WSLCB - Board Caucus
(February 2, 2021) - Summary

WSLCB Interpretive Statement IS-21-01 - CBD Retail Sales in I-502 Stores - Cover Excerpt
[ Event Details ]

Among many subjects, agency leadership discussed the hiring of a new Director of Enforcement and Education, an interpretive statement on CBD product sales, and the social equity task force.

Here are some observations from the Tuesday February 2nd Washington State Liquor and Cannabis Board (WSLCB) Board Caucus meeting.

My top 3 takeaways:

  • WSLCB Director Rick Garza discussed the hiring of a new Director of Enforcement and Education, Washington state legislation which would excise the term ‘marijuana,’ and the Cannabis Regulators Association.
    • New Director of Enforcement and Education (audio - <1m). Garza discussed the recent recruitment of Chandra Brady as the new Director of Enforcement and Education, a division which had been undergoing reformation. He commented that she’d started the job on February 1st, “was hard at work meeting with her team,” and would be scheduling meetings with board members and agency leadership.
    • HB 1210 (audio - 1m). Garza told the board that the bill to remove the word ‘marijuana’ from state law in favor of ‘cannabis’ received a public hearing in the Washington State House Commerce and Gaming Committee (WA House COG) on January 22nd and WSLCB supported the change. Rushford had already asked Policy and Rules Manager Kathy Hoffman to explore replacing the term throughout agency rules, he reported. Garza also noted that “Edmond Lee, as you know, is involved in our internal policy.” Lee handled Organizational Change Management (OCM) for Garza’s office and was coordinating with Rushford to “make sure that we have an agency internal policy that directs us to do that” and that it would be “consistent with the bill.”
      • Rushford said she supported “the marijuana shift in statute” described in HB 1210 but didn’t elaborate on her comment that “[Policy and Rules Manager] Kathy [Hoffman], as per usual, came up with” a “unique approach to considering that for our rules” (audio - 1m).
      • HB 1210 was amended to require expedited change of impacted rules before being passed by WA House COG members on January 29th. The amendment also required the State to treat federal references to ‘marijuana’ as meaning ‘cannabis.’
    • Cannabis Regulators Association (CANNRA, audio - 2m). Garza, First Vice President of the association, said the group had voted the prior week to “affiliate” with the Council of State Governments (CSG) before indicating Board Member Russ Hauge had “worked with [CSG] for a period of time.” Garza described CSG as serving as “a policy association nationally of state legislators.” He’d been contacted by CSG, in part, he reported, because Senator Sam Hunt was the group’s incoming National Chair and CSG had “inquired as to whether [states that had legalized cannabis] would be interested...in being part of an association and they would help us do that.” While CANNRA was ultimately established independently of CSG, they voted “to affiliate with CSG, which provides a lot of services, and also has us able to then meet with legislatures around the country,” Garza said.
      • Hauge replied that when he was “closer to face-to-face” with Garza he wanted to discuss CSG (audio - 1m).
      • Hunt’s senate biography notes that “In 2017, Sam chaired the Council of State Governments West, an organization composed of legislators from the 13 western states, the Canadian provinces of Alberta and British Columbia, and several Mexican border states.”
      • Garza confirmed the formation of CANNRA in September 2020 and WSLCB was announced as a charter member in November 2020. At the end of 2020, CANNRA announced the addition of five member states, described regulatory priorities, and formed special committees.
      • Before CANNRA’s founding, informal regulator roundtables enabled cannabis officials to hear from one another. In February 2020, an internal WSLCB email described suggested discussion topics which revealed that staff at the time considered the following issues, amongst others, particularly “needed/relevant to our agency.”
        • Tracker update
        • Illicit market tracking
        • High potency products
        • Excipients/flavorings
        • Advertising/Marketing requirements
        • [Cannabidiol] CBD and other cannabinoids
  • Policy and Rules Manager Kathy Hoffman briefed on the agency’s first interpretive and policy statements, an internal rulemaking manual, and future plans.
    • Interpretive Statements - CBD Retail Sales in Licensed I-502 Stores (audio - 1m). Hoffman briefly described the release of the agency’s first interpretive statement on January 28th. She said it “clarifies and confirms” the agency’s interpretation of WAC 314-55-109 “concerning cannabinoid additives...and speaks to the ways that CBD product obtained from a source not licensed under chapter 314-55 may be sold in licensed retail locations.”
    • Policy Statements - Delta-8-tetrahydrocannabinol (Delta-8-THC, audio - 1m). Hoffman said staff was “working on” another statement “in response to local stakeholder request and some internal discussion regarding the status of Delta-8-THC, and the conversion of CBD, hemp, or both, to Delta-8 and Delta-9-THC.” Staff raised the issue in 2020 before “some of the tools that we created to determine whether or not a concern would become an interpretive or policy statement” had been implemented, she explained. After research and outreach to other states, Hoffman said staff decided a policy statement was more appropriate “because our current statutes are pretty clear on this and the policy statement is designed to give additional guidance.” Some other agencies had already reviewed the statement, she remarked, before saying it would be shared "with industry associations" in the near future.
    • Rulemaking Manual (audio - 3m). Rushford mentioned a “very helpful” intranet site including “the rules manual, as well as rules and progress, and the calendar” which Hoffman had developed.
      • Hoffman responded that she’d been developing a rulemaking manual since March 2020 for agency staff to learn about “the application of the Administrative Procedures Act” and was on the fourth “version” of it so far, comprising “over 50 pages.”
      • By covering “each aspect of the rule development process in depth” and the “rule coordinator’s role, my role, the kinds of documents that staff and others can expect to see in rule packages,” she believed the manual would assist staff on regular rulemaking in addition to “interpretive statements and rule petitions.”
      • Hoffman had included a calendar for rulemaking events and internal “specific work group meetings” that was “more accessible to everyone at the agency.”
