WSLCB - Board Meeting
(October 2, 2019) - Summary

The Board approved proposed rules for vapor products and heard testimony calling for increased opportunities for African Americans in the 502 market.

Here are some observations from the Wednesday October 2nd Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

  • The Board approved CR-102 proposed rules on vapor products to implement 2019 legislation and align the agency’s vapor ruleset with upcoming cannabis penalty and true party of interest reforms (audio - 4m).
    • During board caucus the day before, Cannabis Policy and Rules Coordinator Kathy Hoffman indicated the CR-102 on vapor products preceded and was largely separate from on-going Department of Health (DOH) and federal investigations around product ingredients linked to an outbreak of severe lung illness cases nationwide and in Washington. WSLCB’s involvement escalated following a press conference and executive order from Governor Jay Inslee on Friday September 27th calling for action from the Washington State Board of Health (SBOH) and legislature.
      • At the time of publication, the SBOH had begun accepting public comments on prospective vapor actions. The SBOH’s site noted “written comments received before 12 noon on Friday, 10/4 will be included in the meeting packet, 2) comments received after 12 noon on Friday, 10/4 will be printed and given to Board members the day of the meeting, and 3) public comments the Board receives will be posted to our website.” While the agenda for the SBOH meeting at the Seattle Airport Marriott allocated one hour to hear public testimony, the Board encouraged written comments in anticipation of “a larger than normal crowd.”
    • Hoffman began her briefing by requesting approval to file a CR-102 proposing amendments to WAC 314-35 saying they “apply only to vapor products as defined in RCW 70.345.010(19): “any noncombustible product that may contain nicotine and that employs a heating element, power source, electronic circuit, or other electronic, chemical, or mechanical means, regardless of shape or size, that can be used to produce vapor or aerosol from a solution or other substance.”
      • Hoffman offered a clear delineation between vapor products and marijuana vapor products, saying “these rules do not apply to any product that meets the definition of ‘marijuana’” as defined in RCW 69.50.101(y). However, that definition does not clearly situate other cannabinoid vapor products containing < 0.3% THC on a dry weight basis.
    • Hoffman explained that the proposed rules implemented HB 1874 on vapor product taxation and HB 1074, the “Tobacco 21” legislation which raised the buying age for tobacco and vapor products from 18 to 21 years. She said the rule package would also “increase the recordkeeping requirements, clarify vapor product licensing requirements including qualification, application denials, insurance requirements, license suspension, and revocation.” Furthermore, the proposed rules would “establish transportation requirements. They establish the ability for the [WS]LCB to seize both cannabinoid vapor products and vapor products and establish forfeiture guidelines.” Hoffman concluded by saying the rules created “a penalty structure that aligns with the current structure reform” for Cannabis Penalties.
    • Before asking for a vote by the Board, Hoffman said she intended to amend the Small Business Economic Impact Statement (SBEIS) to note the agency licensed 3,869 entities “with physical addresses in the state” to clarify “how [WSLCB] came to the figure that we did.” The CR-102 cited an expected “minor cost” for each entity averaging $183.99.
    • The Board voted to move the proposed rule change forward. The agency would continue to solicit written comments on the proposal leading up to a public hearing followed by a request to the Board to adopt the final CR-103 rules. No specific timeline was offered but all indications pointed to an expedited rulemaking timeline.
  • Cannabis Policy and Rules Coordinator Kathy Hoffman shared an update on all open rulemaking projects (audio - 5m).
    • Hoffman’s last cannabis rulemaking update was during the September 18th Board Meeting.
    • Cannabis Penalties (WSR 18-22-099). Hoffman said agency staff released conceptual draft rules to stakeholders on August 29th. She reported a sparsely attended listen and learn session on September 26th was concluded at record speed and the two comments received were “excellent.” A second listen and learn session on the revised penalty matrix was “currently penciled in” for October 31st and would be announced within the next week. Hoffman expected to request Board approval to file the CR-102 in mid-November followed by the CR-103 becoming effective “the first of the year” in 2020.
    • Voluntary Compliance Program (WSR 19-15-074). Hoffman admitted she had not completed forming the project team yet due to her “efforts being concentrated in the vapor space for the last several weeks.”
