WSLCB - Listen and Learn Forum - Voluntary Compliance Program
(May 28, 2020)

Thursday May 28, 2020 1:00 PM - 3:30 PM Observed

The Washington State Liquor and Cannabis Board (WSLCB) planned to host a Listen and Learn forum about draft conceptual rules regarding the voluntary marijuana licensee consultation and education program.

As you may recall, the Board began to consider revisions to existing enforcement guidelines by initiating a formal rule inquiry under in October, 2018. Those efforts were extended by the passage of Engrossed Substitute Senate Bill (ESSB) 5318 during the 2019 regular session of the Washington State legislature, and a completely redesigned penalty rule framework was adopted on January 22, 2020.

ESSB 5318 emphasized a strong focus on compliance, education, and enforcement in the oversight of the regulated marijuana market. The bill mandated that in addition to revising existing penalty rules, that the Board adopt rules to perfect and expand existing programs for compliance education for licensed marijuana businesses and their employees. The program must include recommendations on abating violations described in chapter 69.50 RCW, and be developed in consultation with licensees and their employees. The Board approved the filing of a CR101 on July 17, 2019 as WSR 19-15-074 to begin this work.

WSLCB solicited input from licensees at two meetings to develop the draft conceptual rules we’ll be discussing during this Listen and Learn session. These draft conceptual rules reflect an engaged and inclusive developmental process that embodies not only WSLCB’s commitment to regulatory stability and consistency, but the intent of ESSB 5318, and the input of licensees. 

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Observations

Stakeholders helped WSLCB continue developing a legislative mandate to enable licensees to request compliance education consultations and site visits under lessened threat of AVNs.

Here are some observations from the Thursday May 28th Washington State Liquor and Cannabis Board (WSLCB) Listen and Learn forum on the Voluntary Compliance Program rulemaking project.

My top 3 takeaways:

