WSLCB - Special Board Meeting
(June 18, 2024) - Summary

2024-06-18 - WSLCB - Special Board Meeting - Summary - Takeaways

The board was presented with a rulemaking petition on packaging and three on social equity license mobility; they approved updates for medical cannabis endorsements and heard public comments.

Here are some observations from the Tuesday June 18th Washington State Liquor and Cannabis Board (WSLCB) Special Board Meeting.

My top 4 takeaways:

  • Policy and Rules Coordinator Jeff Kildahl presented a recommendation on a petition for rulemaking regarding Cylindrical Cannabis Packaging (audio - 7m, video - WSLCB, video - TVW, Rulemaking Project).
    • Kildahl started by acknowledging the April 29th petition from Michael Lucero “requests changes to WAC 314-55-106 regarding what the so called principal display panel of a cylinder shaped cannabis package, or container” should be. He mentioned how WSLCB staff partnered with other state agencies to update packaging and labeling (PAL) rules in 2018 in order to “streamline packaging and labeling requirements for cannabis.” That rulemaking also “addressed warning labels, the requirements…especially infused cannabis products. As a result, WAC 314-55-105 and WAC 314-55-106 were amended to require all cannabis products to include the cannabis universal symbol displayed on the principal display panel of the product package,” Kildahl said, as well as a “not-for-kids warning symbol created by the Washington Poison Center” for edible products.
    • “In analysis, the board has clear authority under RCW 69.50.345(7) to determine the nature, form, and capacity of all containers to be used by licensees to contain cannabis, cannabis concentrates, usable cannabis, and cannabis infused products,” established Kildahl. He noted how the “term ‘principal display panel’ is commonly used in the food industry and other businesses to describe the position of labeling on packaged foods and other consumer products and is defined currently in WAC 314-55-106(3) as the portions of the surface of the immediate container or any outer container or wrapping, which bears the labeling designed to be most prominently displayed, shown, presented or examined under conditions of retail sale.” The agency guide on labeling went into more detail on how this was to be applied to cylindrical containers, he explained, including that “a curved surface is the…front main area and does not wrap around to the sides or the back of the packaging or labeling.”
    • The petitioner was seeking to “clarify the principal display panel is the oblong portion of the cylinder versus the top or bottom, and the petition states that the effect of the requested rule change would be that cannabis processors could compliantly sell preroll tubes with a warning symbol appropriately placed on the cylinder of the tube.” However, Kildahl and staff had determined that this was already the case, and the “warning symbol must appear on this principal display panel positioned on the curved surface of the cylinder and not on the top or bottom of the cylinder as the petition suggests.” He argued that since “WAC 314-55-106(3) required the position of the principal display panel to be designed to be most prominently displayed,” and the “universal cannabis warning symbol for cylindrical packaging must appear on the principal display panel, meaning it must be positioned on the curved or oblong surface of the packaging.”
    • As requiring placement of the warning symbol on the principal display panel of products was already in rule, Kildahl relayed the recommendation of staff to deny the petition.
    • Board Chair David Postman thanked staffers for their work (audio - <1m, video - WSLCB, video - TVW) and board members then voted to deny the petition (audio - <1m, video - WSLCB, video - TVW).
  • Three petitions sought similar rule changes to allow for one-time, statewide mobility of Social Equity Licenses awarded prior to the passage of SB 5080.
    • Policy and Rules Manager Cassidy West presented the petitions together, as they had all come from social equity in cannabis program applicants seeking to “modify the social equity license mobility requirements in WAC 314-55-570” so they could relocate their licenses like those being awarded after passage of SB 5080. “However, under the current rules license mobility requirements are more restrictive,” she remarked (audio - 5m, video - WSLCB, video - TVW).
      • West reviewed the background of the 2023 law which changed the equity program, including by allowing successful applicants to move their license out of the city or county to which it was allotted to any city which would permit siting of the business. This was needed as some retailers had been barred from operating “due to local zoning restrictions and bans preventing the license holders from securing a location,” she said. West mentioned that the petitions had been received by agency staff on May 17th , May 21st, and May 23rd, seeking to “allow statewide license mobility for all social equity applicants or repealing the rule entirely” as the “current rules conflict with the amended statute.”
      • The issue for the board was whether to “amend or repeal WAC 314-55-570(4)(d) in response to the changes made to licensed mobility resulting from 5080,” West commented. She listed factors agency representatives weighed in evaluating the petitions, and acknowledged the matter was within the scope of authority of both SB 5080 and the 2020 legislation creating the program, HB 2870.
      • Moreover, West noted WSLCB staff were still working to implement rulemaking related to SB 5080, “and have planned additional stakeholder engagement to gather feedback on petitioners’ request.” She added that a fourth petition had been submitted seeking the change, “as well as written comments on this topic. As such, there's no need for an analysis at this time. If accepted, the proposed changes would be considered as far as the ongoing rulemaking activity for 5080.”
