WSLCB - Board Meeting
(October 13, 2021)

Here are some observations from the Wednesday October 13th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Policy and Rules Manager Kathy Hoffman presented the board with a CR-102 proposing rule changes around regulation of any compound found in cannabis products beyond delta-9-tetrahydrocannabinol (delta-9-THC).
  • Hoffman asked that the board approve filing proposed rule revisions on “the evaluation of THC compounds” as the “next phase of our agency’s iterative process designed to address concerns around the presence of products in the [Initiative-]502 licensed system other than marijuana as defined in statute” (audio - 4m, video, Rulemaking Project).
    • Hoffman established that staff had announced a policy statement on delta-8-tetrahydrocannabinol (delta-8-THC) and other cannabinoids on April 28th “that served as both the agency’s position on this topic as well as a way to start the conversation around the regulation of THC other than delta-9 derived from marijuana, as well as the conversion of [cannabidiol] CBD, hemp, or both to delta-8 and delta-9-THC and any other compound that isn’t identified or defined in statute or rule.” 
      • Staff followed up with a clarifying bulletin about the policy statement on May 3rd.
    • A “very narrowly scoped” rulemaking project was approved by board members on May 12th, she stated, following a presentation by Hoffman during the May 11th board caucus. Hoffman told the board in order to “assure that this work moves forward based in data and science, we hosted the first of two deliberative dialogue sessions around cannabis plant chemistry in June.” Then, “after we learned that hemp-derived delta-9 had become more prevalent in the market,” she said staff chose to refile the project on July 7th “with an expanded scope.” Hoffman indicated a second deliberative dialogue was held on July 20th, and that based on the feedback they’d received from the sessions and stakeholders “we began to develop a regulatory framework for the board to evaluate THC compounds.”
    • Hoffman said the board had since issued an interpretive statement on Allowable Practices for a Holder of a Marijuana Processor License, and staff “began to draft a legislative proposal aimed at expanding our ability to regulate and test all” THC compounds for “safety.” WSLCB staff then reviewed draft conceptual rules at a listen and learn forum hosted by the agency on September 9th, Hoffman reported.
    • The proposed changes in the CR-102 were “based on the language of RCW 69.50.342(1)(m),” Hoffman commented, “providing that the board may prohibit the use of any type of additive, solvent, ingredient, or compound used in the production of, and processing of, marijuana products.” She said the proposed CR-102 “provides definitions for each of these terms and a few others, and establishes a procedure for evaluation.”
    • After board approval, Hoffman would file the CR-102 with the Washington State Office of the Code Reviser (WA OCR) and a public hearing would be held on December 8th. A CR-103 with final rule changes would be put forward on January 5th and, if adopted, take effect February 5th, 2022.
  • Board Chair David Postman wanted to learn more about the “interplay” between the rulemaking effort “and the [agency request] legislation that is still being developed,” as the board intended them to “work together” at addressing “the gaps [in] the authority that we have” (audio - 3m, video). 
    • Hoffman responded that WSLCB “regulatory authority ends with marijuana as defined in statute,” or products possessing at least 0.3% delta-9-THC. She said the rulemaking proposal allowed for agency representatives to “evaluate compounds other than that, [which] may...pose a threat to public health and safety in the way vitamin E acetate did during the EVALI outbreak and after.” To guard against a similar situation, Hoffman stated that rulemaking changes provided “the board a way to evaluate that particular product and determine whether or not...we would like to prohibit its use in our system.” She called the rules "a bit of a stopgap measure" prior to the legislation under development which would “expand the board’s authority to regulate all THC compounds.” Hoffman argued the rule revisions, if adopted, could “protect the integrity of the I-502 system...the way it’s written in statute while we’re looking at ways to expand authority over THC.”
    • Postman made clear the legislation was still under development but staff were working to see it was re-submitted to the governor’s office in a timely manner ahead of the 2022 legislative session.
    • Director of Legislative Relations Chris Thompson gave his own update on the bill during the October 13th Executive Management Team (EMT) meeting.
  • The board unanimously approved the CR-102 (audio - 1m, video).

