WSLCB - Board Meeting
(August 14, 2024) - Summary

Proposed rule updates to product samples were approved by the board, and staff also described a new PAL approval process before hearing some confrontational public comments.

Here are some observations from the Wednesday August 14th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 3 takeaways:

• Justin Nordhorn, Director of Policy and External Affairs, gave a detailed briefing on the proposed rule changes for cannabis product samples (audio - 11m, video - TVW, video - WSLCB, Rulemaking Project).
  • The long running project was based on a petition filed by leaders of the Washington CannaBusiness Association (WACA) and accepted by the board in the summer of 2022. It sought to revise WAC 314-55-096 covering the practice of producer and processor licensees providing vendor, educational, and quality control samples. Such samples can be used as a way to inform purchasing choices on inputs for cannabis processing or when buying end products for retail inventory. When presenting the petition, staff shared the perspective of WACA members that existing rules were “cumbersome and costly to licensees without benefiting public safety,” and changes were intended to increase efficiency, cost savings, and overall safety.
    • While accepted in August 2022, a CR-101 to formally begin the rulemaking process at WSLCB wasn’t initiated until March of 2023, at which point officials held the first focus group meeting on the topic, and released a survey that summer.
      • Product sample rules were last changed in 2018.
    • By the fall of 2023, WSLCB staff hosted another pair of stakeholder meetings in which it became clear that accountability for where samples went was a concern for agency leaders. However, around this time then-Policy and Rules Manager Kathy Hoffman announced her departure from the agency leaving Product Samples as one of many projects which would face a series of delays into 2024. 
    • Beyond steady mentions of the rulemaking in WSLCB meetings, there were no substantive conversations on the subject until Nordhorn reviewed the draft rule revisions a day earlier during the August 13th board caucus. 
    • Collecting representative cannabis samples for required testing by accredited laboratories is a separate process with rules listed in WAC 314-55-101.
  • At the board meeting, Nordhorn summarized the draft language as a “direct outcome of stakeholder engagement, and aims to streamline the existing regulatory framework while ensuring that safety and accountability remain.” After reviewing the background of the petition and project up to that point, he said that multiple offices at WSLCB contributed to the internal work, specifically the “Enforcement and Education, Licensing and Regulation, Finance, and IT divisions as well as our Public Health Education Liaison.”
  • Nordhorn argued officials had approached the issue trying to understand “challenges, complexities, and impacts for cannabis businesses providing and receiving cannabis samples intended for negotiating sales and educational purposes.” He mentioned that during the initial public comment period in 2023, “we received a total of 12 written comments” that had shown areas for improvement such as “misallocation of vendor and educational samples, the need for sample sizes to better represent products consumers are actually purchasing, greater ability for internal quality control samples, focusing on the consumer experience…versus the lab samples, and simplifying the compliance requirements.” Focus groups, he said, “reinforced themes” of written comments, and the survey they’d conducted had generated 428 respondents “across different license types.”
  • The proposal was refined based on survey results ahead of the October 2023 focus groups, Nordhorn indicated, including the merging of “vendor and education samples into one category.” He suggested the focus groups helped inform their recommendations on sample sizing and how representative samples should be of the end product being offered for sale. All licensees had “expressed concerns over the complexity of compliance and business…need for sampling regulations that accommodate diverse product lines, business models and also operational cycles.”
  • Nordhorn told board members the proposed rules would “allow for more representative sample sizes [which also] eliminates the need to create separate products specifically for sampling.” The intent was to “ensure fairness and consistency in the sampling practices and the sizes reflect a common retail purchase unit and also provide a realistic…amount for evaluation of products by licensees and employees,” he added. These amounts had been decided to be “three and a half grams of cannabis, one gram of concentrate, and a single package containing no more than 100 milligrams of THC,” tetrahydrocannabinol. Additionally, the merging of vendor and educational sample categories into a singular “trade” category reduced “subcategories for traceability, reporting, alleviating some of that burden.” Plus, “quarterly limits are considered now instead of monthly limits,” he noted, something intended to help producers on differing “operational cycles” like seasonal cannabis production. Nordhorn mentioned this amounted to “producers will be able to distribute 96 trade sample units per quarter to processors, enabling comprehensive product assessments. Processors may, in turn, provide 120 trade sample units per quarter to retailers,” in order to aid “staff training, product familiarization, and sales negotiation.” 
  • Retail employees may receive “up to 15 trade sample units per calendar quarter, and these samples are strictly for educational purposes and cannot be used as compensation or incentives,” he explained. Nordhorn acknowledged this was fewer samples than current rule, but by raising the sample size “the quantity is more representative.” He felt this was less of a policy change, and more about being “specific in statute for…current paid employees. So it has to be able to be verified through payroll that these samples are…not going outside of the licensed business.”
  • All samples must be documented in the traceability system, Nordhorn remarked, “and this includes keeping detailed records of the product type and amount and the licensees and employees involved in the sampling.” This move supported transparency and compliance, he said, plus, “we're requiring trade samples to be stored in designated areas separate from non-trade samples, and this separation is really essential for being able to easily identify these samples during…audits and premises checks.”
  • Nordhorn stated the proposed rule changes included allowing sample jars for smelling to be offered to employees as part of their sampling allocation rather than being thrown away or returned to a processor for destruction. They would also suggest raising the sample amount for a licensee’s internal quality control to 14 grams, along with “eight cannabis infused products not to exceed 10 milligrams per serving and three and a half grams per batch of cannabis concentrates.”
  • An economic impact assessment was conducted, Nordhorn reported, and related to costs for labeling (“which we envision as stickers on the product that are saying basically, ‘trade sample, not for resale’”) and storage mandates. Said “costs are expected to be offset by the overall reduction in regulatory burdens of creating separate product products specifically designated for samples,” he explained.
  • “We believe this proposal represents a significant step forward in aligning our regulatory practices with the needs of the cannabis industry and ensuring a safe and transparent market,” Nordhorn commented before requesting board approval for the CR-102. He outlined a schedule for the remainder of the project that included a public hearing on September 25th and presentation of a CR-103 to adopt changes on October 9th. Under this timeline, he relayed that the rules would become effective on November 9th.
  • Board Chair David Postman asked about the sample jars allowing customers to see or smell cannabis through a screen, clarifying they couldn’t be sold as retail products. Nordhorn affirmed this understanding: “They cannot be sold. They cannot be donated other than…to the employee. [And] can't be used as an incentive or compensation” (audio - 1m, video - TVW, video - WSLCB).
  • Postman deemed the proposed draft to have "common sense, evolutionary changes,” and appreciated that they moved away from calling samples “educational… because that always seemed really misleading to me. It's marketing” (audio - 1m, video - TVW, video - WSLCB).
  • Board members voted to approve the product samples CR-102 (audio - <1m, video - TVW, video - WSLCB).

