WSLCB - Board Caucus
(February 27, 2024) - Summary

Legislative and budget issues were top-of-mind for the board, but they also discussed an impending rulemaking project related to minors on the premises of producers and processors.

Here are some observations from the Tuesday February 27th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• With committee hearings concluded for the 2024 session, Director of Legislative Relations Marc Webster talked about bills still needing to be passed by one of the chambers.
  • HB 2151 - “Reassigning the accreditation of private cannabis testing laboratories from the department of ecology to the department of agriculture” (audio - <1m, video)
    • After being heard and recommended by the Washington State Senate Labor and Commerce Committee (WA Senate LC), Webster indicated the bill was included in a package pull of bills on February 23rd which added it to the Senate floor calendar. “It'll be good to get those passed and sent to the Governor,” he remarked.
  • HB 1453 - “Providing a tax exemption for medical cannabis patients” (audio - 1m, video)
    • Having been recommended by the WA Senate LC, and then amended in the Washington State Senate Ways and Means Committee (WA Senate WM) on February 26th, Webster said there’d been “a lot of work explaining what our fiscal note both did and did not say.” He credited the work of advocates, and described the amendment WA Senate WM added which sunset the tax exemption after ten years and mandated a tax preference performance review by the Joint Legislative Audit and Review Committee (JLARC). “Apparently that language killed it a few years back,” he said, referring to 2021 legislation SB 5004, whereas HB 1453 “doesn't have to go through any committees on the other side. It just has to go through concurrence.”
    • Webster didn’t believe requiring a JLARC study “would result in them not concurring, but we do have to wait and see…the indeterminate [fiscal] note might actually help the bill, but it's probably moot.”
  • SB 6271 - “Modifying the cannabis excise tax to consider THC concentration” (audio - 1m, video)
    • Following recommendation by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on February 19th, the Washington State House Finance Committee (WA House FIN) hosted a fiscal hearing for the measure on February 23rd, however the committee failed to act on the measure ahead of a legislative deadline on February 26th.
    • Webster commented that the bill directed the agency “to collect data and recommend some tax policies around…high potency THC and concentrates,” although the last amendment offered before legislative cutoff proposed to have analysis handled by staff at the Washington State Department of Revenue. “I'm not sure if that was part of the reason but the bill then died,” he stated, and felt it “just goes to show that even a popular, uncontroversial bill can…get hung up when there's simply no time to pivot, or change, or…try again.”
  • SB 5376 - "Allowing the sale of cannabis waste” (audio - <1m, video)
    • Webster acknowledged the bill had most recently been heard and recommended for passage by the Washington State House Appropriations Committee (WA House APP) on February 22nd and 26th, respectively.
  • SB 5950/HB 2104 - “Making 2023-2025 fiscal biennium supplemental operating appropriations” (audio - 2m, video)
    • When Board Chair David Postman asked about the status of the budget, Webster replied HB 2104 was “maybe the high water mark” for requested money for the social equity program at WSLCB or support for “things like the research team…and tribal, and all those things.” A “concern letter” from the Washington State Office of Financial Management (WA OFM) had been sent to lawmakers, but he said “it did not mention our issues, but we do hope we can get some help” from WA OFM to highlight them.
    • Postman called this a “disappointment,” and wondered if the Governor’s proposed budget had been the real “high water mark” for WSLCB needs. However, Webster referred to a “strange issue with the dedicated cannabis account funding which [was] fixed in the House and Senate” budget bills.
      • While the House and Senate bills started nearly identical to the proposed draft from the Washington State Office of the Governor, there were some unexplained differences, with Dedicated Cannabis Account (DCA) funds reduced to several agencies, possibly due to revenue projections having been lowered for fiscal year 2025. When proposed substitute drafts were released by fiscal committee chairs, all cut funds were renewed. Moreover, the House version included an additional half million dollars for the Washington Poison Center (WAPC) appropriation, and the Senate’s proposed version kept in place previously budgeted funding for cannabis laboratory accreditation likely to be changed with passage of HB 2151, “Reassigning the accreditation of private cannabis testing laboratories from the department of ecology to the department of agriculture [WSDA].”
        • At time of publication, that bill awaited final passage by the Senate.