    • Future Planning (audio - 2m). Looking beyond her immediate responsibilities, Hoffman articulated a longer term “strategic rule planning and development” effort. “We’re beginning to sketch the contours of that plan two years into the future,” she explained, telling the group it would “project a pathway forward that  aligns with the Board’s goals and priorities but also supports regulatory stability through predictable rule development.” Hoffman confirmed that “singular” rule projects would continue while planning allowed staff to “think about those projects as part of a broader plan in alignment with board priorities.”
      • Hoffman noted “at least two longer term projects that we want to add to this plan initially” with the first being modernization of alcohol rules. Hoffman remarked that the process would feature “further expansion of our stakeholder engagement models to include the ‘World Cafe model’” as part of a “very inclusive process of development.”
      • In relation to cannabis, Hoffman said “there’s been a lot of interest in opening our current advertising rules, modernization, in response to the rapid expansion of social media platforms.” She related how “public health and prevention partners” were concerned “that this expansion really increases youth access in ways that are very concerning to them.” She expected the process would include “multiple work sessions” for the agency as well as “additional opportunity for meaningful engagement.”
  • Board members talked about the WSLCB licensing presentation to the Task Force on Social Equity in Cannabis and the first deliberative dialogue session.
    • Board Member Ollie Garrett, the WSLCB appointee to the Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis) went over the January 25th meeting. Garrett said Director of Licensing Becky Smith “did a great job" providing a presentation on the history of cannabis business licensing and fielding questions. She noted Smith talked about “the process with the merger” of adult-use and medical cannabis markets and other “processes that we use at LCB” (audio - 5m).
      • Garrett found that "the feedback from the task force was all positive and the information was valuable.” She regarded it as similar to other task force meetings and WSLCB engagements with communities of color where getting the public response “gives us a lot to look at and to think about for future decisions.” Garrett felt momentum to “look at some of the things that we do and some of the unintentional consequences that occurs” in addition to “asking more questions and things when we’re just thoroughly vetting some of the things that[‘s] being brought before us.” The events had helped her be mindful of the public “interpretation and the impact" of the Board’s decision making.
      • Garrett indicated there was a significant conversation about the first year of funding appropriated for a technical assistance grant program as task force members understood they would “lose it or use it by June.” A delayed start meant the task force hadn’t yet offered guidance needed before the money could be distributed, and Garrett said loss of the money was a top concern of several members. The task force members voted on a motion “allowing the Chairs [Representative Melanie Morgan and Commissioner Paula Sardinas] to kind of go and amend some things to see if there’s a way that they can use the funding now for existing licensees rather than lose the funding.”
        • Four days after the task force meeting, task force appointee and Senator Rebecca Saldaña sponsored SB 5388 - “Concerning social equity within the cannabis industry.” The legislation would:
          • Allow assistance grants for current licensees “who meet the social equity applicant criteria under RCW 69.50.335,” 
          • Require a pilot program to be established in August,
          • Add two licensed processor positions to the task force, 
          • Add several topics to the task force’s legislatively mandated reporting on cannabis equity improvements,
          • And take immediate effect, were the bill to become law.
        • On Monday February 1st, Morgan sponsored companion legislation in the House, HB 1443. That bill was scheduled for a public hearing in WA House COG on Friday February 5th following a work session “Update from the Social Equity in Cannabis Task Force” on Thursday February 4th.
      • Garrett said three task force work groups established at the December 2020 meeting planned to “move forward and speed up the process of coming up with something.”
      • Hauge remarked that Garrett was “doing the Lord's work" on an “enormous project.”
    • Hauge provided his “impression of the panel discussion" organized by Hoffman for the Quality Control (QC) Testing and Product Requirements rulemaking project (audio - 5m).
      • Earlier on the call (audio - 1m), Hoffman described her moderation of the agency’s first deliberative dialogue session hosted on January 28th. Hoffman considered the event a success as it had “over 125 people register” and peaked “at 72 people in attendance.” She said the group considered “multiple positions” and gained an “understanding regarding consumer perspectives around cannabis product testing.” Staff were still organizing the feedback, Hoffman indicated, and a second dialogue session was scheduled for producers on Thursday February 4th with “110 people registered” to date, covering “all three tiers, different production types” and the “overall diversity of our license holders.”
      • Hauge said “it would be possible to look at this and say, ‘well, wait a minute, you know, we’re taking...two steps forward and now we’re taking a step back’ or ‘we’re spending more time than we need to.’” However, he “strongly disagree[d]” with that claim, finding the dialogue to be “very elevated and certainly curated and chaired well by our team.”
      • Hauge was reminded of when the Board "took the rule package on the road" to talk “about what it is we can do and what we can’t do and what is on the table.” His view was that there remained a "lot of fundamental misunderstanding about what the LCB can do" and that “state government has contributed to that.” Hauge observed there were “two agencies, maybe three involved” in the availability and QC of cannabis products “and putting this together in a rational way is going to take some time and I think it’s time we need to spend now.” Rushford was supportive of favoring quality over speed in the rulemaking process. Garrett felt "the more we can bring others, and work with others...the better we will be able to get things right.”
      • Rushford asked about “other agencies participating” in the events. Hoffman stated that several departments had staff attend listen and learn sessions. She said Washington State Department of Ecology (DOE) representatives attended the deliberative dialogue and she believed “there are other agencies that are interested in listening to these sessions” in addition to legislative staff and lawmakers.
        • DOE coordinates the Cannabis Science Task Force charged with transitioning responsibility for cannabis testing lab accreditation to the Department from WSLCB.

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