WSLCB - Work Group - True Party of Interest
(August 12, 2019)

Monday August 12, 2019 10:00 AM - 12:00 PM
WSLCB Enforcement Logo

The Washington State Liquor and Cannabis Board (WSLCB) convened an external work group to gather stakeholder input on the agency's True Party of Interest (TPI) rulemaking project.

Engagement Options

In-Person

WA State Liquor and Cannabis Board, Union Avenue Southeast, Olympia, WA, USA

Observations

On Monday August 12th, Board Member Russ Hauge attended a work group meeting on the True Party of Interest rulemaking project (TPI). His assessment was that stakeholders were “working in a good way to get some solid solutions in the rules.”

  • [ Event Details ]
  • In looking at the difference between “financiers” and TPI, Chris Masse, a partner at Miller Nash Graham and Dunn LLP, offered “commercially reasonable loan agreements” which “give a potential lender some security” through a role in any potential liquidation of the business, a practice Hauge termed “pretty standard.” However, Masse reported “inconsistent response” from WSLCB when she asked what was permitted in financial agreements.
  • Hauge encouraged a clearer “decision-making tree” for the agency as the Board had encountered situations at odds with “where we wanted to go with something.” He hypothetically wondered: “what happens if I was a license holder and I wanted to borrow some money and I hired a lawyer to put together a security agreement and who’s going to review that? What are the criteria they’re going to be using to evaluate that? And what can I count on as to the quality of the decision? And what I’m hearing now is that ‘we can’t really count on that.’”
  • Board Member Ollie Garrett said the environment for cannabis policymaking had “evolved” since the agency first became responsible for regulation, and there were fewer concerns about hidden ownership. Hauge concurred that decision-making criteria on financial agreements needed scrutiny to determine whether WSLCB was “commercially reasonable, or are we being a little bit too heavy-handed?”
  • Hauge mentioned situations where the Enforcement division of the agency reviewed state or federal statutes to arrive at quasi-legal opinions for Enforcement decisions. He felt this created costs for the agency, such as the lawsuit filed by Seattle HEMPFEST over advertising and free speech concerns.
  • Hauge hinted at “hints” that the 2020 legislative session would feature more changes the industry wanted, though he preferred stakeholders approach WSLCB directly to request changes instead of exercising legislative authority to alter the agency. Out-of-state investment was one such change Hauge had heard was being considered again after two bills on the subject failed in 2019.
  • Garrett asked about bringing financial agreements to the Board or Executive Management Team (EMT) for vetting. Board Chair Jane Rushford suggested a cross-division “Business Benefit Team” for weighing agency policy decisions through a business lens.

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