WSLCB - Board Meeting
(August 31, 2022) - Rulemaking and Public Comment

WSLCB Board Meeting - Canopy - Advertising - Cloud Storage - Ethanol - Farmers Markets - Minors on Premises
[ Event Details ]

After opening two rulemaking projects and accepting four of five petitions for cannabis rulemaking, board members then heard complaints and compliments in public comment.

Here are some observations from the Wednesday August 31st Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 8 takeaways:

  • A rulemaking project on cannabis plant canopy was opened by the board in an effort to bring more consistency to the application and enforcement of production limits (Rulemaking Project).
    • Licensed producers in Washington fall into tiers based on the amount of square footage, or canopy, they’re allowed to grow cannabis in. Stakeholders and industry members have raised concerns related to the interpretation and enforcement of these canopy limits, including a 2019 petition to address “overproduction” and comments at Washington CannaBusiness Association (WACA) conferences in November 2021 and again on June 15th where attendees suggested the concept of canopy was still lacking standardization.
      • In December 2019, board members opened a rulemaking project on expansion of the canopy limit for tier 1 growers. Though delayed due to the coronavirus pandemic, the board approved doubling the tier’s canopy limit from 2,000 to 4,000 square feet in July 2021 after a report from staff on survey results suggesting expansion was needed for those licensees to compete in the regulated market.
    • A new canopy measurement protocol was alluded to in a January Medium post by WSLCB Communications staff, but was not announced through the agency GovDelivery listserv. In comments to Cannabis Observer, Enforcement and Education Director Chandra Brady asserted that agency staff had studied the issue since the fall of the previous year after learning measurement standards hadn’t been formalized. She indicated enforcement staff were trained on the more formally defined canopy measurement protocol by January 2022.
    • The canopy project was last mentioned by Policy and Rules Manager Kathy Hoffman on August 2nd. She detailed a need to resolve disparate measuring practices by staff as part of the rationale for the rulemaking push on July 12th.
    • During the board meeting, Policy and Rules Coordinator Jeff Kildahl sought approval to file a CR-101 for rulemaking “to amend WAC 314-55-075 and WAC 314-55-010 regarding cannabis plant canopy.” The purpose would be to “update and modernize rule language” on canopy, he said (audio - 2m, WSLCB video, TVW video).
      • Forecasting “significant stakeholder engagement,” Kildahl stated the extended project timeline would allow for “that stakeholder work.” He expected to bring a CR-102 to the board “for consideration on January 18th, 2023” which would be followed by a public hearing on March 1st. He reported that the earliest a CR-103 to adopt changes could be presented to board members would be March 15th, 2023. 
    • Board Chair David Postman commented that the rulemaking effort was “very, very important” and expected it would be “complicated.” He hoped “we get lots of good input and people are able to work collaboratively” (audio - <1m, WSLCB video, TVW video).
    • Board members then voted to approve filing the CR-101 (audio - <1m, WSLCB video, TVW video).
  • Cannabis advertising, a frequently mentioned area of staff concern, also received board approval for officials to initiate rulemaking to update and clarify rules (Rulemaking Project).
    • Advertising changes for cannabis had been discussed as a goal of WSLCB leaders for several years prior, as early as August 2019, when staff reported legislators were “expressing some concerns around the loopholes and how they’re being applied,” optimistic that legislation might address “a lot of gray areas." That November, Hoffman acknowledged advertising had been a concern since she’d joined WSLCB but in late 2019 officials had to suddenly focus on vapor products. The project was discussed at a WACA conference on June 15th at which time she stated that section (2) of the advertising rules covering outdoor advertising was being litigated and that section wouldn’t be opened for revision. Hoffman most recently talked about the prospective project on August 2nd.
    • During the meeting Policy and Rules Coordinator Robert DeSpain went over the CR-101 for the project to revise rules in WAC 314-55-155, first noting the history of the advertising rules as part of the “broad rulemaking authority” afforded WSLCB through implementation of Initiative 502 and the “last substantive” revisions in 2018 (audio - 3m, WSLCB video, TVW video).
      • He claimed the advertising market for cannabis had “rapidly expanded, in scope and content, across multiple advertising platforms.” For this reason, DeSpain articulated the prerogative of the agency to promulgate new rules while “amending or repealing” rule sections, along with “clarifying and technical updates to our existing rules”
      • With board approval, he would file the CR-101 with the Washington State Office of the Code Reviser (WA CRO) and anticipated a timeline in which a CR-102 with proposed changes would be offered on December 7th. Without delays, a final CR-103 could be presented for adoption on February 15th, 2023.
