The three-member board of the Washington State Liquor and Cannabis Board (WSLCB) meets weekly in caucus to discuss current issues and receive invited briefings from agency staff.
The Board learned more about open and planned rulemaking projects then heard an update from the Director about planned furloughs, re-entry to headquarters, and DEI efforts.
Here are some observations from the Tuesday June 23rd Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.
My top 3 takeaways:
- Staff reviewed the status of agency rulemaking projects and prepared the Board to approve a CR-102 proposing revised True Party of Interest rules.
- The last rulemaking update was provided by Policy and Rules Manager Kathy Hoffman during the June 9th Board Caucus.
- True Party of Interest (TPI, WSR 18-22-054, audio - 4m)
- Hoffman described the extensive background of the project:
- Changes to TPI rules in WAC 314-55-035 were originally conceived as part of the implementation of 2017 omnibus cannabis legislation, but were pulled out following that rulemaking project’s public hearing in early October 2018.
- A dedicated TPI CR-101 was opened in late October 2018 and the scope later revised to include HB 1794 which was signed into law in May 2019 regarding intellectual property, royalties, and licensing agreements. The project relied on an external work group consisting of agency staff plus “industry representatives and their attorneys.”
- Near the end of 2019, it had been Hoffman’s intention to move TPI rules in tandem with revisions to cannabis penalties. However, delays caused the rulemaking efforts to proceed separately after penalty changes were adopted on January 22nd.
- Hoffman had finished curating comments from the project’s May 20th listen and learn forum and stated that she’d present a CR-102 with proposed rules representing “pretty significant changes” at the following day’s board meeting.
- If adopted, the revisions would “modernize the section title. It redesigns the section organization structure significantly. It also modernizes language regarding which entities are considered to be true parties of interest in this space. It removes the spousal vetting requirement. It expands the definitional section to include ‘control,’ ‘financial institutions,’ ‘gross profit,’ ‘net profit,’ and ‘revenue.’”
- Hoffman said the CR-102 “clarifies and expands on what persons or entities are not considered to be” TPI. The agency would include examples for this that were “reflective of the business structures that we see now.”
- The changes would describe situations “under which licensees must continue to disclose funds that will be invested into a licensed marijuana business.” Hoffman added that it “incorporates the amendments consistent with [HB] 1794” and “establishes a new subsection that really distinguishes the requirements for financiers from that of a true party of interest.”
- Should the board approve the CR-102, the proposal would receive a public hearing on August 4th.
- Hoffman described the extensive background of the project:
- Cannabis Retail Title Certificates (WSR 18-09-117, audio - 1m). Policy and Rules Coordinator Casey Schaufler reported that the agency would be asking the board to withdraw the long-dormant rulemaking project “in the near future” while maintaining a board interim policy (BIP) which established the program in April 2018.
- As recently as June 9th, staff conveyed their intention to proceed with the rulemaking project and wrap in SB 6206’s implementation. No explanation was provided for the change.
- SB 6206 Implementation (audio - <1m). Schaufler promised an update at the following day’s board meeting describing a new rulemaking project to implement SB 6206 requiring the agency to issue certificates of location compliance to pending licensees which was signed into law on March 25th. He anticipated being able to present a CR-101 for the board’s consideration at the July 8th board meeting.
- HB 2826 Implementation (audio - <1m). Schaufler expected recent legislation dealing with cannabis products would necessitate a new rulemaking project and planned to have a CR-101 ready for the Board’s approval on July 8th.
- Vitamin E Acetate Emergency Rules (audio - 1m). According to Schaufler, Hoffman had been working with the Washington State Board of Health (SBOH) on that agency’s rules targeting vitamin E acetate in non-cannabis vapor products. He said WSLCB would “likely be maintaining” emergency rules which were last renewed on May 27th.
- See Cannabis Observer’s coverage of SBOH’s vapor product rulemaking at their most recent public meeting on June 10th.