    • Postman inquired whether separate motions were needed to vote on each petition and received confirmation from counsel with the Washington State Office of the Attorney General (WA OAG) that a single vote was acceptable (audio - 1m, video - WSLCBvideo - TVW). Board members then voted to accept the petitions as part of the existing SB 5080 implementation (audio - <1m, video - WSLCB, video - TVW).
  • The board adopted a CR-103 with rule changes related to retail medical cannabis endorsements (audio - 9m, video - WSLCB, video - TVW, Rulemaking Project).
    • Policy and Rules Coordinator Daniel Jacobs explained that with board approval “final rules will be filed today and the changes to WAC 314-55-080 will be effective July 19.” He observed that the petition was submitted by patient John Kingsbury in early 2023 “to address requirements for retailers to maintain their medical cannabis endorsements.”
    • Following consultation with staff from the Washington State Department of Health (DOH), Jacobs reported that draft rule language had incorporated responses from focus groups on March 11th and 14th hosted by agency staff. He listed off the “three main changes that are being done with this rule language.”
      • “Firstly, a new requirement [wherever] store hours are currently required to be posted, the cannabis consultant hours also have to be posted. This requirement can be satisfied by posting a window of time during which appointments can be made to meet with the cannabis consultant.”
      • “The second change is to the…existing in stock requirement that states that endorsement holders have to have medically compliant product in stock. The rule language is being amended to state that that requirement can be satisfied by having [DOH] medical product on order.”
      • “The third main change is adding in a variable cure period to allow endorsement holders to fix whatever issue they're notified of being deficient in. This cure period will range from seven to 30 calendar days depending on the violation at issue.”
    • Jacobs conveyed that the existing rules for endorsement holders covered their staffing, stocking, and timeframe to cure compliance failures. “Additionally, if a licensee has their endorsement discontinued after this cure period has passed,” he indicated that if they tried to “get their endorsement again, they'll have to submit additional information showing that the original non compliance is no longer an issue.”
    • Following filing of the CR-102 on April 24th, Jacobs shared that WSLCB had “received four written comments, including specific suggestions from, from advocacy groups about specifically requiring a retailer to fill out the endorsement form to get the endorsement, and also asking that this form include a space asking to identify the cannabis consultant at the time of application.”
      • The endorsement application form, LIQ-1276, would need to be amended “as a result of this rulemaking to accurately reflect at a minimum the new cannabis consultant hours.” However, Jacobs felt the application form “already includes the following language above the licensee’s signature block, it says quote, ‘I understand that there are continuing requirements and the failure to meet any of these requirements at any time may result in the revocation of this authorization by the LCB,’” he described as “a de facto attestation.” While the form wouldn’t be changed, he told board members the “Licensing division has revised its process for, for processing medical cannabis endorsements to now requiring the submission of the cannabis consultant certificate with the LIQ-1276 form.”
      • Under another new procedure Jacobs identified, anytime Enforcement and Education staff conducted a “final check through before a retail licensee opens their doors they provide additional information about the requirements on holding a medical cannabis endorsement” as a reminder for the licensee, Jacobs said.
    • Representatives of the Enforcement and Education division had “contacted 26 licensees beginning in January 2024, who hadn't issued any recognition cards during the previous quarter” according to DOH records, he stated. According to Jacobs, “16 of the licensees asked to surrender their medical cannabis endorsements and the remaining 10 have provided evidence of their ongoing compliance.” He added that the LIQ-1276 forms were unlikely to be changed given the “improved compliance results that have been achieved from the new cross agency and cross divisional processes that have been put in place.”
    • Jacobs lauded the process improvements by WSLCB and DOH, arguing the changes helped minimize the rulemaking workload. “Lastly, I also wanted to mention that since [HB] 1453  (Providing a [37% excise] tax exemption for medical cannabis patients), has become effective licensing has seen a dramatic increase in the number of retailers applying for medical cannabis endorsements.” He said the high point in the first half of 2024 had been 17 in one month, but “in the past two months, it's been 40.” Jacobs concluded his remarks with a call for board members to adopt the new rules.
    • Postman asked for clarification that a “licensee could not get that endorsement unless they have the information that had been requested [including] a cannabis consultant on staff.” Jacobs responded that the licensee would need the consultant’s DOH certification, and staff would presume good faith, “assuming that a licensee isn't going to submit some other person's cannabis certificate.” Postman followed up to see when WSLCB staff would verify a consultant’s certification and employment with an endorsed retailer. Jacobs stated that it could depend on whether it was a new retailer or existing endorsement holder. Postman was satisfied this system would address the feedback they’d received on the matter (audio - 2m, video - WSLCB, video - TVW).