• Deputy Director of Administration for Licensing Nicola Reid discussed the planned response to an uptick in packaging and labeling (PAL) requests related to Washington State Department of Health (DOH) compliant medical cannabis edibles (audio - 2m, video - TVW, video - WSLCB).
  • Reid relayed that passage of HB 1453 related to a medical cannabis excise tax exemption was incentivizing some licensees to resubmit edibles so they could be labeled as DOH compliant. To expedite these changes, she said, “licensees can submit through a newly developed process that licensing is close to having finished.” This would involve a dedicated email address for submitting DOH compliance PAL changes to previously-approved products, along with an “affidavit attesting to the prior product approval for the product packaging and labeling, and attached pictures of the labels with the FDA [US Food and Drug Administration] statement and applicable…DOH logo.”
  • Reid made clear this process was not for already packaged items, “but for future product that licensees plan to have the additional required lab testing completed. This process would also not applied to licensees who intend to add…therapeutic or curative language, or a plan to modify serving sizes.” She added that Licensing division staff were “looking to share the finalized process through GovDelivery and the LCB website early next week.”
  • Postman was curious how many PAL applications Reid was talking about. She replied that there had been “a total of 451 applications. 248 of those have been approved, and 36 were denied.” The photograph requirements would help officials “give a quick review to ensure that the product going out there is meeting compliance.” Postman appreciated how Reid and her team were “handling it the right way, and I'm hoping it helps move them quickly…it's a good sign, too, that people are interested” (audio - 1m, video - TVW, video - WSLCB).
  • WACA Executive Director Vicki Christophersen and Deputy Director Brooke Davies made comments on PAL change delays on July 17th, following up on Davies’ urging an expedited process for labeling changes related to HB 1453 on May 22nd.