- Incremental Expansion of Tier 1 Canopy (WSR 20-01-171, audio - <1m). The agency hosted a listen and learn forum covering the first half of the marijuana producer rules later that day. The second half would be discussed on June 30th. Schaufler promised an “update for you folks [Wednesday] on the tier 1 expansion and considerations, hopefully, for a CR-102.”
- Quality Control (QC) Testing and Product Requirements (WSR 20-03-176, audio - 1m). Schaufler said the agency had received feedback and expected more during the CR-102’s public hearing on July 8th.
- COVID-19 Emergency Rules (audio - 1m). Hoffman explained that emergency rules on the suspension of cannabis retail excise taxes due to COVID-19 which had been adopted on March 27th were set to expire on July 25th. She said that WSLCB was in “internal discussion on the direction of those, whether we’re going to extend them or not.”
- A proclamation from the Governor on March 24th waived collection of certain taxes and fees “for licensed microbreweries, domestic breweries, and beer distributors, as well as wineries and wine distributors” and was most recently extended on June 18th lasting through July 1st.
- As “[t]he Board has the authority to both assess and waive penalties in rule for marijuana licensees,” the agency’s emergency rule established parity with the tax burden relief in the Governor’s proclamation, and tied their duration of effect together.
- The WSLCB planned to comply with a directive from the Governor to furlough some employees as the agency prepared to execute its “re-entry plan.” And the agency was evaluating diversity, equity, and inclusion in parallel with participation on a legislatively mandated task force on cannabis social equity.
- On June 17th, Governor Jay Inslee announced the cancellation of some state employee raises and the need to furlough “5,600 general government employees” due to reduced state revenue following the State’s response to the coronavirus outbreak. Director Rick Garza explained that the furlough required state employees to not work one day a week for the next month, followed by not working one day a month through November. Deputy Director Megan Duffy had communicated that Mondays would be the WSLCB’s chosen furlough day beginning the following week for four weeks. After that, workers would be furloughed on the third Monday of each month through November. Garza planned to co-host WebEx presentations for each division at WSLCB “starting on Thursday” with Claris Nnanabu, the agency’s Director of Human Resources (HR) to “take questions from staff” (audio - 2m).
- Turning to the agency’s re-entry plan for returning to work in the agency’s headquarters in Olympia, Garza noted that Duffy sent out a preparatory email to staff as Thurston County was expected to be granted approval to shift into phase 3 of the State’s reopening system within the week. Teleworking would “continue to be the agency’s primary means of working through at least September 30th” at which time Garza expected agency leadership would perform a “reassessment” to consider changing that practice “through the rest of the year.” He claimed many state agencies had been “choosing to [telework] through the rest of the year...Everything that we have from our employees tells us that for the vast majority of our employees it's working well” (audio - 2m).
- Garza brought up WSLCB’s diversity, equity, and inclusion (DEI) efforts, saying that Nnanabu was collaborating with “state HR” on a program for DEI training at WSLCB. Staff would present “a larger program for the next year” to the Board when it was ready “in the next month or two.” Garza also mentioned Caprice Hollins of Cultures Connecting and her prior work providing implicit bias training at WSLCB in 2019 (audio - 2m).
- During her update, Board Member Ollie Garrett moved the discussion to the agency’s cannabis social equity endeavors (audio - 6m).
- Agency leadership last talked about the topic on June 9th.
- Garrett explained she’d just dialed into a "social equity call" with WSLCB staff and had been left with the impression that they had trouble “understanding why we’re proposing to do the outreach, the whole social equity bill, why it was created, the perception of people and what they were thinking in the industry of who got left out. Just any of those type of conversations that we’ve been having among ourselves, are they aware of those conversations?” Garza said the agency’s outreach plans were shared with “groups as we meet with them.” He then mentioned an email to legislative leaders from Sheri Sawyer, a Senior Policy Advisor to Governor Inslee, which described delays due to the State’s response to COVID-19 which had held up the cannabis social equity task force created by HB 2870.
