WSLCB - Board Caucus
(June 4, 2019)

Here are some observations from the June 4th WSLCB Board Caucus.

My top 3 takeaways:

• Agency Director Rick Garza spoke about new agency efforts to coordinate with the Washington State Department of Agriculture (WSDA) on hemp (audio – 6m).
  • Garza started off by citing SB 5276 on hemp production and said many I-502 licensees had inquired if they could “live within both worlds, can I be an I-502 cultivator/grower and can I be an industrial hemp farmer at the same location?” He added, “Which is obvious, you know? Why wouldn’t they want to get into the hemp business, too?”
  • Garza scheduled a meeting with WSDA staff for the following week to learn more about that agency’s plans for licensing hemp growers and processor/marketers. WSDA had begun expedited rulemaking to develop the State’s hemp plan and seek its approval by the U.S. Department of Agriculture (USDA), a requirement of federal law.
    • See Cannabis Observer’s coverage of SB 5276’s passage.
    • Here’s a blog post from WSDA staff (April 30) on their department’s next steps on hemp.
    • And here’s the latest legal guidance from USDA (May 28) on hemp production authorized by the 2018 Farm Bill.
  • Garza admitted uncertainty about how and to what degree WSDA would regulate hemp production but aimed to start answering the cannabis industry’s questions as soon as possible. Garza was under the impression that farmers would like to be allowed to plant by August, “which is probably as soon as I can do it.”
  • Board Member Ollie Garrett asked if hemp farming was a potential way to help Tier 1 producers. Board Member Russ Hauge was skeptical, “[For] hemp to be profitable we’d be talking about multiples of 2,000 square feet [the canopy limit of Tier 1s] before you could even think about making a profit.”
  • Garza said they’d continue to rely on WSDA’s process as the WSLCB had no regulatory authority over hemp. Nonetheless, questions remained. “How are we going to know when we walk into a grow operation that it’s hemp over here, and that it’s [a producer’s cannabis] over here?” as hemp cultivars can be physically indistinguishable from marijuana cultivars, particularly after harvest. Garza pointed out that there were no canopy limits on production of hemp.
  • Garza said he’d be meeting with representatives from Washington’s Association of Counties (WSAC) and the Association of Washington Cities (AWC) to gather their thoughts on hemp regulation.
• The Board continued discussions about assisting struggling Tier 1 producers.
  • Garrett commented that she’d been hearing concerns from the smallest tiered producers similar to those mentioned by Hauge and Chair Jane Rushford the week prior (audio – 1m).
  • Hauge said Tier 1 producers had suggested different remediations and he was trying to hear from industry groups and as many small producers as possible before backing reforms. He was uncomfortable with the board dictating improvements absent that input, and looked to the Cannabis Advisory Council (CAC) which was scheduled to meet on July 17th.
  • Hauge wanted to review the agency’s original thinking about tier size and then look at questions like “What do we know now about what the problems are? How can we address those problems? What are the people who own those licenses want to see happen?” Then he wanted “a reasonable proposal that we can move quickly on.”
  • Hauge felt this would “[set] the table for the legislature to take what may be considered logical next steps in the cannabis market,” such as direct sales or on-site tasting as recently adopted in Colorado.
  • Garza urged the Board not to wait for the CAC meeting and to start approaching cannabis organizations on the council directly. He felt the issue should still be a key topic at the July meeting, but didn’t need to wait.
  • Garrett hoped potential avenues to help small growers could be vetted by staff to establish opportunities and limitations before presentation to the CAC. She hoped to limit topics at the meeting but discuss them more thoroughly. Hauge encouraged them to work in tandem, Garrett prepping for the CAC meeting while he approached industry groups and Tier 1 licensees directly. Garza told Hauge he’d look into assigning Senior Policy and Education Manager Brent DeBeaumont to help (audio – 10m).
• The Board reviewed progress towards consistency of agency enforcement (audio – 4m).
  • Garza confirmed the independent consultant hired to audit WSLCB Enforcement was starting interviews within the agency. Two sets of interviews were planned, one later in the week and a second next month. Garza said the consultant was examining both alcohol and cannabis enforcement practices and intended to interview several groups of licensees and trade organization representatives.
  • When Garrett asked if alcohol licensees had expressed concerns similar to cannabis licensees, Garza said they had. He pointed to an ‘Inside Olympia’ interview he’d done for TVW the week before wherein he explained a similar complaint had been raised decades earlier by former Representative Chris Hurst who invested significant time investigating the matter before recommending more officer training.
  • “It creates a narrative that’s difficult,” he mused, “but I think our response is what matters, the ability for us to compromise on [SB 5318] to a point where I think it looks good, I think the rules that Kathy [Hoffman, Policy and Rules Coordinator] is working on with you folks is going to be perfect.”
  • Between Hoffman’s work on penalties and Garza’s enforcement review, the director expected to be able to say if there was a problem, and “how widespread it is.” Hauge agreed that at any agency with enforcement powers “there are natural tensions that are going to surface over time.”
  • Rushford said the state’s conservative approach to the cannabis “playbook” should permit them leeway to create more “meaningful” regulations that weren’t punitive (audio – 4m).