WSLCB - Board Caucus
(May 11, 2021)

Here are some observations from the Tuesday May 11th Washington State Liquor and Cannabis Board (WSLCB) board caucus.

My top 3 takeaways:

• Policy and Rules Manager Kathy Hoffman brought the board up to speed on agency rulemaking projects.
  • Quality Control (QC) Testing and Product Requirements (audio - 1m, Rulemaking Project)
    • Hoffman let the board know staff would “firm up” a timeline for the project “once we’re fully staffed” in a “couple of weeks.”
    • She explained that an agency “convenience contract seeking an economist to assist with our Regulatory Fairness Act analysis...of future rules has been finalized” and that bidding would start in the coming weeks.
      • See the most recent Significant Legislative Rule Analysis and Small Business Economic Impact Statement regarding the supplemental CR-102 from September 2020.
  • Criminal History (audio - 1m, Rulemaking Project) 
    • A listen and learn forum to review draft conceptual rules had been scheduled for May 13th, Hoffman stated, noting that advanced registration “has been low.” The effort remained “on track” to present a CR-102 in “mid-to-late June,” with potential “finalization in mid-to-late August,” she said.
  • Vitamin E Acetate (audio - <1m, Rulemaking Project) 
    • This rulemaking project had received no comments on the CR-101 to date, Hoffman told the board, and the comment period would conclude on May 21st. She planned to offer a CR-102 with proposed changes for consideration on May 26th.
  • Tier 1 Expansion (audio - <1m, Rulemaking Project) 
    • Hoffman reported that there had been no comments received since the board approved the CR-102 on April 28th following the release of a Tier 1 Survey Report on April 2nd.
    • Board Chair David Postman asked when the public comment period closed. Hoffman informed him the last opportunity to offer written comment ended at “5pm on [the day of] the public hearing,” and Policy and Rules Coordinator Audrey Vasek clarified the hearing was scheduled for June 9th (audio - 2m).

• The board heard from Hoffman about a new rulemaking project she’d present at the following day’s board meeting pertaining to “THC Compounds Other than Delta-9.”
  • On April 23rd, the Washington State Pharmacy Quality Assurance Commission (WA Pharmacy Commission) responded to a WSLCB staff request for clarification on members’ interpretation of the definition of ‘Tetrahydrocannabinols’ (THC) in RCW 69.50.204(c)(30)(i), giving general support to a “plain language reading of the statute.”
  • On April 27th, Agency leadership discussed the issue of regulating cannabinoid derivatives and compounds beyond delta-9-THC (delta-9-THC). On April 28th, WSLCB announced a policy statement on delta-8-THC and other cannabinoids before staff sent a clarifying bulletin about the policy statement on May 3rd.
  • On May 4th, Hoffman assured board members that she’d seek permission to open “rule development” at the May 12th board meeting “to evaluate additives, solvents, ingredients, and compounds used in the production and processing of marijuana products to determine whether such products pose a risk to public health or youth access.”
  • During the caucus, Hoffman said filing a CR-101 package on "THC Compounds Other than Delta-9" would be the next step after the policy statement "signaled the agency’s position on this issue at this time." The rulemaking project “really opens up the discussion on signalling rule development moving forward here” (audio - 3m).
    • She expected a “considerable amount of stakeholder engagement” on the topic, believing it was “going to expand beyond our usual stakeholder base” to interest groups like the "hemp industry...public health and prevention attendees," and "agency partners" such as the Washington State Department of Agriculture (WSDA), Washington State Board of Health (SBOH), Washington State Department of Health (DOH), “and others.” Hoffman expected “robust and significant stakeholder engagement.”
    • Hoffman stated that a deliberative dialogue session would be announced after the CR-101 was filed with the Washington State Office of the Code Reviser (WA OCR), likely scheduled “for June 3rd.”
    • Board Member Russ Hauge brought up stakeholder conversations he’d been participating in regarding "hemp-based synthetic THC delta-9" that he’d found “very fruitful.” He anticipated engaging on the topic “daily for the next couple of weeks” and would be joined by Hoffman in a “stakeholder” meeting later that day (audio - 1m).

