WSLCB - Executive Management Team
(May 8, 2024) - Summary

2024-05-08 - WSLCB - Executive Management Team - Summary - Takeaways

Agency leaders discussed budget and legislative goals for 2025; rulemaking challenges; work with other states’ regulators; plus a new tribal compact.

Here are some observations from the Wednesday May 8th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team (EMT) public meeting.

My top 3 takeaways:

  • Already looking ahead to 2025, agency leaders brought up work to align their budget and policy requests ahead of the next legislative session, and questions about the transition to a new governor.
    • Director of Legislative Relations Marc Webster first noted how staff were “in the throes of implementing all of the work that the legislature gave us this past session” as well as some laws passed in 2023. He said division representatives had begun “hearing from legislators about ideas for next session, including…a number of things that were introduced but didn't pass in 2024.” Webster indicated that he and Director Will Lukela planned to begin meeting with lawmakers and he hoped to convey “what's important to you as a board and where you're going to be putting your effort in the coming session.” He noted the numerous “process steps” in securing approval from the governor’s office for agency request legislation, and that he’d been working with Chief Financial Officer (CFO) Rachel Swanner to ensure their budget and legislative requests were in alignment. Webster promised to schedule meetings with each board member to hear their priorities for 2025 (audio - 2m, video - WSLCB, video - TVW).
    • Later in the meeting, Deputy Director Toni Hood explained “proposals for the 2025-2027 biennial budget were due…on Friday,” and division leaders had submitted a “long wish list” with “approximately 20 requests…for money with FTEs [full time employee] or money for- without FTEs.” According to Hood, Swanner was putting together a “decision package” which combined some requests and “we'll be spending the next couple of weeks really diving into this and figuring out should we go forward” with each of the suggestions. Besides their 2025 budget request, Hood insisted their planning needed to take into account potential supplemental budget needs in 2026, contemplating a “three, four year long timeframe to figure out how the money coming to us can work with all of the projects that we'd like to do” (audio - 3m, video - WSLCB, video - TVW).
      • WSLCB officials hosted an August 2023 webinar which laid out the steps in the request bill process.
    • Board Member Jim Vollendroff was curious—since there would be a new Governor in 2025—how the transition in administration would impact the budget process: “what are some special considerations, or things that happen, or we should be considering” (audio - 4m, video - WSLCB, video - TVW).
      • Webster responded that Inslee’s office was still expected to put forward a proposed budget at the end of 2024, and shared that Lukela and Board Chair David Postman had “been involved in some of the discussions around the transition.” Webster added that there would be members of a “transition team” appointed by the governor-elect following the November general election.
      • Postman mentioned that board members served terms that didn’t overlap with the transition, but that there would be a significant overhaul to the makeup of the governor’s cabinet. He said agency leaders would “just go forward like we would anytime” with the proposed budget, and a new governor would “make it their own” upon entering office. Postman noted agency staff were preparing transition materials for new cabinet members, such as “a brief thing where we can talk about what are big issues [were], what we expect to happen.”
  • Legislative bills being implemented by WSLCB had updated materials or events shared, including projects on medical cannabis taxes, tetrahydrocannabinol (THC) regulation, and the social equity program.
    • HB 1453 Implementation (audio - 2m, video - WSLCB, video - TVW, Rulemaking Project)
      • Webster told the group that he was developing “legislative fact sheets” including one for the medical cannabis excise tax exemption, a law staff had discussed during the week’s board caucus and meeting. He stressed that the excise tax exemption would be applied differently by the Washington State Department of Revenue (WA DOR) than an earlier exemption for sales and use taxes. Webster relayed that more communications for patients and stores was in development and staff would continue to emphasize the requirements of HB 1453.
      • Webster further mentioned that Staff with the Washington Economic and Revenue Forecast Council (WA ERFC) gave “their best estimates” in a budget outlook that was “adopted in late April.”
      • Director of Policy and External Affairs Justin Nordhorn subsequently explained they were coordinating with DOH and were receiving questions from producer/processors on whether cannabis which had been tested to quality assurance and control standards could be “tested for the heavy metals to become medically compliant product” (audio - 2m, video - WSLCB, video - TVW).