    • Postman was also curious about the process changes and how they related to staff workload, understanding that with adoption of the new rules “there is no further workload because they're already doing it.” Jacobs agreed, and didn’t think endorsement attestations meant the “volume of applications is going to increase the amount of time that licensing staff are gonna have to spend on each application, when we're already seeing returns on investment for the new process.” Postman also believed the changes were “increasing the visibility of the program and our enforcement of it,” and complimented the work of Jacobs and staff on the project (audio - 1m, video - WSLCB, video - TVW).
    • Board members voted to adopt the changes to medical cannabis retail endorsements (audio - 1m, video - WSLCB, video - TVW).
  • Members of the public spoke about unregulated cannabis products and labeling delays, as well as concerns with how licensing was being handled in the social equity program.
    • Vicki Christophersen, Washington CannaBusiness Association (WACA) Executive Director and Lobbyist (audio - 4m, video - WSLCB, video - TVW).
      • Christophersen thanked agency representatives who’d attended the organization’s spring meeting. She then relayed, “there continues to be a really strong concern about the rampant continued availability of unregulated, untested, untaxed product in outlets across our state and online.” She called this, “unfair competition to our industry [which] presents a threat to the health and safety of our children and to all of us across our state.”
      • While the agency was still conducting rulemaking to implement SB 5367, cannabis regulation legislation from 2023, Christophersen said the law “expanded the definition of [tetrahydrocannabinol] THC to try to capture these products that are outside the regulated market.” However, she argued WSLCB leaders seemed “more focused on expanding testing and requirements on our regulated industry, rather than the sense of urgency around getting the products outside the regulated industry.” Christophersen said WACA members had submitted comments calling for “a renewed focus and sense of urgency around this real problem.”
      • Christophersen also wanted WSLCB staff to work with counterparts at DOH and the Washington State Department of Agriculture (WSDA) “to keep an eye to the integrity of the regulated market as we work to implement 1453.” She noted when “listening to KZOK this weekend, [she] heard some very interesting ads, targeting those that were promised a medical card. And I think we just need to be really careful and work very carefully to make sure that only those intended to get medical cards are getting them and that we're keeping the integrity of the system in mind while we implement this bill.”
    • Brooke Davies, WACA Deputy Director (audio - 4m, video - WSLCB, video - TVW)
      • Davies suggested a PAL conversation at their spring meeting tied in with comments on labeling delays made by Licensing staff on June 12th. She indicated WACA member concerns “specific to edible products that are already approved that plan to seek…DOH compliance,” and whether such items would have to restart the PAL approval process. As staff had made clear that they were dealing with a high volume of requests for labeling approval, Davies reasoned that licensees whose labels had already been approved didn’t need a second review by WSLCB to add a supplemental sticker from DOH. She indicated she’d emailed board members “documenting the history of WACA's advocacy on this issue,” and asked for a clearer statement from agency leaders on the topic. Davies regarded some of the problems her members were reporting as “due to what we see as being…the subjective process of not really understanding what the rules are. And sometimes a package is approved, and then you submit another one that's very similar, and it's not approved, and…that process seems to be a little bit arbitrary.”
      • Davies told board members she’d sent information about costs related to a label redesign and felt requesting an additional fee from those seeking label approval was unreasonable. She also supported the goal of streamlining the PAL approval system while limiting “subjectivity” in rule interpretation and continuing to stop the sale of products which could be interpreted as "overly appealing to children” on the legal market.
    • Christopher King (audio - 5m, video - WSLCB, video - TVW)
      • King again raised questions about whether the board intended to limit speaking time, and was curious if that could be done “in a way that doesn't just impact Black and Brown speakers.” Postman stressed that King could email questions to him directly, but he wasn’t going to answer questions during public comments.
      • “Basically you guys are [a] regulatory capture agency,” King argued, “you created this oligarchy and things where you and your mostly White cronies…get all the money. Everybody knows that.” He shared his belief that applicants to the equity program had their scoring manipulated, and insisted when looking at the appeals process “like 75% of the applicants have valid issues between Ponder [Diversity Group, the third party vendor] and LCB on the appeal…nobody's being heard, nobody's being reversed. And the end product is illusory anyway, because you can't get a store.” King had no faith in adjudication, and felt agency officials had been “monkeying with things to keep [some applicants] out of…the winners’ circle.”
      • King brought up an “erroneous report” by an agency staffer regarding a medical patient cooperative which had been in litigation with WSLCB. He claimed after raiding the cooperative, the patient was “in the predicament that he's in and four people who need care got kicked out of the system because one of your new stores moved in in their neighborhood…and now medical people are not getting the treatment that they need, everybody shackled up when it comes to you guys.”