• A petition to allow a retail cannabis store to move between jurisdictions was denied due to particular concerns about the target jurisdiction and in deference to anticipated recommendations from the Social Equity in Cannabis Task Force.
  • Hoffman offered a “recommendation” to the board on a rulemaking petition brought by Emerald Leaves owner Duane Dunn “asking that the board consider...a revision in rules that would allow relocation of his current retail cannabis license” to a different county (audio - 5m).
    • She described how it was possible to move locations within a county “as long as the relocation does not exceed current threshold allotments that are currently in place.” Statute allowed WSLCB to set the maximum number of stores allotted to each county based on population, Hoffman said, “and we aren’t statutorily authorized to raise the cap in one county without a proportionate increase in other counties.” Another law outlining the allotment required the agency to consider medical cannabis patients that registered in the DOH patient database as well, she added. She’d determined that despite the board having “broad rulemaking authority” overall, it did not cover moving licenses “from one county to another.”
    • Hoffman remarked that should the board opt “to consider license relocation through rule, that process would likely take anywhere from nine to 18 months to complete and does not guarantee that local jurisdictions will raise the number of retail licenses allowed based on an increase in LCB license allotment.” She indicated that Renton, where Dunn proposed moving his retail location, had an ordinance limiting the number of allowed stores, all of which were active, and that the agency wasn’t empowered “to require a local jurisdiction to accept license allotments.”
    • Moreover, rulemaking “at this time would be premature," she argued, “given that any increase in the number of retail outlets above the current statewide limit” subsequent to “January 1, 2020 must be approved by the legislature...consistent with social equity task force recommendations.” For these reasons, Hoffman recommended the board deny Dunn’s petition.
    • An “Assessment of LCB rulemaking authority for cannabis retail licenses” previously prepared by WSLCB staff deferred to the potential for changes to retail allotments that could be recommended by the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF). The conclusion found that while “LCB has the legal authority to engage in rulemaking to increase the overall license cap pursuant to RCW 69.50.3[4]5(2), any policy change of this nature may hinder the goals of the social equity taskforce, and create further disproportionate industry representation in relation to social equity. To ensure social equity goals are achieved, the LCB should not consider rulemaking to increase the statewide cannabis retail license limits until such time as a recommendation is received from the social equity taskforce, with corresponding legislative approval pursuant to RCW 69.50.336(11) to increase the license cap for the desired purpose.”
      • RCW 69.50.336(11) states: “The board may adopt rules to implement the recommendations of the task force. However, any recommendation to increase the number of retail outlets above the current statewide limit of retail outlets, established by the board before January 1, 2020, must be approved by the legislature.” So while any recommendation from the task force to increase license allotments must first be approved by the legislature, this statute does not contravene the agency’s existing authority to determine license allotments in RCW 69.50.345(2). The Board’s decision to not revisit retail license allotments at this time is a choice made following recommendations by agency staff.
      • Meanwhile, the U.S. Census Bureau was compiling data from the 2020 decennial census and planned to publicly release data to enable state redistricting in August 2021. As “population distribution” was the first criteria listed for consideration when making retail allotments in RCW 69.50.345(2)(a), it would seem that growth of the population of Washington state by “nearly 15% over the past 10 years to more than 7.7 million” could warrant review by WSLCB.
    • Postman followed up, seeking clarification on whether a petition like Dunn’s could be submitted again following any legislative action on WA SECTF licensing recommendations. Hoffman believed that would be possible (audio - 1m). 
  • Hauge moved to deny the petition and Postman voted to concur with him. Board Member Ollie Garrett was not present for this board caucus and consideration of the petition was not previously published, having been added to the agenda at the beginning of the meeting (audio - 2m).