    • True Party of Interest (TPI, WSR 18-22-054). Hoffman stated that the rulemaking project’s external work group planned to meet again on October 22nd and that a “working definition” for “control” existed, something WSLCB had labored for some time to devise. Other definitions like "employee" were emerging as issues causing Hoffman to reluctantly suggest this project “may have to move at a different pace” from the Cannabis Penalties. Hoffman had previously hoped to keep both rulemaking projects tied together but planned to request TPI changes be approved “shortly after” the reformed penalties. She anticipated the work required to line up the CR-102 proposed rules would conclude in late November or early December.
    • Quality Assurance (QA) Testing and Product Requirements (WSR 18-17-041). Hoffman looked ahead to final refinement of the proposed QA ruleset at an internal work group meeting scheduled for the following week. Staff was considering how they could support the governor’s executive order on vapor products including how to “weave in” rules around ingredient disclosure in a way that “points back” to open packaging and labeling (PAL) rules. Hoffman expected a CR-102 could be filed by mid-November.
    • PAL (WSR 19-12-029). In part implementing SB 5298, the next step for the PAL rulemaking project was a listen and learn session scheduled for Friday October 11th. Hoffman said she’d only received one comment in response to the announcement of the session distributed on September 26th, but did not mention the separate matrices of comments compiled from industry stakeholders and the prevention community also distributed with that announcement. Notably, Hoffman shared language added into the draft conceptual rules “requiring a listing of additives to concentrates” which she quoted: “a complete list of any other chemicals, compounds, additives, thickening agents, terpenes, or other substances used to produce or added to the concentrate or extract at any point of production. A copy of the complete list of chemicals, compounds, additives, thickening agents, terpenes, or other substances must be kept and maintained at the facility in which the marijuana concentrates are processed.” She added this language had been added prior to the governor’s executive order regarding vapor products and was “in alignment” with the Executive’s action. Hoffman planned to move ahead with a CR-102 by October 30th with a CR-103 to follow by the end of 2019.
      • WSLCB reached out to licensees to ensure they disclose “all of the compounds, additives that are used in vape products in our industry right now.” As of January 1st, WAC 314-55-105(2)(c)(ii)(B) required additional disclosures on product labels: “Any other chemicals or compounds used to produce or were added to the concentrate or extract.”
      • PAL had been a long-simmering subject of dispute between the WSLCB, industry, and the prevention community which occasionally boiled over. The agency drew swift resistance from a surprise action in October 2018 to re-interpret PAL rules around marijuana infused edibles (MIE) which galvanized and united trade associations before dividing them. A bevy of board interim policies followed, most recently updated in July. Cannabis Observer conjectures that any seeming or real lack of scrutiny of the 38-page redesign of the entire PAL section of the WAC (51 pages in redline) in advance of a day-long listen and learn session could be reflective of the prioritization of other crises in a still comparatively new industry historically beset by reactive policymaking in addition to continual revision and expansion of law and regulation. At Cannabis Observer, that perspective enhances our compassion for all parties involved and motivates us to continue doing the work we do to help.
    • Cannabis Production and Canopy (WSR 18-01-058). Hoffman did not propose withdrawing or updating canopy rules, despite forecasting the move a day earlier.
  • During general public comment, citizens called for increased opportunities for African Americans in the 502 market and raised concerns about definitions of product ingredients as the State plowed into emergency rulemaking for vapor products.
    • Aaron Barfield, founder of Black Excellence in Cannabis (BEC, audio - 7m). Barfield indicated that several of the group’s members were present to “give input on the lack of social equity in Washington’s cannabis industry.
      • He described his experience with WSLCB as a “nightmare that has gone on for almost five years now” after operating a pre-502 medical cannabis collective. Despite “following the law and providing a valuable service” Barfield had been fearful of opening a licensed retail establishment. He had changed his collective’s name multiple times to “avoid the scrutiny” of police and regulators that came with positive publicity. “For a black man in the cannabis industry at that time publicity was nearly a death sentence,” he explained.
      • By the time I-502 passed in 2012, Barfield said he’d already “seen how the police and other regulating agencies were persecuting black dispensary owners.” He avoided applying for a license initially due to concerns over “discrimination and targeting” by the agency and law enforcement. Barfield said he found a Caucasian partner, Miles Alexander, to help open a retail location in Renton because there was “a better chance of success without me on the application.”
