WSLCB - Board Meeting
(November 9, 2022)

Here are some observations from the Wednesday November 9th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 4 takeaways:

• The board voted to deny a rulemaking petition regarding customer data collection by cannabis retailers, though there was some interest in better understanding the extent of the practice (audio - 6m, WSLCB video, TVW video).
  • Policy and Rules Coordinator Jeff Kildahl told board members that the petition had been submitted by John Kingsbury, the Patient Committee Chair for the Cannabis Alliance, on September 29th. The petition involved “the creation of a new administrative rule that would require cannabis retailers to display privacy policy information and policy signage in retail stores” and restricted them “or their vendors from storing a customer's information without prior consent,” he said.
  • “Mr. Kingsbury asserts that stores are scanning customer IDs upon entry in order to verify identification and age, but then also retaining that information for marketing purposes without informing customers…what they are doing and without receiving customer consent,” Kildahl explained. He said that the petitioner “does not provide supporting documentation that personal information is retained for marketing purposes” and contended rules were required since “door monitors who checked the identification of customers at cannabis retail stores never know what the retailer’s privacy policies are concerning the retention of customer information.”
    • Beyond the cannabis sector, there have long been privacy concerns raised around ID scanning practices:
      • ID scanners in bars raise privacy issues (2002)
      • A Creeping Private-Sector “Checkpoint Society”—and a Small Step to Protect Your Privacy (2012)
      • Verify: Are nightclub ID scanners a privacy risk? (2017)
      • This ID Scanner Company is Collecting Sensitive Data on Millions of Bargoers (2019)
      • Privacy commissioner flags issues with ID-scanning at Alberta liquor stores (2021)
      • Why is the bouncer scanning my ID with a phone? Scanner apps could present some security risks, experts say (2022)
  • Kildahl also noted that the petitioner argued data “related to cannabis purchases could restrict an individual's privileges related to firearm ownership.”
    • On November 8th, the day before this meeting, Washington State Assistant Attorneys General filed a Statement of Supplemental Authority as part of their motion for summary judgment in Brinkmeyer v. WSLCB, a lawsuit filed in 2020 against WSLCB by Idaho businessman Todd Brinkmeyer, who sought to take ownership of a cannabis license in spite of a residency requirement in state law. Attorneys for WSLCB wanted to include the November 4th dismissal of Fried v. Garland in the record of proceedings, a challenge to federal gun restrictions on medical cannabis patients filed in April 2022 by Florida Agriculture Commissioner Nicole Fried.
  • Kildahl mentioned a “follow-up email received by LCB on October 13th” from Kingsbury clarifying that his “intent was not to require prior affirmative consent for scanning IDs for the purpose of verification of age, or for purposes related” to Washington State Department of Revenue (WA DOR) or Washington State Department of Health (DOH) requirements, “but rather to require prior affirmative consent for storage of that information for marketing purposes.” Technology to “scan the customer's identification are used widely and legally in retail stores to establish the age of customers for age restricted products,” Kildahl reported.
  • Kildahl suggested that in order for the agency to enforce such a rule, Enforcement staff would “have the investigative challenge of confirming that any customer whose information is included in a retail licensees’ electronic records had consented to the privacy policy.” Citing RCW 19.255.010, he noted there were requirements for customer notifications if businesses experienced a data breach involving personal information.
  • Kildahl explained that the petition also called for rulemaking “for confidentiality of medical…recognition card information,” and that it stated “DOH registry identification cards should never, ever, ever be used to retain personal information…for any purposes other than to verify a patient's status, and for purposes dictated by DOH and DOR.” Kildahl noted that DOH already had a statute governing recognition cards, rules on confidentiality requirements, and medically endorsed retailers were required to “follow all rules adopted by the Department of Health regarding retail sale of medical cannabis.”
  • Kildahl argued that “the requested rule and the additional compliance activity that would be required to enforce the rule are outside of the LCB scope of authority and expertise.” Furthermore, “confidentiality of customer medical recognition card information” was regulated by DOH rather than WSLCB. He advised board members to deny the petition. 
