WSLCB - Executive Management Team
(November 10, 2021)

Here are some observations from the Wednesday November 10th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 3 takeaways:

• Director of Legislative Relations Chris Thompson talked about presentations to lawmakers by agency leadership in advance of prefiling for the 2022 legislative session.
  • Thompson reviewed the testimony given to members of the Washington State House Commerce and Gaming Committee (WA House COG) on October 21st by WSLCB representatives and Cannabis Regulators Association (CANNRA) Executive Director Gillian Schauer (audio - 4m).
    • Schauer, who worked as a WSLCB contractor in early 2021, facilitated “information about and analysis...to better inform decision-making and policy development,” on issues like “delta-8 THC, marijuana product potency, impacts on youth consumption, vapor products, consumer safety education, taxes, environmental health and other issues,” according to her Personal Services Contract Exemption Request Form.
  • Thompson then previewed planned presentations for senators on the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA) scheduled for November 15th, saying they’d asked for information on “delta-8[-tetrahydrocannabinol] and other cannabinoids.” He planned to take a “final look” at their materials for the meeting meant to “complement the presentation that Gillian Schauer” would provide. Thompson predicted she’d offer a “national perspective and...public health grounded orientation towards” the topic (audio - 1m).

• Thompson then focused on joint request legislation to be put forward by WSLCB and the Washington State Department of Agriculture (WSDA) to form an interagency coordination team (ICT) on cannabis laboratory standards (audio - 1m).
  • The legislation would require staff from WSLCB, the WSDA, and the Washington State Department of Health (DOH) to cooperate on the ICT, which would be responsible for defining lab standards for subsequent encoding in rule by WSDA policy staff. The joint request would structure the ICT to act as a lab “client,” responsible for deciding criteria to be implemented in a Washington State Department of Ecology (DOE) lab accreditation program.
    • The idea emerged from the Cannabis Science Task Force, which last discussed a draft of the request bill on October 1st.
    • WSLCB staff discussed the request bill on June 9th, September 8th, and on October 13th when Thompson reported DOE staff “had some concerns about the initial draft” and officials of the participating agencies had agreed to revisions.
    • Take a look at the corresponding supplemental budget requests for the agencies participating in the ICT:
      • WSLCB Request
      • WSDA Request
      • DOH Request and Financial Calculator
  • Thompson stated that staff were still “working to complete” the request package for the ICT following meetings with the participating agencies along with staff for the governor’s office and Washington State Office of Financial Management (WA OFM). He noted discussions centered on “what we’re saying in our budget requests, as well as revising some text of the bill.”
  • WA OFM staff had advised Thompson and other officials that “the funding for this effort” shouldn’t be “every year, tucked into a back-of-the-budget amendment.” He said the plan would instead be to “regularize” the money by adding it to statutorily required appropriations from the state dedicated marijuana account. Thompson indicated this was “the last area where we’re focusing on.”

• Thompson finally reviewed a second bill being drafted to give WSLCB officials broader authority to regulate cannabinoids beyond delta-9-tetrahydrocannabinol (delta-9-THC).
  • Thompson described the bill to board members on October 13th and mentioned the third bill draft in a presentation to lawmakers on October 21st. Along with the most recent draft a summary of its provisions and a one pager were released.
  • Thompson brought up the proposal, saying staff had been “finalizing a budget request” to assess the costs the agency would incur “on the enforcement side as well as in rulemaking and developing those policies.”
    • Thompson previously asserted there wasn’t a need for “new funding for this” in relation to a previous draft, remarking that staff expected to manage any new work with existing appropriations. A fiscal note would’ve projected “no impact” for WSLCB and sought no funding, he stated. 
  • Thompson added that representatives of the Washington State Patrol (WSP) were “projecting impact for their crime lab work for which they would need new equipment and training and some other things.” This was so the crime lab staff could “test for a wider range of compounds” aside from delta-9-THC, Thompson remarked. Stakeholders were offering input on the third draft of the request bill, he added, expecting that submittal to WA OFM and the governor’s office would occur “next week” (audio - 1m).
  • Board Chair David Postman told Thompson that the board expected to be briefed on the final draft considering the bill had been “evolved as we’ve discussed it.” Thompson said inquiries about the bill had continued to come in “from department of agriculture” and “we haven’t yet completed the work on the budget stuff.” Once that was completed, he expected to return to brief the board “as soon as possible” and prior to clicking “send with anything with OFM” (audio - 1m).
    • At the September EMT meeting, Postman also requested that the Board be kept informed of progress on the bill. At publication time, Thompson was not scheduled to brief the board on November 16th, the board’s only public meeting during the week when Thompson indicated he hoped to finalize the bill package.
  • Board Member Russ Hauge said he’d been “very happy” with the level of information Thompson had offered around the effort. This was “a really busy time,” Hauge added, but Thompson had done a “great job” (audio - <1m).
  • WA Senate LCTA Chair Karen Keiser had to ask directly about the bill during the WSLCB work session on November 15th (audio - 2m).