    • Postman observed “this is a big one” he was looking forward to (audio - <1m, WSLCB video, TVW video) and the board voted to open the rulemaking endeavor (audio - <1m, WSLCB video, TVW video).
  • Several rulemaking petitions were considered; the first was submitted by a trade association leader and dealt with digital cloud storage of cannabis business records.
    • On July 12th, Hoffman noted an influx of petitions and the effort of staff to respond to them.
    • Policy and Rules Coordinator Audrey Vasek indicated that the petition came from Brooke Davies, WACA Deputy Director and Associate Lobbyist. Requesting changes to WAC 314-55-083 and 087 on allowing “cannabis licensees to use cloud storage options for certain record keeping requirements,” she shared the petitioner’s argument that the existing mandate to keep hard copies of records on licensed premises was “cumbersome and costly” (audio - 5m, WSLCB video, TVW video).
      • According to Vasek, Davies felt allowing cloud storage of records helped “efficiency,” transparency, and costs for cannabis businesses as existing rules required retention of “most types of records on-premises for five years.” While a licensee could also keep digital copies in addition to physical records, they couldn’t keep them in lieu of physical records.
      • After consulting on the possibility of allowing cloud storage as the primary recordkeeping system for licensees with representatives of the Finance, Information Technology (IT), and Enforcement and Education divisions, Vasek stated that several considerations emerged:
        • How would “access to the records be ensured,” was the top issue Vasek reported, theorizing a digital platform could make accessibility easier for both agency staff and licensees. However, access could become dependent on devices “with an internet connection,” which made accessibility more difficult, she added.
        • How records would be preserved and “secured” was another concern she said staff noted. Though digital preservation might be an improvement, cloud data faced risks related to third-party servers, and other requirements for “backups” would be explored.
        • How records would “be authenticated” was the last area of concern for agency officials, stated Vasek, as digital documents could be “more easily altered and edited.”
      • With focus areas outlined, Vasek relayed that staff supported adoption of the petition, and would begin outreach to stakeholders - even potentially expanding the policy discussion to WSLCB licensees beyond cannabis.
    • Postman wanted the agency to be “thinking globally in terms of what are our practices” regarding digital records, so as not to expect licensees to keep records in ways “we ourselves aren’t doing.” He brought up rulemaking on electronic filing adopted by the board on July 6th as a sign they were receptive to use of digital records. Postman promised to listen to the Enforcement and Education staff for their “on site” record needs (audio - 1m, WSLCB video, TVW video) before members voted to accept the rulemaking petition (audio - <1m, WSLCB video, TVW video).
  • A petition involving residual ethanol in cannabis concentrates was denied by the board based on a staff recommendation challenging the proposal. 
    • Kildahl explained a petition was sent in by Colum Tinley, owner of Discovery Garden, on July 11th asking that rules be changed to “remove the limit for the amount of ethanol solvent that may remain in cannabis concentrates after processing” as defined in WAC 314-55-102(3)(f) (audio - 3m, WSLCB video, TVW video).
      • He said the petitioner was proposing “no limit on residual ethanol” as they seemed to be under the impression that was the way it had been before pesticide testing was adopted in rule on March 2nd. According to Kildahl, Tinley claimed there were “technical problems related to producing” concentrates containing ethanol levels below a 5,000 parts per million (ppm) limit.
      • Kildahl pointed out that WAC 314-55-104 “has limited the amount of residual ethanol in cannabis concentrates” since 2015, requiring “all residual ethanol” to be removed from concentrates. He reported that the limit of 5,000 ppm on ethanol had been established for “consistency with [the] standard” of “the levels for other similar class 2 solvents.” Kildahl concluded with a staff recommendation that the petition be denied on the grounds that the level of residual ethanol had been more restricted prior to the change cited by Tinley.
    • Postman concurred with the recommendation, inferring some “misunderstanding” on the part of the petitioner, and wary a rule change as was being proposed would detract from their goal of “consumer safety” (audio - <1m, WSLCB video, TVW video). A vote was taken to deny the rulemaking request (audio - <1m, WSLCB video, TVW video).
  • A petition on cannabis product samples from an industry representative convinced WSLCB staff and board members to consider revisions to relevant rules.
    • Kildahl established the July 8th petition from Vicki Christophersen, WACA Executive Director and Lobbyist, was regarding WAC 314-55-096 covering “Vendor, educational, and internal quality control samples” (audio - 3m, WSLCB video, TVW video).
