WSLCB - Board Meeting
(November 6, 2024) - Summary

New petitions and draft rule language were forecast for rulemaking projects over the next several weeks, and public criticism of the social equity program at WSLCB continued.

Here are some observations from the Wednesday November 6th Washington State Liquor and Cannabis Board (WSLCB) Board Meeting.

My top 2 takeaways:

• Policy and Rules Manager Cassidy West addressed three rulemaking petitions and touched on six already active rulemaking projects related to cannabis.
  • Captive Insurance Companies (audio - <1m, video - TVW, Rulemaking Petition)
    • West told the board a new petition was “received on October 31 to amend WAC 314-55-082, to address the use of captive insurance companies for cannabis licensees.” She indicated Policy and Rules Coordinator Daniel Jacobs would have a staff recommendation developed “in coordination with the [Washington State] Office of the Insurance Commissioner” for presentation on December 18th.
  • Payment Flexibility (audio - <1m, video - TVW, Rulemaking Petition)
    • Highlighting a petition filed in response to recently adopted payment flexibility rules, West expected to present a recommendation to the board  on November 20th. West relayed that she would provide the recommendation.
  • Traceability Platform (audio - <1m, video - TVW, Rulemaking Petition)
    • Also set for November 20th, West explained that Policy and Rules Coordinator Denise LaFlamme was going to present the recommendation for a “petition on replacing CCRS,” the Cannabis Central Reporting System used by WSLCB.
  • Minors on Wholesale Licensed Premises (audio - <1m, video - TVW, Rulemaking Project)
    • Draft language for the minors on premises project—which had been initiated by the board on February 28th—was projected for distribution in November and presentation as a CR-102 on December 18th.
  • SB 5376 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • West noted draft language for the cannabis waste bill, SB 5376, would also be publicly available before the end of the month and presented to the board on December 18th.
  • SB 5080 Implementation (audio - <1m, video - TVW, Rulemaking Project)
    • According to West, a new public hearing on supplemental language on social equity rulemaking implementing SB 5080 would be hosted by officials on December 4th.
  • Lab Authority Transfer (audio - <1m, video - TVW, Rulemaking Project)
    • West added that the project would also have proposed rule text available by December 18th.
    • Director Will Lukela was asked about the lab quality standards and accreditation authority transfer during a TVW interview on October 10th.
  • Product Samples (audio - <1m, video - TVW, Rulemaking Project)
    • “We are collaborating with stakeholders on comments received during the formal comment period, and we want to make sure that we have a full understanding of all stakeholder input before moving forward,” said West.
    • Board Chair David Postman had wondered about comments on the project during the preceding day’s board caucus, with West responding that it involved “research and development” as well as “employee” sample amounts.
  • Employee Stock Ownership Plans (ESOPs, audio - <1m, video - TVW, Rulemaking Project)
    • Initiated by board members on October 9th, West remarked that hearing from interested parties was the next step for her team.