  • Stakeholders connected to the forum webinar to provide feedback on agency efforts to develop a compliance education program for cannabis licensees.
    • Development of a Voluntary Compliance Program (VCP, WSR 19-15-074) was legislatively mandated in 2019 as part of the Enforcement reset bill, SB 5318. Section 4 of the session law appended RCW 69.50.342(3) which states:
      • (3) The board must adopt rules to perfect and expand existing programs for compliance education for licensed marijuana businesses and their employees. The rules must include a voluntary compliance program created in consultation with licensed marijuana businesses and their employees. The voluntary compliance program must include recommendations on abating violations of this chapter and rules adopted under this chapter.
    • Section 5 of the session law, encoded as RCW 69.50.561, defined the scope of the VCP.
    • The implementation of SB 5318 was largely rolled into the Board’s open rulemaking project on cannabis penalties, initiated in October 2018. But creation of the VCP was outside its scope leading to the initiation of a dedicated rulemaking project in mid-July 2019.
    • In the May 14th announcement for the listen and learn forum, the agency described the project’s background:
      • “ESSB 5318 emphasized a strong focus on compliance, education, and enforcement in the oversight of the regulated marijuana market. The bill mandated that in addition to revising existing penalty rules, that the Board adopt rules to perfect and expand existing programs for compliance education for licensed marijuana businesses and their employees. The program must include recommendations on abating violations described in chapter 69.50 RCW, and be developed in consultation with licensees and their employees.”
    • The agency began soliciting input after filing the CR-101 to open the rulemaking project. To meet the legislative requirement to create the VCP “in consultation with licensed marijuana businesses and their employees,” Policy and Rules Manager Kathy Hoffman organized a VCP work group and hosted meetings on November 12, 2019 and February 24, 2020. The work group's input was collated into notes mentioned in mid-December 2019. Hoffman announced she’d gathered final internal feedback on February 4th resulting in version 2.0 of the draft conceptual rules under discussion at the listen and learn forum.
    • Hoffman first scheduled the VCP listen and learn forum for March 17th, but had to cancel the event in support of the State’s response to the coronavirus. She identified the forum’s new date at the May 12th Board Caucus.
    • Hoffman led a round of introductions (audio - 13m) including WSLCB’s expanded Policy and Rules team which hosted the event:
      • Kathy Hoffman, Policy and Rules Manager
      • Casey Schaufler, Policy and Rules Coordinator
      • Audrey Vasek, Policy and Rules Coordinator
    • A majority of WSLCB’s Enforcement Marijuana Unit observed along with one staffer from the Licensing division:
      • Jason Barsness, Enforcement Marijuana Unit Sergeant, NW Region
      • Josh Bolender , Enforcement Marijuana Unit Lieutenant
      • Joe Bussman, Enforcement Marijuana Unit Officer
      • Dean Davis, Enforcement Marijuana Unit, Wenatchee
      • Jennifer Dzubay, Enforcement Marijuana Unit Commander
      • Henry Gill, Enforcement Marijuana Unit Lieutenant, Pierce and King Counties
      • Alexis James, Enforcement Marijuana Unit Officer
      • Doug Jones, Enforcement Marijuana Unit Officer, Central / Eastern Washington
      • Jonathan Miller, Enforcement Marijuana Unit Lieutenant
      • Steve Morehead, Enforcement Marijuana Unit, Wenatchee
      • Robby Satterlee, Enforcement Marijuana Unit
      • Belinda Verona, Enforcement Marijuana Unit Administrative Assistant
      • Percy Williams, Enforcement Marijuana Unit
      • John Wilson, Enforcement Marijuana Unit Lieutenant, NW Region
      • Jeremy Wissing, Enforcement Marijuana Unit Captain, Eastern Region
      • Richard Lee, Enforcement Marijuana Unit
      • Erik Jennings, Senior Marijuana Licensing Specialist
    • Two of the agency’s attorneys from the Washington State Office of the Attorney General (OAG) observed:
      • Penny Allen, Assistant Attorney General
      • Bruce Turcott, Assistant Attorney General
    • Staffers from the Washington State Board of Health (SBOH) dialed in to take notes on Hoffman’s innovative listen and learn meeting format and its remote facilitation:
    • Remote participants and observers included:
  • Policy and Rules Manager Kathy Hoffman walked participants through each section of the draft conceptual rules to gather feedback.
    • VCP Draft Conceptual Rules v2.0 (Feb 25, 2020)
    • WAC 314-55-013(1) - Purpose and Scope (audio - 2m).
      • Kelsey Halstrom (audio - 1m). Calling attention to subsection (1)(e), Halstrom wanted “a little bit of clarity” about why “individual business operations and distribution are not included in this program.” She argued that some questions from licensees might well be considered part of those topics. Hoffman appreciated the perspective and said the agency was open to revised wording.
      • Ryan Lee (audio - 3m). Lee understood the agency was trying to avoid giving “general business advice” not tied to their regulatory role. Hoffman agreed, saying the Washington State Department of Commerce might offer other input to licensees. Dzubay spoke up to concur with Lee, saying the agency doesn’t “want to tell you who to hire, fire, how much your costs are” or other business advice.
    • WAC 314-55-013(2) - Definitions (audio - <1m).
      • Kelsey Halstrom (audio - 1m). Halstrom noted that while a licensee “designee” could apply for a consultation visit, how to designate a designee wasn’t specified.
      • Lukas Hunter (audio - 3m). Hunter said that “later on in section four ‘public health and safety’ as described in [RCW] 69.50” appears in the draft but “there’s no official definition in statute or in WAC for public health and safety.” He suggested creating a “definition applicable to this section” based on “the key points in the Cole Memorandum” and “health and safety concerns that would be under [WSLCB’s] jurisdiction.” Expanding on his recommendation, he suggested an emphasis on the “health and safety impacts of how products are packaged” and cannabis production processes might be included. Hunter felt a clear definition could proscribe “what is within the scope of” WSLCB’s responsibilities versus other institutions like the Washington State Department of Health (DOH) or the Department of Labor & Industries (LNI).