  • Board Chair David Postman remained interested in talking to industry representatives “a little bit going forward and find[ing] out what their practices are…because the question is a good one” (audio - <1m, WSLCB video, TVW video). Board members then voted to deny Kingsbury’s petition for rulemaking (audio - <1m, WSLCB video, TVW video). 

• Policy and Rules Manager Kathy Hoffman asked the board to end a board interim policy (BIP) exempting cannabidiol (CBD) imported as an additive for cannabis products from legacy traceability mandates (audio - 3m, WSLCB video, TVW video).
  • Hoffman had been working with board members to rescind unnecessary interim policies in favor of policy statements since September 2021. The last BIP rescinded was at the July 20th board meeting.
  • Hoffman said BIP 12-2019 was adopted in June 2019, after “current statute provid[ed] that licensed cannabis producers and processors” could “use a CBD product obtained from a source outside of our regulated system only for the purposes of enhancing CBD concentration in the products…manufactured within our system.” She described how this had been codified in rule in WAC 314-55-109, but “when that rule was put into place, our Leaf [Data] System didn't have the ability to track products that were manufactured outside of our system, CBD or otherwise.”
    • In June 2019, Hoffman had reported how adopted rules “superseded what we were able to do in traceability” and there was no “workaround for this yet.” Board members adopted BIP 12-2019 at the meeting following Hoffman’s briefing, and was intended to remain in effect “until the implementation of a Leaf Data System workflow that will allow marijuana licensees to enter test results of such CBD products.”
    • The vendor, MJ Freeway, never implemented a workflow to fix this before the agency transitioned to the Cannabis Central Reporting System (CCRS) in December 2021.
  • Lacking “any way for anyone to record that CBD had been outsourced and then brought into the system,” Hoffman told members the transition to CCRS meant “the board interim policy is no longer needed because that outsourced CBD can be reported in the CCRS system.” Board Chair David Postman checked that this wasn’t being replaced with a policy statement because “we’ve moved beyond it,” and Hoffman agreed, answering that “Leaf System has been retired and we’ve moved on to something different.” Board members then unanimously agreed to rescind the BIP.
    • Chief Financial Officer Jim Morgan talked about the status of CCRS on September 14th.
    • Deputy Director Toni Hood provided a CCRS update at the Executive Management Team meeting later the same day.

• Several members of Black Excellence in Cannabis (BEC) offered general public comments as well as other citizens concerned with prior licensing treatment, overall agency transparency, and continuing traceability reporting challenges.
  • Sami Saad (audio - 5m, WSLCB video, TVW video)
    • Saad addressed the board on September 14th and October 12th. 
  • Damian Mims, BEC Executive Treasurer (audio - 4m, WSLCB video, TVW video)
    • Describing a King 5 “Facing Race” story from October 26th, Mims shared a claim from the article “that it could take years for social equity retail licenses to be issued.” He acknowledged, “so far, that's true,” as it had already been years since the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) was established. Mims compared the timeline to implement a related bill, SB 5052, a 2015 law that merged licensed recreation stores and unlicensed medical dispensaries. He asserted from July 2015 when the law “went into effect, to the time it was opened” by the board for licensing that October was “80 Days.” Whereas “from the time House Bill 2870 went into effect till the time social equity licenses could be open on January 1st, 2023” would mean “we’re at 934 days and counting.”
      • WA SECTF began making formal recommendations to WSLCB and other state agencies in September 2021, as mandated by HB 2870, and were slated to disband at the end of June 2022. Then, a 2021 law, HB 1443, extended the group’s charter through June 30th, 2023 in order to get input on new topics.
    • “The existence of Black and Brown opportunity to personal and generational wealth is not present here in Washington state,” said Mims, blaming it on “the elude and evade tactics taken by Washington state government agencies including here at the LCB.” He offered “the [Hillard] Heintzereport of 2017,” which covered enforcement practices by the agency, as evidence which prompted several questions:
      • “Is the LCB racist?”
      • “Are Black and Brown people important?"