- Read Cannabis Observer’s coverage of Sawyer’s letter to lawmakers in the June 15th Week Ahead.
- Garrett clarified her wish to know if Director of Legislative Relations Chris Thompson and staff engaged to help develop the agency’s cannabis social equity response understood how and why the agency had arrived at this point. Garza expressed surprise that any agency staff on that project would be unclear about the purpose of their work and the need for outreach: “We’ve been speaking with them about this long before the [agency request] bill was even introduced last winter.”
- Garza noted that SBOH Health Policy Advisor Christy Curwick Hoff was the key staffer who would “head up the task force” after completing a three month full-time assignment to the Joint Information Center (JIC) for the State’s COVID-19 response at the Washington State Emergency Operations Center (EOC) at Fort Murray on July 1st. Garza said that Thompson had been sending Hoff materials so that she could be “up to speed” on community perspectives on equitable cannabis industry access and criticisms of the agency. He assured Garrett that he’d follow up with Thompson to be sure those involved “know where we came from here and where we’re going.”
- Agency staff and board members shared news about their engagements and prepared for the following day’s board meeting.
- Garza told the group that he and Hoffman had presented at the Washington CannaBusiness Association (WACA) “spring meeting.” They provided details on interim “allowances”, a rulemaking update, and fielded questions from “the crew” (audio - 1m).
- Board Member Russ Hauge said he’d resigned as chair of the Washington State Sentencing Guidelines Commission “[s]o, I have some more bandwidth here and I’d really love to make myself useful, particularly as we’re facing this period of transition from the COVID[-19] crisis to the new normal.” Specifically, Hauge wanted to engage in the agency’s “enforcement issues.” He reported that he’d spoken to Thompson to better understand “the legislative strategies and the short term things that we’re trying to accomplish here” (audio - 2m).
- Executive Assistant Dustin Dickson confirmed that an announcement for the following day’s board meeting had been distributed. He noted that they’d received one written comment but no requests to share verbal public comment during the virtual meeting. Citizens contacting Dickson to arrange to speak would receive “additional instructions and a link to connect to the WebEx through your computer” separate from the dial-in number to listen to the meeting (audio - 1m).
Documents and Links
Complete Audio - Cannabis Observer
[ InfoSet ]
Audio - 04 - Rulemaking Update - Cannabis - True Party of Interest - Kathy Hoffman (4m 11s; Jun 23, 2020) [ Info ]
Audio - 05 - Rulemaking Update - Cannabis - Retail Title Certificates - Casey Schaufler (39s; Jun 23, 2020) [ Info ]
Audio - 06 - Rulemaking Update - Cannabis - SB 6206 Implementation - Casey Schaufler (17s; Jun 23, 2020) [ Info ]
Audio - 07 - Rulemaking Update - Cannabis - HB 2826 Implementation - Casey Schaufler (22s; Jun 23, 2020) [ Info ]
Audio - 08 - Rulemaking Update - Cannabis - Vitamin E Acetate - Casey Schaufler (40s; Jun 23, 2020) [ Info ]
Audio - 11 - Rulemaking Update - Alcohol - Audrey Vasek (3m 21s; Jun 23, 2020) [ Info ]
Audio - 12 - Rulemaking Update - COVID-19 Emergency Rules - Kathy Hoffman (1m 2s; Jun 23, 2020) [ Info ]
Audio - 15 - Update - Rick Garza - Live Entertainment Questions (2m 10s; Jun 23, 2020) [ Info ]
Audio - 16 - Update - Rick Garza - WACA Spring Meeting (42s; Jun 23, 2020) [ Info ]
Audio - 17 - Update - Rick Garza - Diversity, Equity, and Inclusion Program (1m 40s; Jun 23, 2020) [ Info ]
Audio - 18 - Update - Ollie Garrett - Social Equity (5m 31s; Jun 23, 2020) [ Info ]
Audio - 19 - Update - Ollie Garrett - Enforcement Consistency (2m 15s; Jun 23, 2020) [ Info ]