - 2m, video).  
  • Board Member Ollie Garrett also found that cannabinoid regulations would only be acted upon if cannabis sector stakeholders testified and stayed involved in the legislative process because “as an agency, we can’t do it alone” (audio - <1m, video). Postman agreed wholeheartedly, saying their efforts were “responsive” to the concerns of “large segments of the industry.” However, a “split” remained with some calling for greater restrictions, he stated, as well as “a small segment that want it more wide open.” Postman said legislators would hear mixed reactions to the “independent path” taken by WSLCB on the issue, but he believed their work would achieve the control over synthesized cannabinoids that many stakeholders professed to want (audio - 1m, video).
  • Garrett hoped there would be recognition that the regulations offered by agency representatives were “better than what else is out there,” with Postman adding there would be “another bill” which would be more permissive of synthesized cannabinoids in the legal adult use market (audio - 1m, video). 
  • Hoffman shared her view that the state was proposing a “middle approach” as opposed to other legal cannabis states “with outright bans.” Highlighting the “public health and safety concerns here,” she said she’d sent an email about “upticks that we’re seeing in adverse event reporting” which was being taken seriously based in part on what officials hard learned from the vaping associated lung injuries (VALI) health scare in 2019. “And our agency is responding in a responsible way” to synthesized cannabinoid concerns, claimed Hoffman (audio - 1m, video). Postman observed that WSLCB had been contacted by officials from Hawaii “doing research on adverse impacts” as they were “facing some of these same issues” (audio - <1m, video).
    • Michele Nakata, Dispensary Licensing Section supervisor of the Hawaii Department of Health Office of Medical Cannabis Control and Regulation (OMCCR), was also Second Vice President at the Cannabis Regulators Association (CANNRA).
    • Gillian Schauer, CANNRA Executive Director, spoke about synthesized cannabinoids in September 2021.

• Director Rick Garza summarized the status of request legislation on regulation of cannabinoids that had been pre-filed in both chambers ahead of session and would be evaluated by lawmakers - along with a potential “contrary” proposal (audio - 2m, video).
  • Garza told board members that agency representatives had “wrapped up our contact with legislators…a couple of months ago given the concerns that we were hearing about legislation that was out there,” including a proposal to “reorganize the board” and also efforts “contrary to the work that we’re doing on our cannabinoid legislation.” He said there’d been “numerous discussions” with lawmakers “especially in the last month,” including sharing “some of the concerns we have about some of the bills that may be coming our way.” 
  • Garza believed that board members and agency leaders had been voicing their perspectives to elected officials as well as cannabis industry stakeholders and felt they were honoring Postman’s stated commitment to engagement and transparency on their policy motives and goals. “And, we’re looking forward to the discussion on our bills,” he noted, which he anticipated would be heard publicly by lawmakers “next week, or certainly, the second week.” 
    • The request legislation, SB 5547 (“Expanding regulatory authority over cannabinoids that may be impairing and providing for enhanced product safety and consumer information disclosure about marijuana products”) and HB 1668, its companion in the Washington State House of Representatives (WA House), were prefiled in December 2021. They would be formally introduced as bills at the start of the 2022 legislative session on Monday January 10th. 
  • Postman asked for confirmation that no hearings had yet been scheduled for the request bills. Garza responded that the hearing calendar for the first week of session would “be out on Thursday” though he was uncertain if the legislation would be heard the first week of the 60-day session. Postman requested the board be informed whenever hearings were scheduled (audio - 1m, video). 
    • Several legislators talked about their expectations for the 2022 session with cannabis industry members at the Washington CannaBusiness Association (WACA) fall policy conference in November 2021.

• Hoffman went over the social equity rulemaking effort, saying it was part of the effort to implement recommendations from the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) and would feature direct stakeholder engagement by WSLCB officials (audio - 2m, video Rulemaking Project).  
  • Hoffman had begun to “draft some rules” related to administering the “social equity program itself.” Working with Licensing division staff, she said she would have “draft conceptual” language that included a “significant” reorganization of licensing rules. Comparing the changes to extensive enforcement reforms brought about by SB 5318 in 2019, Hoffman stated that the reorganization trimmed language which “seemed to create barriers” to participation, as well as unnecessary “legalese.”
  • She was weighing stakeholder engagement options, most likely a listen and learn forum, “by the end of February.” Though this was a “very aggressive timeline,” Hoffman expressed confidence it would allow agency staff to “be as responsive as we can, as quickly as we can, and as conclusively as we can.” She expected a more concrete update “in the coming weeks.”

• A proposal to open “narrowly scoped” rulemaking for electronic service around adjudication proceedings was being drafted by staff whom Hoffman said were also evaluating if implementation would “cross more than one” rule section (audio - 1m, video).  
  • She predicted a CR-101 would be presented on February 2nd and that a CR-102 with proposed changes would be offered by staff on March 15th. As the project would be “really technical,” Hoffman added that officials weren’t expecting “controversy around it” as it would be “value added” to their regulatory work.
  • Postman asked if the project would involve “external government partners” like the Washington State Office of Administrative Hearings (WA OAH). Uncertain, Hoffman referred to Kildahl, who said they hadn’t considered “the interplay with OAH.” Postman replied that “Tanea Smith and others” could “help on that front” (audio - 1m, video).