Here are some observations from the Wednesday November 10th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 3 takeaways:

• Chief Financial Officer (CFO) Jim Morgan provided an update on the transition to a Cannabis Central Reporting System (CCRS), reporting the project remained “on track.”
  • Morgan kicked off his briefing by saying the effort was “moving right along” with a “go live date” of December 6th. “And our preparations have us on track for that,” he told the group (audio - 4m).
    • November 17th was the “go/no-go decision point” for the internal WSLCB CCRS Steering Committee to decide whether to proceed, said Morgan, and “at this point, all signs are pointing to that being a ‘go’.”
    • Morgan commented that a “month-long industry testing period” had concluded on November 4th, bringing "very good participation throughout the industry, licensees, integrators, labs.” This testing period "pointed out a number of issues that have all been addressed," he added.
    • “We continue to keep our finger on the pulse of the industry,” Morgan stated, highlighting his participation in the Washington CannaBusiness Association (WACA) Fall Policy Conference on November 3rd. He’d found responses to be, "by and large, very favorable of what we’re doing and...where we are in that process." 
    • Morgan recalled that he’d previously mentioned concerns from cannabis businesses stemming from regulators “taking ourselves out of business transactions between licensees” resulting in the removal of “a now automated process, and creating a manual process for them.” He highlighted how some integrators were collaborating on “an industry-led solution that will provide those business-to-business transactions, and automate that,” determining that the risk posed by that problem “has really subsided.”
      • Morgan was referring to the efforts of the Washington Cannabis Integrators Alliance (WCIA), an informal group of software providers, licensees, testing laboratories, and trade associations “formed to address concerns about how data can be passed between licensees/platforms following the launch of the Washington LCB's upcoming CCRS system.” In the months following the announcement of the CCRS transition on August 27th, participants collaboratively developed and published a data transfer specification and protocol for information exchange intended to minimize the need for manual data entry by enabling disparate systems which implemented the specification to interoperate more easily.
    • Morgan indicated WACA board members had hardly raised the issue when he’d spoken with them weeks earlier, but still had questions about the CCRS “manifesting process.” He assured the board his project team was “evaluating some options for that,” but they weren’t going to “be able to implement any kind of significant change before go-live.”
      • While reporting to WSLCB under the CCRS regime would largely be conducted via comma-separated value (CSV) files following a set of defined formats, licensees would be required to submit transportation manifest details via a Drupal-based web form prior to movement of products. The form was situated behind a CAPTCHA specifically intended to preclude automated submissions and was not available during the open testing window in October. It was only published on November 2nd after repeated requests by WCIA participants.
  • Board Chair David Postman asked Morgan about licensee “concerns that when we do go live that...we’ll be eagle eyed looking for the first violation,” wondering if there was “anything we can do to...assure people of our reasonableness” on related enforcement. Morgan replied that this question was raised at the WACA conference and he’d given assurances that “our focus is on compliance and helping people become compliant.” He said enforcement officers from WSLCB wouldn’t “be out there with a heavy hand" seeking to issue violations for businesses “having a little trouble getting on board.” Postman felt everyone involved in the CCRS transition would “all need to be a little bit patient and flexible." Morgan did offer a caveat that enforcement restraint would depend “on the nature of them not complying” and individuals showing a “good faith effort into trying to do what they need to do” (audio - 2m).
    • In email communication and at the WACA conference, Cannabis Observer founder Gregory Foster suggested agency staff issue a policy statement to more formally declare post-CCRS compliance priorities, as policy statements were intended “to advise the public of its current opinions, approaches, and likely courses of action...as described in RCW 34.05.230.”
  • Board Member Russ Hauge remarked that the role of cannabis traceability had not been “to create opportunities for us to enhance our revenue with violations,” but to “provide a tool that allows the market to function" and help regulators “to understand what’s going on at the level of the...license holder” (audio - 1m). 
  • Postman agreed with Hauge, saying that had been “how we’ve used traceability” since he’d joined the board earlier in the year. He believed WSLCB officials weren’t concerned with licensees “forgetting to fill some square,” but focused instead on “bales [of cannabis] moving out the back door...the work we do all the time.” Morgan spoke up to say it was challenging to reassure “the industry that...our approach is to help them be in compliance” (audio - 1m).