        • Section 4(b) of the draft conceptual rules states: “(b) Regulatory issues described this chapter observed during the course of an advice, consultation, and education visit are not subject to disciplinary action unless the identified issue has a direct or immediate relationship to public health and safety as described in chapter 69.50 RCW, and this chapter.”
        • In a comment in the draft, Hoffman noted “This language honors the intent section of ESSB 5318,” the bill’s preamble which emphasizes the Board should focus its enforcement efforts on violations which endanger either public health or public safety. However, the actual laws encoded into RCW indicate the Board should distinguish potential violations which pose a “direct and immediate threat to public safety.”
        • The issuance of potential public health violations within the scope of consultation visits appears to conflict with RCW 69.50.561(5) which states: “Rules adopted under RCW 69.50.562 must provide that violations with a direct or immediate relationship to public safety discovered during the consultation visit must be corrected within a specified period of time and an inspection must be conducted at the end of that time period.”
      • Ryan Lee (audio - 1m)
    • WAC 314-55-013(3) - Requests for Consultation (audio - <1m). 
      • Ryan Lee (audio - 4m) Lee suggested the agency provide the option “for a no-action letter or some kind of an advisory opinion” which would enable licensees to “lay out all your circumstances, what you’re doing” and get a response from WSLCB on “doing X, Y, Z - are these things in compliance with the WACs?” Lee felt this approach would enable WSLCB to consult with other agencies or the OAG more easily. He reasoned that the change could “relieve a lot of stress on Enforcement to actually, physically go out to all these sites” and allow licensees to request guidance on compliance issues more than once a year.
      • Lukas Hunter (audio - 2m). Hunter asked if the phrase “officer” was “binding” or whether it could be “agent of the Board.” This would allow staff “deemed a different part of the agency” to conduct consultation visits. He also noted that there wasn’t “a timeline for an assignment to an enforcement officer” after a request for consultation was received by the agency. Hunter explained that after requests for consultation were “assigned to an enforcement officer there’s a 30 day window” for the “visit [to] take place.” However, there wasn’t a constraint “between the initial time of submission” of the request and an “actual assignment to an Enforcement officer.” He wondered if the agency would “put that in writing.” Dzubay initially had no response to the idea, but later indicated the agency had developed an internal policy and wanted to maintain flexibility by keeping that policy outside of the WAC.
      • Kelsey Halstrom (audio - 2m). Halstrom wanted to ensure that “informal requests are still not limited.” Beyond that, she asked if the “differentiation between informal requests and a formal consultation request would be this application” mentioned in the draft. Asked whether there was a draft of the application for consultation services, Dzubay replied that enforcement had developed a “format of how [licensees or their designees] were going to suggest or ask for a consultation visit.”
      • Chris Bradley (audio - 5m). Bradley inquired whether the concept of a “visit” in the draft would “incorporate the notion of virtual visits given the current set of conditions we’re under and/or the efficiency of the officers who have to service these visits.” Hoffman acknowledged that the draft conceptual rules were developed before the COVID-19 pandemic and agreed it was “something that we’d want to consider.” Dzubay explained that Enforcement had an email address for individuals to “ask questions, they can always ask their officers.” She remained concerned that the agency couldn’t manage daily consultations with every licensee but “there is no number that we’re going to say ‘you’ve been cut off’ because if you need the help we...want to offer that.” Dzubay still wanted to avoid overpromising before knowing how often consultations might be requested. Bradley felt that “removing inhibitors [to education] would be positive and the notion of kind of a tiered approach to responding to the requests” by way of letter or virtual interaction could be “more efficient for the...personnel who have to respond to these.”
      • Ryan Lee (audio - 2m).
    • WAC 314-55-013(4) - Advice and Consultation Services (audio - 1m). 
      • Lukas Hunter (audio - 1m).
      • Matthew Clark (audio - 3m). Drawing on his familiarity with the U.S. Occupational Safety and Health Administration (OSHA), Clark told attendees that some problems could be “immediately addressed” but a recommendation for corrective action “usually comes with some kind of a timeline to get those things corrected. And I find that leaving things open ended tends to mean they don’t actually get done.” Hoffman asked where Clark “would put that language and what would it sound like?” He replied that it “depends what kind of resources are going to go” towards the action, he speculated between six months and a year, or “not super short.” Hoffman pointed out that section (5)(b) of the draft (“reasonable efforts to correct or abate all conditions identified in the statement of conditions within the mutually agreed upon date and time”) was intended to “allow some flexibility depending on the circumstance” and asked for revised language.
      • Ryan Lee (audio - 1m). In subsection (4)(c) Lee noted the draft said “Advice, consultation, and education provided under this chapter is limited to the matters specified in the request for consultation.” He interpreted it as asking applicants to disclose “what I think all my problems are” and wondered whether other issues were “not covered.” Lee felt the ambiguity could create “a lot of anxiety for licensees.” He suggested drawing up a list of potential issues to choose from or “a walkthrough to tell us what is in noncompliance.”
      • Crystal Oliver (audio - 3m). Oliver was curious about the agreed upon corrective date for issues. Was it firmly established at the time of inspection or “would the licensee have the flexibility to establish that date at some time in the future?” She envisioned a circumstance where the date for fixing a problem was dependent upon consulting with a contractor. Dzubay said officers would try to work with the licensee to determine “when do you think you can get this done?” She added that the form being developed for the process would include space to ask for an extension to get into compliance. Oliver asked if industry representatives could review the form before it was implemented. Dzubay said that she’d need to confer with Hoffman as the document was in “the revision mode” but felt that the agency “could send that out.”