      • “Is it the practice of cronyism, pay-to-play, nepotism, or just being conveniently ignorant the reason why there's still successful ongoing opposition for Black and Brown people's fair chance to earn wealth?”
      • “Will the government agencies please stop with the cloud of interdepartmental finger pointing, not my job, and delay tactics, which are affecting the retail licenses that go out to Black and Brown people, and just get it done?”
    • Mims felt that “the reason why Black and Brown people suffer from unfair laws and missed opportunities for wealth is due to a very successful race-based system” which extended to existing cannabis licensing policies. He commented that “Black and Brown people in this state have suffered from unfair laws and practices since…its inception.” Mims expected state institutions to stop furthering “oppression” and not only issue licenses, but issue them “where the majority of Black and Brown people actually live” because “it's time to get us out of the waiting room.”
  • Byron Talbert, cancer patient (audio - 6m, WSLCB video, TVW video)
    • Peter Manning, a BEC member, asked to speak for Talbert, a former Bella Sole dispensary member who previously survived prostate cancer “but he came back, he has throat cancers.” Talbert had come to the board because he “currently can't afford the medications from the dispensaries because…they are located far away from him” and no longer “were relatively cheap.” Manning called Talbert a “victim of what the system has become, what it involved into today” and “a pioneer in the sense of using cannabis to treat a medical condition.” He claimed to have rented a van to bring Talbert in person “and tell the story to the board because I think there's many more like him.”
      • Board members heard from researchers about affordability of retail cannabis as a medical patient concern on November 8th.
    • Manning argued there were both “victims that stem from not only…the economic opportunities that we were overlooked, but there's also the victims that actually use cannabis for medicinal purposes.” He hoped to see “Black people…stop speaking of cannabis as illegal, and I think Whites need to take the stance that Black people talking about cannabis isn’t illegal.”
    • Talbert spoke up to ask “why can’t we have a dispensary,” as well as why patients like him were being “discriminated against.” He attributed the treatment to his race, having seen “people look at us the wrong way” but he just “needs help sometimes” after having suffered for years. Talbert urged the board to see “a new year…new time, and we need to change things” for the better.
  • Peter Manning  (audio - 4m, WSLCB video, TVW video).
    • Manning last spoke to the board on October 12th.
    • Manning also mentioned the King 5 coverage, having received “a lot of phone calls from a lot of different people, and agencies after” it aired. He was surprised to be “ten years into the cannabis industry and we're still talking about inclusion.” He saw “a lot of different mechanisms at work to prevent us from getting there” and believed that “certain people in power” were working to stop “Black and Brown people from…becoming part of this industry.” Manning had brought “victims of being marginalized and…not given the fair opportunity to participate in the cannabis industry,” noting Talbert had to travel from Kent to Renton for “cannabis that doesn't really suit his needs.”
    • “I was told a couple weeks ago that we would be looking into what I assume would be…to rectify what was done…to several Black individuals unjustly,” explained Manning, because “I think that needs to be looked at before we could even move forward.” He said there were “no other agencies that I believe that overlooks the past harms that they cause, other than the LCB, and I'm sorry to say that but that's what I truly believe.”
  • Christopher King (audio - 3m, WSLCB video, TVW video).
    • King also provided public remarks on October 12th.
    • Describing a “transparency theme that was just indicated by” Manning, King said “everybody knows that [BEC] was truly founded by Aaron Barfield,” and for this reason King was suing Manning and Mike Asai, Emerald City Collective Gardens (ECCG) Co-Founder and BEC Vice President “for usurping that name.” He further alleged “a defamation issue in there too, because they keep saying that all I do is criticize [Board Member] Ollie Garrett” which he felt was “materially false.”
    • Other transparency concerns King raised included Saad seeking a previous licensing application, and how “Kevin Shelton wrote to you guys” about another license he suggested had been improperly influenced by Garrett. King wanted an accounting both for the arguments made in Shelton’s letter and how it had been handled by WSLCB because “all we got back was the same letter that he sent.” He insisted that he’d acted transparently while “this entire board, it has been nothing but a mockery.”