• Public comments reflected disappointment with the social equity licensing process, in particular finding suitable business locations, and continuing concerns about racial bias and transparency at WSLCB; one speaker claimed that a senior agency leader had resigned.
  • Peter Manning, Black Excellence in Cannabis (BEC) President (audio - 5m, video - TVW)
    • Manning expressed disappointment with the Director of Enforcement and Education Chandra Wax, who’d overseen the near hiring of a former Minnesota cop convicted of manslaughter on duty to provide in-service training to their officers. “We've never gotten that one apology from the board about that,” he remarked, “nor have we ever got an apology from the board when it pertains to exclusion of Black and Brown people from the industry over the last 10 years.”
    • Manning spoke of harassment he’d received for speaking up on cannabis equity concerns, even alleging he’d been “physically attacked by my own people paid by White retailers.” He asserted his commitment to fighting for the inclusion and economic empowerment of Black and Brown people, despite “how White supremacy works to suppress them.”
    • He mentioned reviewing litigation the agency was a party to, Brinkmeyer vs. WSLCB, where counsel argued that those “trying to engage in cannabis industry in the State of Washington don't even have constitutional rights because cannabis is illegal federally, check out the mindset of that.” Manning questioned the right of the board to regulate an illegal market, particularly when it comes to the rights of marginalized communities. 
    • Manning called for a complete overhaul of the LCB, accusing several staffers of bias and discriminatory practices. He further criticized the slow implementation of social equity programs like SB 5080, which “went out almost two years ago” and still didn’t have rules in place.
  • Paul Brice, Happy Trees Owner (audio - 3m, video - TVW)
    • Brice was also unhappy with how the social equity program had been handled by the agency, stating, “you guys know you're not trying to make it better for the Black or Brown community at all.” He suggested lessons weren’t learned during the initial retail licensing window, alleging conglomerates dominated the industry as marginalized entrepreneurs weren’t included. Overall, he suggested agency leaders’ rush to implement the next round of licensing without addressing the failures of the first round demonstrated a lack of commitment to social equity.
    • “The fact that these licenses, next round, is trying to get rushed out,” under SB 5080, made Brice think “it's going to go the way that this…first round went.” He called the program overall a “failure,” and found the only hope was additional legislative action.
    • Brice last addressed board members on September 25th.
  • Michael Schermerhorn (audio - 4m, video - TVW)
    • Schermerhorn had previously spoken about what he alleged was an improper investigation conducted against himself and another patient’s medical cannabis cooperative. He talked about an effort to arrest him by law enforcement and prosecutors in Skagit County which he believed violated his due process rights. Schermerhorn accused the prosecutor there of providing false information to law enforcement, which led to his arrest, plus severe consequences for his health. He stated his heart condition was exacerbated by the stress of the situation, and he “was resuscitated on the way to the hospital” by paramedics. He wrapped up with a call for a federal investigation into the matter.
  • Christopher King (audio - 6m, video - TVW)
    • King had been trying to get additional information about the qualifications and hiring of Lukela as agency Director. Suggesting that a CV for Lukela may have been selectively shared with certain individuals, such as reporter Austin Jenkins, King questioned if background information had been kept from others, including himself. He relayed how Lukela had previously worked in Colorado.
    • Turning to reporting on the struggles of Colorado social equity entrepreneurs, King drew parallels with Washington state. He cited articles and op-eds that criticized the lack of meaningful progress in Colorado, particularly regarding the exploitation of the program by large corporations.
    • Criticizing Wax, King claimed “I see that she resigned yesterday,” but insisted more turnover was necessary at the agency. “We need an LCB that's with Governor[-elect Bob] Ferguson, and…we need people like me on that board,” said King. He hoped for statutory changes so the WSLCB board would be split, “some should be elected, some appointed. I'm willing to help.” King added that the only board member he had confidence in was Jim Vollendroff.
      • At publication time, Cannabis Observer had not obtained authoritative proof of Wax’s resignation, but another source independently verified she had resigned from her post with immediate effect. She’d served in the role since February 2021.
  • Gregory Foster, Cannabis Observer Founder (audio - 3m, video - TVW)
    • Foster provided various recommendations for traceability improvements, a subject he had previously addressed, and mentioned plans to attend a Washington State Joint Legislative Audit and Review Committee I-900 Subcommittee (JLARC I-900 Subcommittee) meeting later in the day to hear that staff’s “follow up audit report on the history of traceability and implementation of traceability.” 
    • Foster reviewed three recommendations he provided to the JLARC members as the WSLCB declared seven more years of utilization of CCRS before transitioning to any replacement traceability platform:
      • Moving CCRS “from a file upload system to an API” to “enable real time feedback and update of data, which are problems that the auditor pointed out.”
      • Next, officials should “leverage and incorporate the [Washington] Cannabis Integrators Alliance data schemas” which were already in use facilitating data transfer between licensees.
      • Staff should also “investigate why METRC was not awarded the contract in 2017. They were the apparently successful bidder and that went back and went to MJ Freeway. Go back and look at that. Why did that happen?”
  • Keyon Garrett (audio - 2m, video - TVW)
    • A participant in the social equity program, Garrett expressed frustration with the difficulties of finding a suitable location for his cannabis business due to strict zoning regulations, particularly the distance buffers for stores in Seattle. He credited applicant Sami Saad for helping him in the process, but indicated there needed to be better collaboration and coordination within the social equity program to streamline the process and provide more support to participants.
    • Garrett observed he’d been “mentally drained, just riding around looking for places, and it's just- it feels like it's unfair.” He hoped there would be more assistance for equity applicants like himself, so he could open a store instead of “spending money on gas and a whole bunch of stuff” trying to get his license. Despite the difficulties, Garrett expressed hope for the future of the social equity program and the potential for positive change in their community.
  • Sami Saad (audio - 3m, video - TVW)
    • Like others, Saad voiced frustrations with the cannabis equity process at WSLCB, in particular applicants like himself who were former dispensary owners. He felt “pioneers” merited licenses, and argued staff had made promises but failed to deliver.
    • Saad relayed various challenges he has faced in the social equity program, such as finding a suitable location, receiving funding, and communicating with agency staff. He commented on the personal impact of the challenges he had faced, including the loss of his son and the financial strain of pursuing a cannabis business. He emphasized his strong motivation to succeed and his commitment to helping his community.

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