• Webster also discussed bills which weren’t advanced in the legislature, but might be included as budget provisos to address issues like cannabis inversion and diversion, a data dashboard of regulated substances, or a tax study on “high THC [tetrahydrocannabinol]” products.
  • Bringing up legislation which was “dead” in the normal legislative process, Webster suggested there was a chance some issues could be advanced via budget proviso, rather than a change in law. He specified cannabis bills HB 2255 (“Concerning inversion and diversion of cannabis”) and HB 2182 (“Creating a data dashboard to track use of regulated substances”) as possible provisos (audio - 1m, video).
  • Having earlier suggested SB 6271 as a possible candidate proviso minutes earlier, Postman assumed “we're somewhat agnostic about where that lands…in terms of the work.” He wondered if the research might be directed to JLARC as he felt that “seems to be the most logical.” Webster was unsure, “from what I've heard…JLARC and the [Washington State] Institute for Public Policy both cited some capacity concerns about taking on something like that,” but WSLCB would be the primary source for data collection to support a report regardless of which state agency led the study  (audio - 1m, video).
    • “And I should just point out that the high potency THC bill itself, [HB] 2320” was “still moving, so there's other work related to this in that,” he added. Postman asked if it was possible that the tax study could be amended into HB 2320, a bill with new regulation, training, and research related to high THC products. Webster acknowledged that it was possible, but didn’t know whether lawmakers were considering that approach.
    • Later that day, the Washington State Senate Rules Committee (WA Senate RULE) voted to move HB 2320 to the Senate floor calendar for a potential second and third reading.

• Policy and Rules Coordinator Denise Laflamme briefed on the CR-101 to undertake rulemaking regarding Minors on Wholesale Licensed Premises based on a petition the board accepted in 2022.
  • At the height of the coronavirus pandemic in 2020, cannabis production remained active as schools and day care facilities closed. One implication was that the owners of licensed cannabis producers and processors who were parents or guardians of minors had limited options for childcare. To accommodate this, WSLCB announced they would “not enforce the provisions of WAC 314-55-015 for families who have children under the age of 16 on the licensed premises” providing that certain conditions were met. However, this allowance was ended in December 2022.
    • In August 2022, the board accepted a petition submitted by former licensed producer Crystal Oliver seeking rulemaking for the temporary policy to be made a permanent rule. However, after accepting the petition, work on the project was halted in the spring of 2023.
      • Oliver also filed a separate petition for rulemaking to permit contractors to work at a licensed production facility, “provided the person is over the age of 16 and not engaging in any work related directly to the production, processing, or sales of cannabis.”
    • On January 9th, Policy and Rules Manager Cassidy West acknowledged the petition and said staff were collecting feedback on it. On February 14th, West described how there had been many comments already received on the subject, and both of Oliver’s petitions would have staff presentations to officially start rulemaking on Wednesday February 28th.
  • During the caucus, Laflamme explained that she was on track to present the board with the CR-101s at the next day’s board meeting. “The first petition pertains to reinstating a temporary cannabis license allowance,” which she indicated “permitted minors under 16 years of age on the licensed premises of cannabis producers and processors provided certain conditions were met,” while a “second petition pertains to allowing employees of contractors who are under the age of 21 on licensed premises of cannabis producers and processors under certain conditions” in order to “work in such trades as construction, plumbing, electrical who maybe under 21 and employed as apprentices or trainees.” With the board’s approval, she would file the CR-101s and “an informal public comment period would open and would be open until March 28th.” Laflamme anticipated having proposed rules “to the board for approval in July after a couple of rounds of stakeholder feedback” (audio - 2m, video).
  • Postman was curious how the rules for minors on wholesale premises differed between alcohol and cannabis, “do we know…in a brewery could you come if you're an apprentice or something?” Laflamme said she’d spoken about that with Coordinator Daniel Jacobs, whom she called on to talk about “some analogous situation” with liquor licensing (audio - 3m, video).
    • Jacobs shared that RCW 66.44.316 and 318 involved those under 21 employed in the sale of alcohol, and those aged 18 to 21 working or interning that involved the “handling, transporting, and possessing beer and wine,” as well as other allowances for some persons under 21 studying viticulture. He noted that there had been expansions for “the 18-to-not-quite-21 folks who are working, like as an apprentice or for companies while still being supervised by someone that's 21 or over.” He felt this made a “framework to allow those folks onto liquor premises to do non-liquor-related work.”
    • When Postman pressed him on an equivalent policy involving minors under 18, Jacobs demurred, stating there were “rules about how the back access to the bathrooms needs to be in terms of going through areas that are restricted to minors,” and deferred “more to Licensing on that because they would know more details.” Postman encouraged further staff investigation on the issue.
      • Although no cannabis licenses allow for on-site consumption, wineries and breweries around Washington have been advertised as kid-friendly, while venues selling alcohol, including one WSLCB licensed inside a Washington State park, identify as ‘family friendly.’
  • Board Member Ollie Garrett wanted to better understand whether Community Workforce Agreements (CWA), also called Public Labor Agreements (PLA), “apply to this industry.” She promised to “dig deeper after this call to see how that applies” (audio - 1m, video).

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