WSLCB - Executive Management Team
(November 13, 2024) - Summary

Implications of the 2024 election began to come into focus for agency leaders who received rulemaking updates before learning more about the unexpected departure of the board chair.

Here are some observations from the Wednesday November 13th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team meeting.

My top 3 takeaways:

• Staff considered agency priorities for the legislative session in 2025, and brought up an internal work group looking at alcohol and cannabis labeling.
  • Director of Legislative Relations Marc Webster updated on the results of the November general election and upcoming legislative priorities.
  • Webster reported that Democrats increased their majority in both chambers of the Washington State Legislature, and Governor-Elect Bob Ferguson's transition team included “some Olympia vets, many of the advocates and stakeholders we work with, and a name familiar to all here, Board Member Garrett.” He expected a “big shake up” in the House and Senate policy committees that oversaw cannabis (audio - 2m, video - TVW, video - WSLCB).
    • Three Republican members of Washington State House Regulated Substances and Gaming Committee (WA House RSG) would not be returning following a retirement and two campaigns for other offices. Meanwhile, Democratic Senator Karen Keiser, Chair of the Washington State Senate Labor and Commerce Committee (WA Senate LC) and the longest-serving senator in her party, planned to retire at the end of 2024.
  • The Washington State Office of Financial Management (WA OFM) requested that state agencies conduct a “budget exercise” to address projected revenue shortfalls in 2025, however Webster viewed WSLCB participation in the effort as having little impact on their work since the agency “doesn't get much, much of its funding from [the state general fund] or other funds, subject to the outlook” (audio - 1m, video - TVW, video - WSLCB).
    • Webster mentioned that the agency would be making a minor change to the medical cannabis excise tax exemption request bill on data sharing at the request of WA OFM. The revision involved fine revenue and “the account that that is deposited into.” He noted it was “possible that OFM will make that change in like an omnibus accounts bill, but it will be removed from ours, ours stays within our fairly narrow title” (audio - 1m, video - TVW, video - WSLCB).
      • Staff initially reviewed proposed cannabis request bills on September 10th.
  • Webster conveyed that his main priority before the start of the 2025 legislative session was preparing for a December 10th presentation on the social equity and cannabis program to WA House RSG (audio - 1m, video - TVW, video - WSLCB).
    • Lawmakers will begin to pre-file bills for 2025 on December 2nd.
  • Director of Licensing and Regulation Becky Smith updated on an internal work group reviewing packaging and labeling (PAL) of cannabis and alcohol products (audio - 1m, video - TVW, video - WSLCB).
    • Smith shared that the work group was formed to ensure that “there wasn’t yet just one person doing all those reviews” of product labels. They’d first convened on October 1st, and included representatives from the Enforcement and Education division as well as Public Health Education Liaison Kristen Haley. The work group was “looking at ways to lean the process,” she said, in order to “process these labels quicker, but also with more eyes on them as well.”
    • Smith also reported there was “a new licensing specialist that's going to be assisting in the review.”
    • Recent agency activity around cannabis PAL included:
      • Medically Compliant Packaging and Labeling Guidance released over the summer,
      • Board denial of a petition involving packaging requirements on June 18th,
      • A research brief on the subject published in August, 
      • Mention in an October 21st presentation to public health and prevention interests that WSLCB staff were developing recommendations.

