WSLCB - Executive Management Team
(July 10, 2019) - Summary

Agency leadership discussed diversity, equity, and inclusion initiatives; the lifting of the moratorium in Clark County; and an interim study on taxation by potency.

Here are some observations from the Wednesday July 10th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team public meeting.

My top 3 takeaways:

  • Agency leadership hosted a long discussion on small business opportunities for cannabis licensees (audio – 37m).
    • This conversation followed up on the work session held during the May 1st Executive Management Team (EMT) public meeting.
    • Director of Licensing Becky Smith updated the group on small business opportunities identified by her team and “diversity, equity, and inclusion” possibilities. She described progress on the following action items:
      • “Expanding online resources and toolkits.” Smith said this work was underway already, noting WSLCB had organized web resources and informational toolkits before. She added that this would include updating the agency’s business portal.
      • “Continuing to enhance outreach to diverse licensees.” Smith said Kim Sauer, Program Manager for the agency’s Responsible Vendor Program, was continuing to host informational events but aimed for “bigger reach” to bring in more diverse licensees via outreach to organizations like Washington’s Commission on Hispanic Affairs (CHA) or Department of Veterans Affairs (WDVA). Director Rick Garza added that these organizations would have better lists of minority-owned businesses and minority community groups.
      • “Connect with and conduct outreach to community organizations.” Smith stated that the Office of Minority and Women’s Business Enterprises (OMWBE) suggested outreach to “social justice groups.” Smith said this was being arranged and could involve in-person visits to organization meetings. She observed that WSLCB needed better understanding of groups which didn’t have cannabis licenses already. Smith anticipated meeting with the Washington Civil Rights Coalition (WACRC) among other groups. Garza suggested looking for potential agency staff with diverse language skills through these groups in addition to looking for prospective licensees.
      • “Survey licensees further to understand the demographic data and resources.” Smith said staff had reviewed existing retailer demographic data but “we haven’t done anything for veterans” or minority representation aside from race. Board Member Ollie Garrett asked how comfortable Smith was with available data sources. Smith said they continued to work on producer and processor demographics but hadn’t been able to dedicate staff to the review since it was started by Licensing Supervisor Frank O’Dell.
      • “Increase the number of licensing forms and applications available in other languages.” Smith continued that versions of documents in languages like Spanish or Korean “should be done” by September and would be an “easy lift” for the agency.
      • “Increase language line access to staff and communicate that to stakeholders and staff.” Smith also planned to increase awareness of a “language line” available to WSLCB staff to explain rules and answer questions in languages besides English. The agency had staff that could speak Spanish and Korean, but Smith highlighted the absence of Russian language capabilities which would assist “a big [Russian] community down south in Vancouver.”
      • “Ensure efforts are well communicated throughout the agency.” The agency’s “diversity committee” planned to notify agency staff of the availability of documents and forms in languages besides English to enhance in-person outreach.
    • Next, Smith said the Licensing division was “considering a new marijuana application system which supports Washington State entrepreneurs, small businesses, women, veterans, and communities of color.” She was planning education outreach with OMWBE including a “lessons learned” session on the lottery and priority application processes. Smith noted that “internal review” of these processes by staff had occurred but no other external feedback had been solicited. Garrett asked about WSLCB’s ability to contact applicants who weren’t awarded licenses in earlier windows. Smith said agency staff had contact information for applicants who were admitted to the initial lottery, but not for applicants to the priority process of the legislated merger of the recreational and medical markets in 2016. Garza added that over 7000 applications had been received for the initial license lottery. He was certain the next application process wouldn’t follow the lottery or priority methods and would address those systems’ flaws. Garrett mentioned a report produced for the agency by an outside consultant which cited problems in the application process as a key barrier to participation by diverse entrepreneurs.
    • Garza asked Smith to provide a timeline for acquisition of data on minority representation amongst licensed producers and processors. Garrett felt this information was crucial to not only promote a diverse industry, but also ensure cannabis businesses were representative of their communities.
    • Becky Smith expected to survey cities and counties to find out if they want more licensed cannabis businesses by working with the Association of Washington Cities (AWC) or directly surveying jurisdictions. She also planned to review state population data to potentially recalculate retail store allotments or grant local jurisdictions control to increase their total stores as desired – an interesting interpretation of WSLCB’s authority to determine the maximum number of retail outlets per county in RCW 69.50.345(2). Garza added that it would be years before the agency had new federal census data, leaving them reliant on information from the 2010 Census and demographic estimates from the Office of Financial Management (OFM). Garrett said she’d seen candidates for local office asked about increasing the retail caps by constituents from minority communities.
    • Smith said she was working to “determine potential pathways for agency request legislation” with Director of Legislative Relations Chris Thompson. A key issue was to consider small or minority business impacts when WSLCB “changes a policy or procedure.” Thompson said he was in “early stage discussions” with Garza and Tribal Liaison Brett Cain on a social equity program under a potential revised licensure process. Garza added that they’d be looking at how an equity program would impact or be implemented by different WSLCB divisions. Thompson said request legislation from the agency must meet a September 13th deadline.