• Director of Communications Brian Smith also talked about the CCRS transition, mentioning that staff had been working “with subject matter experts on the team to make sure that we’re getting out the right kind of communications” (audio - 2m). 
  • Smith said his office had managed an email account [ ccrs@lcb.wa.gov ] to receive “general questions” and work out responses. Once replies were contrived, “then that’s posted” to a frequently asked questions (FAQ) screen and used to “feed the webinar questions and address them live.”
    • CCRS webinars were hosted by WSLCB staff on September 8th, September 20th, October 4th, and October 29th.
  • Smith commented that Cannabis Examiner Manager Kendra Hodgson had prepared “a quick start" guide for licensees which would be sent out to stakeholders “by Friday morning.” He claimed licensees, labs, and integrators were getting “what they need,” and assured the board his staff would continue “churning out the information that’s necessary” ahead of December 6th.
    • Take a look at other CCRS resources offered by WSLCB.
  • Postman was curious about using agency communication to stakeholders “between now and go-live that addresses this anxiety among licensees that we’re going to be looking for missed dotted ‘i’s and crossed ‘t’s...to reassure people a little bit, and also, explain how [traceability] is used today.” Smith promised he would address that sentiment (audio - 1m).

• On November 16th, the WSLCB project steering committee agreed to the December 6th launch date despite the concerns expressed by members of the regulated community and their service providers.
  • On Monday afternoon, November 15th, Foster sent an email detailing “WCIA concerns for CCRS transition decision” to Morgan, CIO George Williams, Hodgson, Director Rick Garza, and the board members. He conveyed his impression that, among WCIA participants, “The general consensus has shifted from a sense that things will be bumpy for the industry to a concern that this holiday season may be severely disrupted not only for business but also for agency staff.” Foster extended an invitation for WSLCB staff to meet with WCIA participants on Tuesday morning, November 16th, in advance of the publicly stated decision point on November 17th.
  • On Tuesday morning, Morgan acknowledged receipt of the email and declined the invitation to meet with WCIA participants. Later that afternoon, the WSLCB CCRS Steering Committee convened “and made the decision to ‘go live’ as planned on Dec. 6, 2021.”
  • Morgan followed up with Foster on Wednesday November 17th to share that news and offer responses to the concerns raised.
    • Regarding required usage of the transportation manifest web form, WSLCB staff offered:
      • “Manifest information collected from licensees has primarily been used by LCB enforcement and examiners and will continued to be needed. The State Patrol has relied on printed manifests that accompany shipments. It has not been a priority for them to have a real-time upload from LCB for their purposes.
      • CAPTCHA is used to be compliant with state security standards. Several options for mitigating this issue have been explored, but none were determined to be able to be implemented before go live. We have identified this as a high prority for us to address as soon as practical after go live.”
    • Regarding Foster’s suggestion that the agency issue a policy statement on its post-CCRS enforcement priorities, WSLCB staff offered:
      • “A policy statement is in the works and will be issued soon. However, the LCB has addressed this several times already. The agency has responded to individual questions and reflected on this item during webinars which are posted to the website. WAC and its interpretation are at the agency level.
      • For the purposes of CCRS the agency is interpreting that the reporting frequency is weekly if there are updates, edits and changes. There are instances in which that the applicable reporting rule is more frequent than weekly (example: lab reporting remains within 24 hours of completing the lab results). WAC that states licensees would use the LCB/traceability generated ID number. For the purposes of the agency the ID’s generated by the licensees meet the WAC requirement as long as they are a consistent methodology and maintain traceability.”
    • Morgan concluded by saying, “In closing, thank you for your comments and posing the questions. It is beneficial for LCB staff to review stakeholder concerns in advance so that we can ensure we are as prepared as possible.” He added, “We likely will not know until Dec. 6 the degree to which all licensees are prepared. However, please know that we have actively engaged with industry trade associations, individual licensees and stakeholders. In general, the upsides of this transition are known and, for the most part, a positive change.”