• Several members of the public lodged complaints and criticism with the board over accusations of “cronyism”; problems with the social equity program and past licensing windows at WSLCB; plus disparate enforcement around events with cannabis.
  • Christopher King (audio - 4m, video - TVW, video - WSLCB)
    • King took issue with what he considered to be the "cronies, hoss thieves, and gatekeepers" at the agency, stating that he’d attended the recent Cantanna Fest at the McMillin Farm and Brewhouse in Puyallup, “and a couple of things became clear to me, and that is that I need to issue an apology” to members of Black Excellence in Cannabis (BEC) since being “misled by some information couple years ago about some people who really were in it for their own agenda and weren't entirely truthful about some things, but…we've had a meeting of the minds, and we're good now, and we're all unified.” He suggested there was a “common understanding about the common enemy, and that common enemy is you guys.”
    • Speaking about Board Member Ollie Garrett, “I recall that Ollie said in a KING5 interview that she wasn't aware of all these issues of cronyism and…unlawful favoritism…but Peter [Manning, BEC President] gave me his letter, October 6, 2016 where he specifically mentioned it to her.” King had the impression Garrett was “a gatekeeper also, because…going back to this issue when [license applicant] Kevin Shelton sent that letter out, and…there was no response to that.”
    • He’d heard from Garrett that she “didn't want me using Tabor 100 in any of my correspondence, or the Tabor emails” even though he said there was one such email “from September 25, 2020 in which she specifically mentions Tabor 100.” Referring to Launch Industries—which the Washington State Department of Commercecontracted with for a technical assistance grant program—King implicated Garrett in hosting the group at a Tabor 100 event and asked: “Is there financial records of that event with Tabor 100 and you because…the Secretary of State in Oregon had to resign because of her intermingling with the cannabis industry.”
      • Oregon Secretary of State Shemia Fagan resigned in May 2023 after it was revealed she’d failed to disclose $10,000 monthly consulting work for one of the state’s licensed cannabis businesses which was also a Democratic donor in the state.
  • Paul Brice, Happy Trees Owner and former Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) advisory member  (audio - 4m, video - TVW, video - WSLCB)
    • Brice stated that the task force hadn’t discussed Retail Title Certificate holders “being able to roll their way in, to be able to be part of the social equity program, devaluing the program, bringing more non Black or Brown, like we all understood what the intent was.” He indicated that for “for the last nine years every time I go to one of these conventions [there were] no Black or Brown” attendees. He suggested that the 2024 Interchange event organized by Marijuana Venture in Spokane was “the most prestigious event that we have for Washington state, and this is what it looks like,” and reiterated his view that racial diversity and inclusion in the cannabis sector was the “true intent” of the equity program.
    • He argued “by letting title certs in just willy-nilly find a White person that made under [median income] money, [or] lived in DIA”---meaning disproportionately impacted areas—to join a certificate in order to take advantage of the program. Brice asserted that there was an effort by policymakers to mislead the public to “just talk about correcting a mistake here, and so we can't talk about the real matter at hand.” He concluded that the equity program had become about “rewarding corporations and an individual Black sole proprietor to have more bearing than someone who puts together 12 people to just get the rubric, to just bring more White people in, makes no sense of what we spent five years on.”
      • Inclusion of retail title certificates as part of the equity program had become a flashpoint after it was suggested on June 5th that certificate holders weren’t meant to be included and might not be bound by some limitations imposed on equity program licensees.
      • Certificates were set up through an interim policy in 2018 and were adopted as a more permanent solution through a policy statement in July 2021.
      • Members of WA SECTF considered including title certificate holders in their recommendations on the social equity program in late 2020 and 2021. WSLCB staff gave a presentation covering the certificates in January 2021, and the topic was included in the scope of responsibilities for the task force Licensing Work Group that April, with a conversation on license mobility dealing with the certificates in September. The group ultimately advised including “current title certificate holders who fit the definition” of equity applicants to the full task force early in 2022.
      • Rule language with the definition for equity certificate holders was adopted following presentations and a public hearing in September 2022.
  • Tamiko Henry (audio - 2m, video - TVW, video - WSLCB)
    • “In 2015, Whites were allowed to open stores with no credentials, while Blacks and Browns were denied in spite of being better qualifiers. What is the LCB going to do to correct this?” Henry wanted to know. Postman clarified board members were not required to respond to questions during public remarks. Henry suggested emailing the board and Postman responded she was welcome to do so, “or if you want to ask your question now, well, we can have somebody follow up and email back to you.”
  • Peter Manning, BEC President, (audio - 3m, video - TVW, video - WSLCB)
    • Manning agreed he’d seen WSLCB Enforcement “in full force” at a ‘Cannafest’ event “hosted and put on by Black people” which he felt was “over-enforced.” By way of contrast, when he’d attended an “all White event at a White farm similar to that Cannafest. No LCB were present. There was plenty of weed consumption…you guys treat us differently, even in an industry that is allegedly legal.”
    • Manning shared that Garrett had told him “we don’t look in the past,” and believed “I would hate to have Ollie Garrett teach my kids anything about Black history, because they would never understand that they were descendants of slaves and the 400 years of struggle we had to go through in dealing with White supremacy.”
    • Considering the “wealth you guys robbed from us for the last 10 years, and you have made no clear pathway to help us get that back,” Manning felt, “Whites have solidified this industry. They control it. They dominate it.” He alleged WACA leaders “instructed” agency officials to “interfere with [Cantanna Fest] permits in Seattle, to come in full force at their event, to harass them.” Suggesting WSLCB members could be “bought” and that they had “no respect” for communities of color, Manning repeated a prior call for staff involved in the 2015 cannabis licensing window to be fired in order to “make it right.”

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