    • Sami Saad, successful social equity applicant (audio - 4m, video - WSLCB , video - TVW)
      • Saad supported equity license mobility, but wanted it to be limited to the county where a license had been allotted for the first three years. An equity applicant himself, Saad remarked he “cannot even find location” and was frequently told “this is 350 feet [from another cannabis shop] you cannot have here.” He wanted “equal opportunity” in a free market, even if that meant competing against a nearby store. Saad also felt allowing all licensees to move all throughout Washington state wasn’t fair, “for example they have somebody's holding location because waiting until this to happen and we cannot even get location.”
      • Furthermore, he asserted there was “too much regulation on…the endorsement for the medical,” and that the only rules medically endorsed retailers should have to follow was “the right age and if…that person qualified to have [medical cannabis, which should] be tested.”
      • Saad reiterated a call for half of the retail licenses in the social equity program to be awarded to “pioneers” who ran medical dispensaries before the state licensed cannabis businesses, calling the removal of shops like his “a double standard with no justice.”
    • Paul Brice, Happy Trees Owner and former Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) advisory member (audio - 4m, video - WSLCB, video - TVW)
      • “I hope to be a face for a lot of other Black and Brown [people] as a reminder that we cannot be treated this way,” Brice argued, commenting that he’d been “targeted, fined, and again attacked by LCB so much in the past.” He felt equity applicants were treated like a “pumpkin patch…because the pumpkin patch comes in, everyone's afraid, ghost, goblins, and green smoke and all this other bad stuff that's going to happen. And I felt it was a stereotype for, being Black is a major thing especially still with the LCB.”
      • Turning to the disproportionately impacted area (DIA) mapping, Brice talked about the Hilltop in South Tacoma which “qualifies for a DIA then all of a sudden, because some years go by, they have some parts and so forth they can now remove the status…like surviving the Hilltop and then just because you clean up the Hilltop some and get rid of all the Black, Brown and remove some violence and all of a sudden people who survived it no longer get credit for being in that DIA.”
        • DIA classification was tied to criteria from decennial U.S. Census tracts in the state. Whether a particular geography was counted as a DIA was only analyzed once per decade and was dependent on when socioeconomic changes like gentrification could be said to have measurable impact on assessment criteria.
      • Brice then brought up SB 5052, a 2015 law combining the medical and adult use markets “when LCB just gave additional two pot licenses out to a lot of people who were not deserving. Were not pioneers.” He agreed with Saad that former dispensary operators like himself should be prioritized in additional licensing windows. But rather than having the standards of the scoring rubric lowered, being awarded a license “should be tougher than before.” Brice felt officials were “getting further and further from the true intent. And that is to help the Black or Brown that were so left out,” whereas new applicants might otherwise "squander the intent" of the program. He suggested the “goal for this is to have Black or Brown involvement and legacy wealth for Black and Brown people who helped champion to get the legalization for cannabis.”
    • Mike Asai, Emerald City Collective Gardens Founder and Black Excellence in Cannabis (BEC) Vice President (audio - 4m, video - WSLCB, video - TVW)
      • According to Asai, at the inaugural WA SECTF meeting in October 2020, members of the public urged agency leaders to allow equity licenses to be mobile around the state, and that “the board's refusal to act has led to significant decisions faced today.” He commented that “equity in cannabis is fundamentally about rectifying injustices suffered by the Black descendants of slaves and Brown communities who are disproportionately targeted and harmed by the war on drugs.”
      • “The LCB issue licenses to bad actors from the medical cannabis area who did not qualify” under SB 5052, Asai said, and “continues to only partly listen to the very communities the social equity program is meant to support.” Asai laid blame at the feet of former Director of Legislative Relations Chris Thompson, claiming he’d “consistently misled us claiming legislative action was necessary” in order to have equity licenses be mobile. These concerns raised the question of whether “the LCB [is] serving the public? Or is it swayed by WACA? Black Excellence in Cannabis is here to hold LCB accountable for past, current, and future actions. We stand firm because no one else will.”
      • Asai said that agency leaders had “retaliated against cannabis pioneers and advocates and is currently…retaliating against me…simply for speaking the truth.” He felt a “refusal to engage with Black Excellence in Cannabis because of my…tort claim shows a continued disrespect by the LCB to Blacks in Washington state.” Feeling like the agency “brushed us off,” Asai insisted “these actions will not obscure the truth.”
      • His last point was to repeat a concern he’d made on June 5th “that certificate holders should not…be included in the social equity program.” Instead, “high rubric scores should determine eligibility, not minimum qualifications without proper evaluation.” He explained BEC’s “initial support for certificate holders was based on the assumption that they included Black descendants of slaves and Brown individuals. Since this is not the case, we have revised our stance: remove certificate holders from this program.”

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