        • Staff had agreed allowing heavy metals testing right away “will be much more fair for the sungrowers because they typically only have the one fall harvest, and so they would be using last year's or they would have to wait until this next year,” he remarked. Nordhorn anticipated licensees would begin getting their crops tested for heavy metals and distributed, calling the inquiries “a positive towards the medical cannabis area, because we're having some producers now express more interest.” 
        • However, “testing standards between DOH and LCB, [were] slightly different,” he claimed, “we raised the lot sizes up to 50 pounds and DOH…doesn't have that same testing size… I don't know if they'll be discussing that in their open rule development or not, but that could create…other areas of confusion or limitations for some licensees.”
          • DOH representatives previously went over their goals for the program and the rulemaking project during a September 2023 webinar and another on February 29th, as well as at a town hall hosted by the Cannabis Alliance in December 2023.
          • At time of publication, DOH rules didn’t offer a weight limit, instead referencing WSLCB rules.WAC 246-70-030(11) defined “lot” size based on the type of plant material as either:
            • (a) The flowers from one or more marijuana plant(s) of the same strain. A single lot of flowers cannot weigh more than allowed by the WSLCB in chapter 314-55 WAC; or
            • (b) The trim, leaves, or other plant matter from one or more marijuana plant(s). A single lot of trim, leaves, or other plant matter cannot weigh more than allowed by the WSLCB in chapter 314-55 WAC.
          • WAC 314-55-010(20) set lot sizes at five pounds for lots of cannabis flower, and 15 pounds for “leaves, trim and other plant matter.” WAC 246-70-050(c)(ii) doesn’t offer any additional requirements over the size of a lot, but noted “For screening a lot, three grams per lot.”
    • SB 5367 Implementation (audio - 3m, video - WSLCB, video - TVW, Rulemaking Project)
      • The new definitions and requirements in the THC law were “really complex,” said Nordhorn, and “some of the issues and brainstorming we've been trying to do don't always pan out to [be] viable. Particularly…we need to make sure everything is legally defensible that we put into the regulations.” His reading of “how the statute ended up…has created some, some challenges,” such as defining a “total THC concentration…we're going to be focusing on keeping all of the THC concentrations listed, but separate.”
      • Separate compounds—including delta-8-THC, delta-9-THC, and the isomer tetrahydrocannabivarin (THCV)—would be listed because the "consumer deserves to know what is in the product,” he said. However, serving sizes would be focused on delta-9-THC, remarked Nordhorn, adding regulators expected “very low levels of everything else.”
      • Nordhorn asserted WSLCB officials were attempting to mitigate new costs for cannabis licensees, and HB 1453 had originally been intended to “dry up the unregulated market of delta-8 that was being sold openly and to all ages. It wasn't to add extra burdens on the regulated industry.” Even with their efforts, Nordhorn asked board members to pass on any comments they were getting about higher costs under the revised draft rule language once it was published.
    • SB 5080 Implementation (audio - 2m, video - WSLCB, video - TVW, Rulemaking Project)
      • Nordhorn informed the board he’d be leading the focus groups on the law modifying the social equity program on Wednesday May 15th and another on May 22nd. His aim was to collect input on the “actual rule language [and the revised scoring rubric] instead of…policy areas that may not impact how the language is being crafted and developed.” Nordhorn mentioned that WSLCB would release a survey following the focus groups, and that nothing was finalized. “So even after the CR-102 gets filed those are proposed rules, and we still get to hear feedback from stakeholders,” he said. Similar to SB 5367, interested parties “see some language and [assume] this must be the end result. And it's really not,” explained Nordhorn, clarifying that staff used an “iterative process” to create new rules.
        • During that morning’s board meeting, several members of the public offered comments around the revised rubric that was publicly introduced during the prior board meeting on April 24th. Remarks were particularly harsh of changes which expanded applicant criteria from “past cannabis convictions to include any drug offense.” 
      • Communications Director Brian Smith mentioned that Associated Press reporter Gene Johnson’s April 20th article on the equity program “originated with us.” He commented that Board Member Ollie Garrett and Licensing Director Becky Smith had been interviewed by Johnson, but “for various reasons that got pushed out…but I thought the story turned out fairly well” (audio - 6m, video - WSLCB, video - TVW).
    • Nordhorn credited Strategy and Performance Analyst Mallori Hays with creating a program within Microsoft Lists for accepting internal feedback on possible rule changes. This offered “social platform engagement for internal folks where…if they see somebody came up with a suggestion, they can either like it or dislike it,” which he said was information that could “come into play in the evaluation o[f] priorities” related to a project. Nordhorn stated there were also automated features like confirmation their suggestion had been submitted, and the ability to get updates as a rule project was advanced (audio - 3m, video - WSLCB, video - TVW).

Information Set