      • Indicating that sample requirements were last changed in 2018, he described rules for packaging and labeling cannabis product samples used in negotiating sales, “educational purposes for retail employees,” for quality control, and for creating “sample jars” allowing customers to smell products. The rules also featured prohibitions on providing samples for free to any “retail customers,” Kildahl added.
      • Sharing the petitioner’s assertion that the rules were “cumbersome and costly to licensees without benefiting public safety,” he relayed their view that changes could increase efficiency, cost savings, and safety if staff explored amending rules to:
        • “Allow producer processors to add on additional product units to any retail order as educational samples”
        • “Place the existing monthly educational sample limit on producer processors instead of retail licensees.”
        • “Removing the internal quality control sample restrictions.”
      • Issues identified by staff included risks from larger sample sizes and numbers of samples being accepted by retailers or for internal quality control sampling, remarked Kildahl. However, he told the board that officials were nonetheless open to “understanding these perspectives” and exploring the topic in an effort to “streamline business practices” for the cannabis sector and would recommend approving the petition.
    • The board accepted the petition for rulemaking without additional comment (audio - <1m, WSLCB video, TVW video).
  • A petition to permanently encode a temporary coronavirus pandemic allowance for minors on licensed wholesale premises from a former producer was also accepted by the board. 
    • On July 5th, Hoffman talked about the petition and Kildahl indicated staff had been reviewing the allowance including requirements such as “video security" and requiring valid proof of age. Staff also talked about the allowance for minors on licensed premises during a caucus on May 24th.
    • Postman introduced the petition to amend WAC 314-55-015 to allow minors “under the age of 16 to be allowed on licensed cannabis premises” (audio - 5m, WSLCB video, TVW video).
      • DeSpain informed the board that Crystal Oliver, formerly the Washington Sun and Craft Growers Association (WSCA) Executive Director, submitted the petition on July 6th, and that minors would only be allowed if they were the “child, or grandchild, of the licensee, is not engaging in any work” on the premises, and wasn’t in possession of any “products associated with” cannabis production. This would make the temporary allowance permanent along with all the restrictions on it, he explained .
      • In current rule, “cannabis licensed producers’ and processors’ premises are restricted to persons at least 21 years, or older,” DeSpain stated, affirming that changing the rule was within the board’s existing authority. Staff had called out the following possible “issues to consider”:
        • “Youth access and safety risks” from the potential of accidental or “intentional” cannabis ingestion, as well as from existing machinery or equipment
        • “Enforcement” risks if minors lacked identification to prove they were at least 16
        • “Gender equality” implications due to the “economic downturn” of the pandemic impacted sectors with “high female employment shares and in women-owned businesses”
    • DeSpain reported that WSLCB staff were open to considering this topic, and that the rulemaking process would permit them to engage with stakeholders and the public on the matter. The board accepted this recommendation without additional inquiry (audio - <1m, WSLCB video, TVW video). 
  • The final petition, also regarding minors on licensed cannabis premises, asked to allow the staff of independent contractors over 16 on site which the board accepted reticently.
    • Submitted by Oliver along with the preceding petition on July 6th, DeSpain said this proposed changes to WAC 314-55-015 for “employees of independent contractors under 21 years of age on premises of licensed cannabis producers and processors” (audio - 5m, WSLCB video, TVW video).
      • So long as the person was at least 16; “an employee of a contractor engaged in” work such as “electrical, plumbing” or other trades; and wasn’t working “directly related to the production, processing, or sales of cannabis,” they’d be allowed on-site, he elaborated.
      • DeSpain confirmed the board’s authority to change rules restricting access to cannabis facilities, and offered staff concerns similar to the previous petition regarding youth access and enforcement. He mentioned that agency representatives wanted “procedures, records, and/or processes” for identifying whom this exemption applied to, and tracking its utilization.
      • However, this proposal carried an additional complication over “the meaning of ‘employee’” in statute, which he interpreted to mean a change in rule would “only apply to employees of independent contractors.” DeSpain told board members staff had determined public engagement from a rulemaking project would be “beneficial,” and that they were recommending accepting the petition.
    • Postman asked about an allusion to “federal guidance” on the topic by DeSpain. He answered that there was a “full age gate” restriction for those under 21, and some at the agency had voiced concerns about exemptions leading to "pushback" from federal authorities. Postman recognized there was potential for an impression they were “letting kids around” cannabis businesses, and that this had long been a fear of federal authorities as outlined in the 2013 Cole memorandum. “Of course, if we really took into consideration what they thought, we wouldn’t be able to do anything,” he quipped (audio - 1m, WSLCB video, TVW video).