      • Once awarded, his name was added onto the license and as a licensee he observed his “requests for guidance” from WSLCB were regularly ignored. When Barfield got responses he was “consistently given incorrect, misleading or delayed information.”
      • A subsequent investor, James Buchanan, told WSLCB that Alexander was allegedly growing cannabis as a licensed retailer and the agency told Barfield and Buchanan to remove Alexander from the license. Alexander sued her business partners after being voted out. Barfield said that he’d since been “working to expand the only majority black-owned store in Washington,” Emerald Haze. Barfield claimed he had put forward applications for other retail locations which had earned “priority one” status but were downgraded. He also claimed WSLCB had assisted Alexander in her successful lawsuit which resulted in taking over Emerald Haze and “continuing to jeopardize our license without consequence.”
      • Barfiled concluded that African Americans who had been part of the cannabis industry before the state’s legal market had been “forced to take on unsuitable partners to overcome the excessive barriers to entry put in place” by WSLCB. He felt the absence of black-owned cannabis businesses in the state “has become so shamefully embarrassing that the state is now finally being pressured into doing something about the problem.” Barfield said the agency hadn’t “fulfilled its responsibility to implement a fair and equitable system which represented all members of our community. Instead, we’re left with an [WS]LCB agency that its own officers publicly describe as a toxic environment.” He asserted “blacks are being exiled from an industry that we helped to build.”
      • Barfield reported that he’d asked an agency ”communications officer” why WSLCB wasn’t seeking input for a social equity program from individuals most directly impacted by the war on drugs as well as the agency’s past and current policies. He said the officer claimed to be uncertain how to reach Barfield, who assured the Board that Black Excellence in Cannabis stood ready to offer assistance. Specifically, he suggested the agency “immediately begin righting the wrongs done to black pioneers from the Washington cannabis community and any true social equity program will include funding for education and training programs and the creation of a review board for monitoring [WS]LCB enforcement activities.”
    • Brionne Corbray, self-identified as “the first African-American to open up a medical marijuana collective” (audio - 5m). Corbray claimed he’d been targeted by the federal government and Seattle Mayor Jenny Durkan in her former role as U.S. Attorney for the Western District of Washington.
      • Corbray said that despite getting a business license for his collective from the Secretary of State (SOS) he was “targeted and put out of business” adding federal officials threatened him with prison time and “threatened to kill me, literally.”
      • Corbray summarized government treatment of African American cannabis entrepreneurs as the "Crow syndrome" whereby individuals are made an example of to intimidate a community of color.
      • Corbray said he was participating in a documentary about WSLCB’s licensing process and said he’d sue the state if denied one.
      • “I can’t even tell you how many [African Americans] have been to prison over marijuana,” Corbray added, saying he was “owed something” for the treatment from WSLCB which he believed resulted in federal scrutiny of his business. “We are here to fight for our seat back at the table,” Corbray told the Board, offering “fair warning” from disenfranchised communities.
    • Tim Goodman, a former retail store General Manager (audio - 4m). Goodman added to earlier comments and estimated 10-15 retail stores were owned by African Americans out of hundreds the state licensed. He saw it as a serious injustice given that African Americans “led the way for being locked up for it when it was illegal.” Goodman added that he’d seen less educated Caucasian employees promoted past him and encouraged attendees to “take a deep look at your culture.”
    • Don Skakie, a patient activist from Renton (audio - 3m). Skakie last spoke to the Board at the September 18th Board Meeting where he called attention to discrepancies between alcohol and cannabis packaging requirements. Following up on Hoffman’s presentation, Skakie suggested the agency draw a distinction between "naturally-occurring" compounds like plant terpenes and "value-added” ingredients like artificial flavoring added to concentrates. He cautioned against “over-burden[ing]” cannabis licensees by “having too fine a point on what is naturally occurring.”
    • Following public comments, Rushford emphasized that “social equity is one of the Board’s priorities and we’re taking a number of steps with the legislative process in 2020. We greatly appreciate the comments made here today and invite you into our rulemaking process and the opportunities that we have. But we also want to know how to reach you when those opportunities are available.”