    • Garrett wondered if the agency could set up technical assistance or access to capital for applicants before they applied. Thompson said the agency was interested, prompting Garza to mention the call with Prosper Portland during the previous day’s Board Caucus. Garza added some licensees had already expressed interest in lending their expertise to such efforts. Thompson indicated local governments sometimes set aside funds for business development. “Whoever gets an opportunity at this point they’re ready,” Garrett said, outlining her expectations for the support offered by an equity program: “they will, hopefully, be successful.”
    • Director of Communications Brian Smith encouraged outreach to the Department of Commerce (DOC) about business assistance. Garrett replied that DOC Policy and Planning Director Cheryl Smith had reached out already and was “very knowledgeable.”
  • The group discussed the end of the cannabis business moratorium in Clark County.
    • On July 2nd, the Clark County Council in southwest Washington lifted the moratorium on cannabis businesses which had covered the county’s unincorporated territory since 2014. The Clark County cities of Woodland and Camas continue to ban legal cannabis stores.
    • The new code’s effects include:
      • Stores will be allowed to open on January 1st, 2020.
      • The adopted code “maintains the prohibition on marijuana establishments within 1,000 feet of an elementary or secondary school or public playground, as required by state law, but reduces the buffer to 500 feet for child care centers, libraries, churches, transit centers and recreational facilities.”
      • It adds “a 500 foot buffer for substance use disorder treatment facilities.” 
      • Lastly, retailers “will be allowed to be open until 11 pm, the same as the city of Vancouver.”
    • The subject came up during the lengthy conversation about small business opportunities (audio – 37m, ~21m). Garrett wanted to know if there were already interested businesses. Becky Smith replied that there were three licensees holding retail title certificates in the county who could be granted final approval to open. Management Analyst Kaitlin Leeberg promised to reach out to those certificate holders soon.
    • Becky Smith returned to this topic later, saying Clark County had retailers waiting to open but no producers or processors. As the jurisdiction’s ban had been in place when WSLCB upped the cap to incorporate medical dispensaries, the agency hadn’t allocated more retailers but could consider it should the county want more stores. Smith indicated that while there were three retail title certificate holders, four were allotted – leaving one unclaimed retail license in Clark County (audio – 3m).
  • The agency was undertaking the legislature’s interim feasibility study on taxation of cannabis by potency, preparing to announce an emergency suspension, and helping arrange listening sessions to inform independent law enforcement consultants hired to assess WSLCB practice and culture.
    • Thompson discussed the legislatively mandated feasibility study of cannabis taxation based on potency (audio – 6m).
      • The study was first publicly discussed during the May 15th EMT meeting after the legislature allocated $100,000 to the agency specifically for the study through a proviso in the state budget.
      • Thompson reported “robust internal discussions” had led to a project plan for the study, a timeline, and “potential workgroup members.” He said the agency had “solicited some outside consultant support to look at what would be the impact on industry especially.” Thompson felt there was “a lot of work to do” to meet the December 1st deadline mandated by the legislature.
      • Garrett wanted to know about potential state revenue impact. Thompson said that would be considered, but the first step was gauging feasibility, “technically, operationally, administratively for us.” Were it feasible, Thompson speculated, the next question would be impact on tax revenue.
      • Board Member Russ Hauge asked if the move to a potency tax had to be revenue neutral. Thompson responded that the appropriation didn’t say so. Hauge then wondered whether the study could help answer questions about the impact of excise tax on medical cannabis products. Thompson answered that medically compliant products with higher potency was an issue the study could consider. Hauge then asked to be included in the workgroup’s meetings which Thompson expected to pick up between August and September.
      • Garrett asked if the study could suggest revenue go to an equity program. Thompson agreed the workgroup could “have some conversations” about it, but cautioned there was no shortage of parties interested in “a bigger share” of cannabis tax revenue.
    • Brian Smith briefly mentioned that an emergency suspension would soon be announced after the agency verified some “squishy” information. He did not name the suspended business nor indicate if it was a cannabis licensee. WSLCB Communications typically announces emergency suspensions via press release (audio – 3m).
    • Brian Smith also reported on agency efforts to help set up two “engaged discussion[s]” with licensees and the public on behalf of Hillard Heintze, the independent consultant hired to assess WSLCB law enforcement practice and culture.
      • In March, the agency issued an RFP for an independent consultant to evaluate the WSLCB Enforcement and Education division in an attempt to stave off pressure from the legislature expressed in SB 5318.
      • Chicago-based Hillard Heintze had been conducting interviews with selected licensees and their colleagues for at least the past month. Cannabis Observer founder Gregory Foster was invited to accompany a licensee during one of these interviews.
      • To gather additional feedback, the consulting firm requested logistical assistance setting up two 90-minute public listening sessions. The events will be hosted at Green River College on July 30th and Spokane Community College on July 31st.
      • Smith anticipated an invitation from the agency would be sent to the regulated community the following week. Garza added the events were requested by Hillard Heintze to engage licensees who may not be members of cannabis trade groups.