      • The memo was subsequently rescinded in 2018, but it remained the polestar of federal guidance on state-legal cannabis for some regulators.
    • The board voted to accept the petition and consider rulemaking on the matter (audio - <1m, WSLCB video, TVW video).
    • Postman added a final observation that action on these projects wouldn’t be immediate and they might not agree to adopt the rules as petitioned, but acceptance was “a sign of issues that we think are of importance and worthy of" serious discussion (audio - 1m, WSLCB video, TVW video).
  • Members of the public spoke up about cannabis social equity and raids at unlicensed medical cannabis markets, while one offered gratitude for the agency's receptiveness to rulemaking petitions.
    • Peter Manning, Black Excellence in Cannabis (BEC) member (audio - 4m, WSLCB video, TVW video) 
      • Noting he’d been attending WSLCB meetings “since 2014," Manning explained that he’d seen numerous "denominations and ethnic communities" voice their thoughts during public comment, yet the industry was predominantly Caucasian.
      • Complimenting proposed social equity rules advanced at the previous board meeting, Manning nonetheless had a "problem with that mobility" which left equity retail licenses tied to the county where they were allotted. He felt that policy was “no good” and “can’t be labeled” equity.
      • Manning further disliked seeing cannabis retail title certificate holders—licensees barred from operating due to jurisdictional bans and moratoriums—”crammed” in with social equity licensing. Acknowledging some of those businesses had been spending money and waiting years to operate, Manning advocated for a separate system, feeling their hopes "shouldn't be placed on the backs of social equity” as that system was delicate enough. “It’s almost like it's being set up to fail," he alleged.
      • Manning had previously seen “Black people and Brown people that owned dispensaries in Seattle were forcibly closed with the help of the LCB.” He claimed there were now “White-owned collective gardens popping up all over the state” making delta-8-tetrahydrocannabinol products available to children, and asked to meet with agency officials to “make these problems go away.”
    • Mike Asai, Emerald City Collective Gardens (ECCG) Co-Founder and BEC Vice President (audio - 2m, WSLCB video, TVW video) 
      • Asai mentioned the “current farmers market not regulated by the LCB,” stating that they were “problematic to the whole cannabis market.” He speculated that if “Black and Brown [people] were to do this, we would be met with extreme force by the LCB and the state.”
        • The day before on Tuesday August 30th, there were raids reported on unlicensed medical markets in Roy and Tacoma. Twenty22Many Founder Patrick Siefert passed on information from a patient present that “it had nothing to do with LCB or cannabis. And everything to do with Mushrooms.”
        • However, in a separate facebook post, regular WSLCB commenter Christopher King took credit for spurring law enforcement action against Vincere's Compassion Club and Red Barn Trading Post, indicating he was “not proud of it” but that he was advocating for “the Black OG’s who got shafted the hardest.” He posted comments he intended to share with the board.
        • Both King and former medical collective owner Kevin Shelton signed up to speak at the board meeting on Wednesday, but neither were available when called upon.
        • On Friday September 2nd, WSLCB Communications staff published a press release documenting investigations of "two businesses" followed by a "Special Operation" on Tuesday August 30th during which agency enforcement officers led execution of search warrants and arrests to follow up on "multiple public complaints" about the locations. In addition to unregulated cannabis products, Vincere's was reported to have "growing equipment, cash, electronic and surveillance equipment, ballistic vests, and two firearms" on the premises and one person was arrested. Red Barn was characterized by "a sizeable amount of psilocybin, peyote products, cash, electronic and surveillance equipment, and four firearms" and two people were arrested.
      • Asai reiterated an earlier call for the mobility of social equity licenses throughout the state. He felt WSLCB could accomplish this “without legislation,” but he worried the proposal he’d seen “will not be a successful social equity program.”
      • Both Asai and Manning spoke to the board on August 3rd.
    • Vicki Christophersen, WACA Executive Director and Lobbyist (audio - 1m, WSLCB video, TVW video) 
      • Voicing gratitude for the board’s acceptance of both of WACA’s petitions, Christophersen recognized that the "scope of work" for the rulemaking team was large. Promising WACA members wanted to collaborate with the agency, she assured the board that the petitions they’d offered weren’t trying to "presuppose an outcome." 
      • Postman’s speech before WACA members at the opening of their conference on June 15th encouraged more collaboration as the relationship between the agency and industry organization had become strained following prominent legislative and regulatory disagreements over the prior year.

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