    • Citing a 2002 case, RK Ventures, Inc. v. City of Seattle, King argued it was a situation where the board altered provisions of a liquor license at the behest of city officials, with the opinion outlining claims officials were “pursu[ing] a campaign designed to stop downtown Seattle nightclubs from playing rap and hip-hop music because the music attracted African Americans and crime to the area.” He said the “White guys who had that club who were playing Black-themed music…were allowed to sue, but the patrons who were listening to the Black-themed music, who were largely Black, they didn’t have standing to sue.” King asked if the public was expected “now to believe that you're earnest,” and challenged Postman on the notion of how productive his remarks to the agency were, figuring “you may not like what they produce.”
  • Jferrich Oba, Senior Cannabis Connection President (audio - 5m, WSLCB video, TVW video).
    • Oba identified himself as "Papa John" and a former BEC and Bella Sole member, commenting that he’d been “trying for some time, maybe six years, to get our license reinstated” after losing priority one status. He didn’t understand the delay in action by WSLCB on something “that they have studied and know was done in a manner that was biased,” believing legal cannabis was “an industry, which is very easy to build wealth because so many people are into this product.”
    • At 83, Oba had been “seeing this racism and inequity play out,” and wanted board members to recognize “that you can do something about it.” He shared a story of his military service, having helped save a Caucaisan officer in a panic because he considered “him as a human being who needed help immediately.” Oba compared that to agency leaders who “studied this situation concerning these licenses, and they were wrongly taken,” arguing there should be action to reinstate them. 
  • David Busby, OpenTHC CEO (audio - 4m, WSLCB video, TVW video, written comment).
    • Busby had complimented the board for addressing previous concerns on CCRS on October 12th.
    • “Recently you guys asked all of us software integrators for” an updated CCRS “access application and there's just a few issues with this one” regarding making integrators responsible “to provide a service level agreement from us to the LCB, and possibly from us to our clients.” The problem was “we don't really have a service level agreement from the LCB, and I'd like to get some kind of” agreement committing the agency to deliver services “if we're obligated to…meet some requirements into that system.”
    • Busby reported that there was no confirmation from WSLCB when CCRS data was received, and “CCRS [had] not generated errors when we know that it should have in other cases.” Failure to generate error messages could be a problem if they went to look for data later and found it wasn’t recorded or available, he explained.
    • Additionally, Busby told the board “for some of this information, it is not possible for us to upload the information because other…software have not uploaded that information.” He offered an example where “we can’t put a sale record in to receive inventory if the other party “who's sending us the material hasn't put that inventory into CCRS.” As neither licensees, nor integrators, were empowered to “to obligate another [licensee or] software vendor to get that data into CCRS,” he didn’t know what to do.
    • Busby also argued some “necessary data, which had been previously supplied by the agency on more than one occasion is no longer provided, and when asked to remedy that the agency ignored the request.” He added that “all of this stuff seems like it could be solved with just slightly better technology” and that some features of traceability “used to be available but are now not available.”
    • As for reporting importing CBD into CCRS, Busby noted “there's not really any guidance in the CCRS documentation on how to handle that kind of material…maybe there's even an opportunity for LCB and the integrators to have another sit down like we used to.”
  • Suzanne Brown (audio - 2m, WSLCB video, TVW video).
  • Mike Asai (audio - 4m, WSLCB video, TVW video).
    • Asai began by defending Garrett from “disgusting” accusations, saying BEC had been cut out of the sector not due to any current board members “but the action of the prior LCB board in 2010 to 2015 and some current LCB staff.” Calling Garrett “a main part of why we even have social equity in Washington state,” Asai didn’t believe she’d interfered with the awarding of a license to retailer Emerald Haze, which had a “grand opening in April of 2015. Ollie was not a board member or had any connections to the LCB at this time,” making it “humanly impossible for Ollie to mastermind a plan in 2013 to award [original owner] Miles Alexander a license while having no attachments to the LCB.” Asai assured Garrett that BEC and “the Black community…stands by you.”