• Director of Policy and External Affairs Justin Nordhorn went over several policy priorities and the status of cannabis rulemaking projects.
  • Nordhorn reported that the agency would prepare a supplemental CR-102 regarding cannabis product sample rules (audio - 2m, video - TVW, video - WSLCB, Rulemaking Project).
    • He indicated that public feedback had prompted reconsideration of some concepts included in the initial rule proposal, specifically ensuring “the amount of samples that are going to the employees, whether it’s producer, processor, or retailer, is not so much that the state is condoning daily or near daily use.”
      • While nothing of this nature was offered during the October 9th  public hearing, it may have been raised in written comments, or directly to staff by interested parties.
    • The agency wanted to ensure that the rules were workable, particularly regarding research and development, Nordhorn added. Such rules were likely to be “significantly different than sampling” and he indicated may require a separate rulemaking project (audio - 1m, video - TVW, video - WSLCB).
  • Nordhorn announced that he was pushing back the timeline for stakeholder engagement on the Employee Stock Ownership Plan (ESOP) rulemaking from December to January to allow more time to develop the initial proposal (audio - 1m, video - TVW, video - WSLCB, Rulemaking Project).
  • Nordhorn noted that the agency was considering rulemaking to address concerns about medical cannabis patients paying higher prices than recreational customers. He relayed that he’d spoke with counsel from the Washington State Office of the Attorney General (WA OAG), and believed WSLCB had rulemaking authority to define “unfair or deceptive business practices as a regulation” (audio - 1m, video - TVW, video - WSLCB).
    • As WSLCB noted in a cannabis newsletter on October 25th: “Patients have expressed concerns over a potentially deceptive practice relating to retail stores increasing their prices before applying tax exemptions. Patients were told that it was based on a concern about not selling cannabis below cost of acquisition. To be clear, all sales prices are set before any taxes are added to the purchase so tax exemptions will not reduce costs below acquisition and are not a loss for retailers.”
  • Nordhorn reported that officials were also considering rulemaking to strengthen regulations regarding transfer and assumption of licenses in the hopes of preventing situations in which a license could be transferred to a new owner in order to “wipe the slate clean” regarding issues like unpaid taxes (audio - 1m, video - TVW, video - WSLCB).
    • Board members are scheduled to have a “Review of Social Equity Transfer and Assumption Memo” on Tuesday November 19th and may take formal action on the subject since it was also included on the agenda for the following day’s board meeting.
  • On December 4th, a public hearing was scheduled regarding the social equity program and SB 5080, though Nordhorn noted he would have to observe the event remotely (audio - 1m, video - TVW, video - WSLCB, Rulemaking Project).
  • Nordhorn concluded by offering praise for Public Health Education Liaison Kristen Haley’s work on hybrid engagement sessions, reporting that “there's this level of excitement from the participants, and we actually had some folks volunteer for some almost subgroup type of homework assignments. So it's really encouraging to see that” (audio - 1m, video - TVW, video - WSLCB).
    • Nordhorn was describing focus groups hosted by Haley on high tetrahydrocannabinol (THC) policies, including many public health and prevention roundtable events closed to Cannabis Observer and the public.

• Director Will Lukela provided a brief update on his activities and offered congratulations to Board Chair David Postman on his appointment to a new position, which prompted Postman to announce that he would be leaving the agency the following week.
  • Lukela reported that he was participating in meetings with state agencies and industry stakeholders, contributing to the agency budget proposal, and navigating transitions in state government stemming from the recent election. He congratulated Postman on his appointment to a new position as the chief of staff for the incoming attorney general, Nick Brown. Lukela took a moment to “thank you for everything you’ve done for the board, the agency, and myself” (audio - 1m, video - TVW, video - WSLCB).
  • Postman confirmed the following week was set to be his last at WSLCB, although “I want to try to finish a couple of things, including the performance reviews for a couple of people who are owed those.” He mentioned that “I'll just save my farewells for next week sometime” (audio - 1m, video - TVW, video - WSLCB).
    • That morning, Postman sent a notification to staff and some interested parties announcing his departure. He indicated, “This was unexpected for me. I worked with Nick in the governor’s office, and I couldn’t decline a chance to help him and his team in what will certainly be trying times. I’m thankful that Nick believes I have something to offer and was honored when he asked me to come work in the Office of the Attorney General.”
    • Postman’s six-year term as Chair began on March 15th, 2021 and he had been expected to remain at the agency until January 2027.
  • Postman’s departure from the board provided Governor-Elect Ferguson—at time of publication the Attorney General—with an immediate opportunity to influence leadership at WSLCB upon entering office on January 15th, 2025.

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