• Policy and Rules Coordinator Jeff Kildahl went over the status of the Quality Control (QC) Testing and Product Requirements rulemaking effort (audio - 1m, video, Rulemaking Project).
  • Kildahl said a listen and learn forum was scheduled for October 20th and, to date, “no pre-session feedback” had been received on the conceptual draft rules distributed to stakeholders. He remarked that under the existing timeline a CR-102 package would be presented to board members on December 8th.
    • On September 29th, Kildahl explained that agency contractor Industrial Economics, Incorporated (IEc) had sent out a request “seeking interview participants to help us understand cannabis producer and processor perspectives” and had completed 18 interviews, and scheduled seven more. He said staff sent a survey invitation to cannabis producers, processors, and producer/processors “to help us understand” their perspectives “beyond the deliberative dialogues,” which had concluded September 24th (audio - 1m).
    • On October 13th, interviewees from the effort were contacted by IEc Senior Research Analyst Paige Smalley with an additional question: “The Regulatory Flexibility Act, which dictates the topics to be addressed in the Small Business Economic Impact Statement, requires agencies to consider any potential employment impacts that may result from a rulemaking. Given the potential rule elements discussed during our interview, do you anticipate that the rule could potentially affect employment at your business? This might include, for example, needing to hire more staff to carry out activities required to be in compliance with new regulations, or reductions in employment stemming from expected reductions in revenue/increases in business costs.”

• Shawn DeNae Wagenseller, Washington Bud Company Co-Owner, spoke to the board about the ability of licensed producers to cultivate any cannabinoid compound in bulk for use as additives in the legal market, and asked “our regulatory agency to install protections for us legal licensees” by revising draft agency request legislation (audio - 5m, video, written comments).
  • Wagenseller, a Washington Sun and Craft Growers Association (WSCA) board member and Cannabis Alliance member speaking on behalf of her business, reported being stressed from the prospective agency request bill. She believed it would permit “processors to import all minor cannabinoids...not just CBD, and to create synthesized products for the market” as well as giving “privileges to growers to not grow this new term ‘plant Cannabis,’ but only stay with marijuana.” 
    • The bill adds a definition for ‘plant Cannabis’ which states it “means all plants of the genera Cannabis, including marijuana defined in 69.50.101(ee), and hemp as defined in RCW 15.140.020.” Director of Policy and External Affairs Justin Nordhorn previously stated the intent was to create “allowances” for producers “that are also growing hemp...in the I-502 marketplace.”
  • Wagenseller couldn’t imagine why “our regulatory agency would invite all minor cannabinoids into the system from unregulated [hemp] plants,” but assumed it may stem from “a lack of understanding of the plant.” She offered to “educate a little bit better.”
  • Wagenseller said the “botanical name...includes male and female plants. And it doesn’t matter if it's hemp or ruderalis or marijuana, they can all interbreed.” She argued that those producing cannabis “for consumption” were only concerned with “female plants...no seeds” and talked about trichomes produced by female plants to “capture male pollen. Once the pollen is captured, the plant discontinues producing trichomes and goes into seed production.” The end of trichome production in cannabis “completely devalues your crop,” she said. By way of contrast, she claimed a hemp producer “grows both male and female plants, because they want the seeds” and other plant materials. Plants for cannabis products required “space around them,” Wagenseller noted.
  • Believing the board had heard their legislative proposal “won’t hurt” licensed growers, she said “46% of my sales were [plant] trim” in 2017, but “after [HB] 2334 passed in 2019 it was 7%.” Insisting that her plant trim “has value,” she concluded that there wasn’t “a shortage of cannabinoids in 502” and that licensed producers like her could provide “all cannabinoids that any market needs.” Wagenseller’s written comments indicated that “licensed growers face many challenges,” and listed “sensible changes to both rule and law to protect our relevance.  Let’s not go down the road of big ag nor big beer & wine that caused small family business to go nearly extinct before clawing their way over decades to gain relevance with current farm to table or craft designations.”
    • Wagenseller had spoken against allowing synthesized cannabinoids in the I-502 market at several previous WSLCB meetings throughout 2021.
  • Postman replied to say that the agency request bill was “still a work in progress.” He indicated that Hoffman and staff were engaged in “detailed conversations about this” and would continue to seek feedback. While noting the “important juncture” reached by the companion rulemaking project, Postman emphasized Wagenseller’s input could still impact the potential legislative request by the agency (audio - 1m, video).