    • As for social equity licensing, Asai accused the board of providing “misleading information from its website,” something he insisted had been a problem during the previous application window in 2015. “A person that attended the manipulated task force over the past two years would think that map is showing 42 active licenses for the social equity program,” he remarked, when “this map is not transparent” as some licenses were in areas of bans and moratoriums. Asai didn’t understand the delay in beginning the equity licensing process which continued to frustrate “myself, and many other Black and Brown pioneers who were shut out” from “millions of generational wealth.”
  • Toni Harig  (audio - 2m, WSLCB video, TVW video).
    • Saying she was a “65 year old White woman” who’d known “the Manning family for many years," Harig spoke for her daughter-in-law whose cannabis store was “taken…within the past 10 years” allegedly due to being “affiliated with Black men in the industry." Manning had been assisting her in getting her license back, she stated, and “we're hoping today is the day that…we can get our voice heard and have this be returned to her.” Harig supported BEC raising awareness over “White only cannabis…industries in Washington.”
  • Linda Sanchez (audio - 4m, WSLCB video, TVW video)
  • Ahmed King, BEC Executive Secretary (audio - 5m, WSLCB video, TVW video)
  • Jamar Irving (audio - <1m, WSLCB video, TVW video)
  • Kingsbury signed up to speak but was unavailable when called.

• Board Chair David Postman spoke to several of the public comments around social equity licensing (audio - 7m, WSLCB video, TVW video).
  • Postman addressed those “who might not be…aware of where the LCB is at at this point on the question of social equity licenses. We do have a program, the rules were approved just recently, our Licensing Division” was gearing up to open an application window, the agency hired a “leading firm out of Chicago that has experience in the field…to help us at this point,” and additional WSLCB staff were being hired. He felt the rules also featured “some of the very things that people had been asking for, including in today's comments, that has been acknowledged by…some people in the community as an improvement over what was there.” Postman regretted that “somehow over the last two weeks that's been lost, which I can't explain, but we haven't changed anything in the last two weeks.”
  • Predicting more work before the application window would be opened, Postman assured the public that would happen once they had “good data on what an economically distressed area looks like and where those are, and how it's calculated.” He also thought board members and some staff had “acknowledged repeatedly" many of the points raised by public speakers about “lost opportunities” as well as “the reality of systemic racism that exists, that the war on drugs just disproportionately impacted communities of color.”
  • Postman recognized that the protracted rulemaking timeline had frustrated some stakeholders, but the result was “better” rules which he believed “was worth it.” WA SECTF recommendations had been useful to the agency, but he said “it wasn’t a complete package, we needed to to translate that into something that was workable, fair, and defensible in a court of law.” Postman lamented, “it would have been nice if the initiative in the first place set a different course” instead of WSLCB requesting “a bill to the legislature that changed the course” of the issue.
  • He insisted, “I won't ask people to trust us or be patient; I know how hollow that rings. All I can do is tell you what the facts are, that there is a program, that it's coming” and that “people inside the LCB challenged themselves to overcome any of their shortsightedness on this question.” Postman continued, assuring people the board was trying to get the best possible information out “in a timely fashion” even though some had been waiting on the process for years.
  • “We also need to acknowledge and understand that there are people not in this room today, but who may be watching, who don't want us to do any of this,” he said, “and we're not letting that stop us either.” Postman stressed the board members and agency leaders welcomed questions and comments electronically as well, though “it won't always be the answer you want. I don't get all the answers I want here, and I'm in charge.” He concluded that “the community has been heard, that it's…just demonstrable fact that community input was heard, was processed, and influenced the outcome.”
  • Board Member Jim Vollendroff offered his perspective that “in the time that I've been a board member, which has been since May of this year, I have been impressed with the community involvement in this conversation. I've been impressed with the work that I've seen internally and we do see the sense of urgency.” He was confident that “there are things coming and I am proud of the work that I've seen happen here in the short amount of time that I've been here” (audio - 1m, WSLCB video, TVW video).