WSLCB - Executive Management Team
(April 13, 2022) - Summary

Broad ranging conversations between the board and staff touched on retail safety, the cannabis reporting system, Healthy Youth Survey (HYS) data, and regulation of cannabinoids.

Here are some observations from the Wednesday April 13th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) meeting.

My top 3 takeaways:

• Staff shared more details on cannabis retail safety, including improved information by state financial regulators and more discussion of cashless payment options.
  • Board Chair David Postman noted that “a fair amount of time” had been spent reviewing the topic earlier in the day during the board meeting but invited Director Rick Garza to share his assessment (audio - 1m, video).
    • The board hosted a “Cannabis Retail Safety Forum” on March 29th.
  • Garza said “good understanding” of WSLCB activity on the matter had been conveyed at the board meeting as well as a forum between licensees and law enforcement representatives from “King County, Bellevue, Pierce County, Tacoma, [and] Olympia” the day before. However, there hadn’t been “as many licensees present as we would like” in attendance (audio - 8m, video).
    • Garza indicated agency staff were looking into partnering with “potentially a security firm or company that could provide assistance to us with training for our licensees, and maybe more importantly, assessments” of business premises to determine whether they could “be more secure.”
    • Describing the “rash” of armed robberies as centered in Pierce and King Counties, specifically Seattle and Tacoma, Garza suggested beginning training and security assessments on cannabis businesses in that area. He said Tacoma Mayor Victoria Woodards had contacted his office and “the idea is for us to work [in coordination with] the City of Tacoma and Pierce County” to host a community event on “ways and best practices that we can use to assist them right now.” Garza brought up that some other police agencies were proactively meeting with retailers in their jurisdictions as well.
    • Additionally, Garza touched on information Chief Financial Officer (CFO) Jim Morgan had shared during the board meeting regarding “cashless systems out there that are available for our licensees to use.” He hoped to increase understanding about the services, and was communicating with Washington State Department of Financial Institutions (WA DFI) staff, representatives of state credit unions and banks, as well as customers of two cashless payment services. Garza mentioned POSaBIT, remarking that the company was “being used by a large number of our licensees.” Garza addressed licensee concerns around “high transaction fees, some of the information we’ve learned in the last couple weeks…it’s more like what you might pay to use a debit or credit card…we need to do a better job of educating our licensees to what’s available.”
    • Any tax incentives or “deferral” by WSLCB officials would need legislative approval in 2023 “or, authorization as far as budget,” Garza stated.
    • He reminded the board of the legislative and government official participants at the agency forum on March 29th who reinforced the need to contact Washington Senators Patty Murry and Maria Cantwell about the federal SAFE Banking Act and push for their support of the bill in the U.S. Senate. Garza reported that WSLCB officials met with Murray the previous week, and were still scheduling time to meet with Cantwell. He said the conflict was around “other proposals like the MORE Act” and what cannabis reform step Congress wanted to pass first. According to Garza, the Washington State Office of the Governor (WA Governor) was considering composing “a letter that will go from state elected officials, including our governor, attorney general, and our lieutenant governor, our treasurer” to the state congressional delegation “and others” about the importance of passing the SAFE Banking Act.
      • The will-they-won’t-they of Senate action on cannabis reform in the face of dozens of states with differing policies has kicked into higher gear since Majority Leader Chuck Schumer announced the drafting of far-reaching cannabis reform legislation in July 2021. In his role as First Vice President of the Cannabis Regulators Association (CANNRA), Garza had been involved in the federal conversation around cannabis policy from the perspective of a regulator for some time, mentioning both the MORE and SAFE Banking Acts in relation to his role with CANNRA in March 2021 and April 2021.
      • In the spring of 2021, Schumer demurred on the legislation’s timeline, promising a senate bill “soon” in March and April, then telling a podcaster it would be introduced “shortly” in May.
      • By July 2021, Garza was predicting legislation brought by Schumer and other senators by “the end of this month, if not, maybe a little bit sooner.” At a CANNRA briefing to the Washington Traffic Safety Commission (WTSC), he brought up Schumer’s draft legislation which had been released the day before.
      • In September 2021, Garza told Cannabis Alliance members that CANNRA representatives would “share some of our concerns” with senators that December. That month, CANNRA leadership released a “Response to the Discussion Draft of the Cannabis Administration and Opportunity Act.” Garza and the board talked about federal legislation at the end of September, confident reform remained “years away.”
      • In April 2022, it was announced that Schumer would wait until August to formally introduce his reform bill.
    • Staff for the Washington State Department of Labor and Industries (WA LNI) were continuing to look at worker safety concerns for licensees, Garza mentioned, and noted that raised a question of "what about our own staff’s safety, as far as our officers?" He summed up WSLCB staff efforts as focused on communicating what licensees were able to do to address fears of armed robbery, and expected there would be more to share in the near future.
  • Postman conveyed he’d been “heartened” by the willingness of others to engage and find solutions, pointing to the work of local government officials and licensees. He stated that WA DFI staff had been “sharpening their pencils" to look into “whatever could be done to help.” Postman’s understanding was that questions about financial services had been a recurring topic in the cannabis sector and that legislative solutions at the state level “very quickly come up against the federal issue, there’s only so much the state can do.” While hopeful there would be Congressional action in the coming years on cannabis banking options and “perhaps national legalization,” he knew that regulators couldn’t wait for “the perfect answer.” Postman assured them that work would continue, but it would need “buy in” from all stakeholders, including cannabis consumers who “have to buy into this, in a literal way” (audio - 5m, video).
  • In his update, Director of Communications Brian Smith said WA DFI would expand its cannabis banking resources with more information on available cashless payment options. He planned to use their input in his public messaging on the subject “this week” (audio - 3m, video).
    • Board Member Ollie Garrett wondered why there wasn’t more direct outreach to licensees by cashless service providers. Smith did not have an answer, but promised to help draw attention to alternatives to cash payments.
    • Garrett asked if there were less obvious obstacles to the systems they weren’t recognizing. Morgan indicated that the cashless service vendors were reaching out to cannabis licensees, but "it's not universally known…that it’s OK for them to do that in some cases." He assured the board their education work would continue and Postman said the board would help amplify their messaging.