      • Matthew Clark - continued (audio - 2m).
      • Crystal Oliver - continued (audio - 1m). Oliver believed that the generality of “worker safety” could result in “disparate enforcement in the field” depending on an officer’s familiarity “with LNI rules.” If WSLCB’s intention was “to focus on extractors then perhaps it's what the language should read in that section of WAC.”
      • Eric J (audio - 2m).
    • WAC 314-55-013(5) - Licensee Responsibilities (audio - 1m).
      • Matthew Clark (audio - 1m). Clark said that he “did this for a municipality with New Mexico State OSHA” and licensees “had to give them a report showing how we had corrected the issues that were identified originally.” This method could enable cannabis businesses to show the agency that “they’ve met the needs without having to have another site visit.”
      • Ryan Lee (audio - 3m). Lee advised that published information about Enforcement's intentions was “fantastic for licensees” and could be regularly issued as “advisory opinions” or educational guidance. If the division were to “lay it out so that everyone can read it, see it, understand it,” those communications could result in fewer site visits. While "perfect clarity is impossible" in rulemaking, Lee argued that advisory documents would be “very, very helpful” in the agency’s compliance education efforts.
  • Marijuana Unit Commander Jennifer Dzubay shared Enforcement perspectives, participants offered final thoughts, and Hoffman concluded with next steps for the rulemaking project.
    • Dzubay provided Enforcement’s point of view, indicating division leadership had initially thought they were “behind the curve on the enforcement with our policies” leading to “a couple mad dash meetings” to draft policies (audio - 9m). 
      • Dzubay said officers had “started utilizing the notice to correct" form, adding that it was “working really well” though some licensees remained concerned it was similar in appearance to the agency’s administrative violation notice (AVN). She said of the similar appearances, "that’s not a bad thing, it’s just, ‘let's just fix this and be done.’"
      • She reported that her unit did “about 165 hours of education in April.” Reviewing some "missed opportunities we had," Dzubay said the division’s goal had been to visit 90% of cannabis licensees in 2018, but only made it to 55%. In 2019, officers visited 75% of the state’s roughly 1800 cannabis businesses. One limitation was her unit employed 21 officers though they were “supposed to have about 38.”
      • Regarding licensee compliance errors, Dzubay admitted she made mistakes like anyone else “and I hope somebody doesn’t come after me” without getting a chance to fix them. She noted that Enforcement was “hiring Consultants,” a new agency job title, who would be “more responsive to the requests” and performing site visits or “final inspections.” Some officers would continue those activities as well.
      • Dzubay also intended for Enforcement on the eastern and western sides of the state to “be on the same page.” Whenever “the same trends keep coming in,” she said the unit intended to issue guidance. She added that she "would love to invite ourselves to the [cannabis industry] association meetings."
      • Turning to officer training, Dzubay said officers were often asked "1) what do you guys know and 2) how do we keep you guys consistent?" She explained that Enforcement was creating training “for just our marijuana team.” Officers had also “taken classes on indoor marijuana cultivation” as well as “safety procedures, hazard material training, extractor training” to better understand the industry. The unit reviewed policies and rules at weekly team meetings. Dzubay indicated that “probably 90%” of the marijuana unit was dialed into the listen and learn forum “because we want to be on the same page as you.”
      • Finally, Dzubay noted that “in the field licensees love to talk about the business and they actually show our people around.” Officers subsequently shared what they learned with their colleagues.
      • She encouraged those with questions to email mjenforcenr@lcb.wa.gov, a distribution list for marijuana unit Captains and Lieutenants.
    • Hoffman asked for any “final comments from attendees” (audio - 1m).
      • Lukas Hunter (audio - 1m)
      • Kristin Baldwin (audio - <1m)
      • Wendy Hull (audio - 2m). Hull had a question about the difference between the Notice To Correct and the traditional AVN. Dzubay replied that it could depend on “what’s on your record...I see it as a lot like a written warning even though it's not.” Knowing that written warnings can count against a licensee’s insurance coverage, she said it was more about “capture...of a conversation.” Dzubay did allow that "it looks like an AVN" and the agency may modify its format to make it "look less threatening.”
      • Chris Bradley (audio - 2m). Once the program was implemented, Bradley asked that WSLCB "measure its efficacy from the industry perspective" to see if cannabis businesses “feel like we’re becoming more educated” towards compliance. Hoffman thanked Bradley for the suggestion and noted that the CR-103’s concise explanatory statement included “the way that the agency is going to assess the effectiveness of the rules.” She was amenable to surveying licensees as part of that effort.
    • Hoffman moved on to summarize what staff had learned, first saying she’d noticed a need to clarify definitions like “public health and safety.” Schaufler said distinguishing between the notice to correct and AVNs stood out to him in addition to “what it takes to come into compliance,” the scope of the visits, and timeline flexibility. Vasek added a need to clarify the scope of “workplace hazards” (audio - 3m).
    • Wrapping up, Hoffman said a comment spreadsheet would be created by staff in the "next couple weeks and message out to you once it's done." The agency would likely make revisions to the draft conceptual rules and “engage in additional stakeholder outreach,” including another potential listen and learn forum. Hoffman urged anyone with comments or suggested language changes to send them to lcbrules@lcb.wa.gov. “Even though we hear what you’re saying in concept,” she explained, “putting that into a rule can be challenging” (audio - 3m).

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