• Chief Financial Officer (CFO) Jim Morgan went over progress on the agency Cannabis Central Reporting System (CCRS) which was “stable” despite lingering difficulties.
  • The last EMT update on CCRS was on February 9th and regulators met with software integrators to discuss CCRS 2.0 on March 1st.
  • Morgan told the team that “work continues to happen behind the scenes,” but that overall, CCRS had “work[ed] as expected.” He said there were “issues and challenges and suggested changes” to the system from WSLCB staff and other stakeholders that were being considered, but the “highest priority report” would go “into production next week” (audio - 7m, video).
    • Morgan reported that “the team ran into some…challenges. As more and more data was entered into the system they discovered some performance issues” around how “reports were constructed.” However, he stated those issues had been “worked through” and the system would be “usable to our enforcement staff and others who need to avail themselves of those reports.” He didn’t view it to be a big “setback that reports are only becoming available now because as we’ve been developing reports, that’s also the time where the licensees have…been entering data.”
    • Morgan also mentioned the team was almost done on the “scoping effort for phase II." The following week, they’d present their findings to the business owners “to evaluate” and then bring the proposal to the internal CCRS Steering Committee. After this, a calendar and “communications effort” for the phase would be created so licensees know “what changes impact them” with ample notice and detail.
    • A specific change to the manifest process incorporating suggested improvements approved by the CCRS team would be part of the scope of phase II, Morgan reported, but would be developed separately from “changes to the standard upload.”
    • Morgan said “about 83% of licensees have logged into the system” and the remaining 17% were “the focus of” Education and Enforcement staff. A few were inactive businesses, but the division would move to “an enforcement posture” for licensees they’d already contacted and informed about the migration to the CCRS, following regular “enforcement steps.” Morgan called attention to the fact that since “about 78% are actively uploading data,” there was a gap between those who had accessed the CCRS and those who were utilizing it as expected. This group would also get attention from agency enforcement officers, as leadership at WSLCB started looking for 100% usage of the CCRS.
    • Postman wanted to see a demonstration of the reporting updates and understand what changes would “do for us.” He further wanted to know about inquiries for help from licensees. Morgan believed that some requests were still coming in but had “minimized to the point where it’s not something that’s being reported to me as a…key indicator of how we’re doing” (audio - 2m, video).
  • Enforcement and Education Director Chandra Brady subsequently explained that CCRS related requests to the Cannabis Examiners unit in her division had been their predominant issue for the first quarter of 2022. She said the unit was “looking forward to having that transition technically complete” (audio - 9m, video, presentation).

• Policy and Outreach Director Justin Nordhorn would provide updates during future EMT discussions, and raised topics like the Healthy Youth Survey, work on tetrahydrocannabinol (THC) regulation in the legislative interim, and future outreach activities (audio - 9m, video).
  • Nordhorn began by complimenting staff attention to rules inquiries as well as his team’s work with the Enforcement and Education division. Having seen some information was only shared internally once it was made public, he commented there had been improvements in looping in relevant offices “before the public announcements have gone out so that we can have consistency and also confidence in answering questions as they come from all over the state.”
  • Nordhorn described “doing some other outreach" during the legislative interim, indicating Public Health Education Liaison Mary Segawa was involved in the HYS survey for 2023 along with other agencies. He’d also engaged with the Washington State Department of Health (DOH) Medical Cannabis Program Manager Shannon Angell on issues like “medically compliant product, availability of such” as well as what information budtenders could share, remarking that additional public resources would be released in the future.
    • Find out more about the DOH medical cannabis program from a February 22nd public hearing on their Medical Marijuana Consultant Certification rulemaking project.
    • DOH staff gave a presentation on the medical cannabis program, including consultants, to the WA SECTF Licensing Work Group in June 2021.
  • Stakeholders in the cannabis and alcohol sectors were being contacted about their outreach needs and “how to set up some more informal problem solving.” He distinguished these efforts from listen and learn forums as more about enlightening the agency staff on topics and challenges so they could be “in consideration when we’re going through policy development.”
    • Nordhorn said interim policy work for his team would address “the THC compound issue that’s continuing from last session” which he said included “issues around the definitions” of compounds like delta-8-tetrahydrocannabinol (delta-8-THC). This effort would inform “what do we need to do for [the] legislative session next year,” which could be made easier by having “a number of those rules done by the year’s end.”
    • He noted there was going to be a deliberative dialogue with an expert panel on THC compounds on Wednesday April 27th, and other events would be scheduled “in May and June around similar topics.” In July, Nordhorn relayed there’d be more listen and learn sessions on agency rule projects.
      • In 2021, WSLCB hosted dialogues on Cannabis plant chemistry in June and July.
  • Postman committed to having the policy work of Nordhorn become a regular facet of EMT meetings.

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