King County Council COW - Committee Meeting
(September 7, 2022) - WSLCB Briefing

Members heard about social equity, pesticide testing, and retail safety from WSLCB regulators before a follow up on a cannabis business safety task force by the King County Sheriff’s Office.

Here are some observations from the Wednesday September 7th King County Council Committee of the Whole (King County Council COW) Committee Meeting.

My top 5 takeaways:

• Washington State Liquor and Cannabis Board (WSLCB) Board Member Jim Vollendroff had requested the chance to speak to committee members about what the agency was doing and how they might collaborate with county officials.
  • Councilmember Jeanne Kohl-Welles introduced the panel of WSLCB leadership, who would discuss social equity, “how pesticides in cannabis production are being regulated and perhaps where there may be a greater need, retailers’ safety, the SAFE Banking Act at the federal level, and other issues.” She welcomed agency participants before praising Vollendroff, whom she said “had requested of me that we set this presentation up” (audio - 2m, video).
    • Kohl-Welles had long advocated for medical and adult use cannabis reforms, including as a state legislator and proponent of Initiative 502 in 2012.
  • Vollendroff brought up his prior background at the King County Department of Community and Human Services from “2002 to 2019,” including leading the agency. He noted that he left to help start the Harborview Behavioral Health Institute before being appointed to WSLCB in March of 2022, first serving publicly in May (audio - 4m, video, presentation).
    • Vollendroff then talked about his “amazing colleagues" at the agency with “direct linkages to the work at the county as evidence[d] by this cannabis safety task force that the council has passed.”
    • He thanked council members for recognizing “September as National Recovery month,” noting he was the “first individual with the behavioral health background” as well as, “to the best of my knowledge, the first person in long term recovery to also serve in that role.”
    • Mentioning the “opportunities for us to collaborate together on this work,” Vollendroff turned to the presentation from "some of the heavy hitters within the LCB." Additionally, knowing that “Council will be making a trip to [Washington,] D.C. in the near future,” he asked for their “support of the SAFE Banking Act and having discussions with our Congressional Delegation on that particular issue.” He alluded to a trip to an event in the nation’s capitol he’d attended “years ago” with Council Chair Claudia Balducci.
  • Vollendroff described the responsibility of the board to “hire the Director" who oversaw division leaders and “about 450 employees in the LCB.” He mentioned the agency mission and vision, and that “in 2021, we distributed, by formula, over 64 million dollars to local governments, so we have a direct relationship…with local governments” (audio - 2m, video).
    • Fiscal information from the Washington State Treasurer for 2021 showed $15 million in cannabis excise tax revenue disbursed to local governments (graph). Vollendroff’s figure may include local sales and use taxes cannabis businesses generate, which vary by jurisdiction.
    • The Washington State Economic and Revenue Forecasting Council released an economic review for June 2022 featuring information on cannabis revenues along with updated excise tax and license fee estimates.
    • A January 2022 report by the Marijuana Policy Project (MPP) indicated Washington State had collected over $3 billion in cannabis excise taxes since retail sales began in 2014, not inclusive of local sales taxes. 

• Director of Licensing and Regulation Becky Smith reported on the status of a social equity licensing program being developed by WSLCB, including a revised timeline on when the application window would begin (audio - 7m, video).
  • Throughout 2022, Smith had been integral to preparing and conveying agency plans for equity applications and the awarding of licenses.
    • She attended a March 23rd presentation during a Listen and Learn Forum on equity in cannabis.
    • On April 6th, Smith briefed the Seattle City Council Finance and Housing Committee on what WSLCB staff had accomplished, and what they were preparing to do, with regards to social equity including a rulemaking project. A request for proposals (RFP) for WSLCB to contract with a firm to prioritize social equity applicants was mentioned by Smith on April 13th.
    • At a June 15th Washington CannaBusiness Association (WACA) event, she speculated during questions that although her division would be “ready to roll in September” the start of the application window was dependent on completing rulemaking, probably “this fall.”
    • On August 3rd, Smith spoke to past licensing windows and the equity process, as well as the RFP for a social equity contractor having responsibility for reviewing and verifying eligibility documentation provided by applicants, but provided a more comprehensive assessment to the board on August 10th. At that time, she blamed delays on the mapping of disproportionately impacted areas (DIAs) by researchers at the University of Washington (UW) and remarked that staff were “crossing our fingers” that Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) members would agree after a UW briefing on August 23rd that was ultimately removed from the agenda.
  • In the meeting, council members heard Smith explain how the program aimed to “increase the number of cannabis retail licenses held by social equity applicants from disproportionately impacted areas as well as to reduce accumulated harm suffered by individuals, [and] families subject to impact from the War on Drugs.” She commented on the role WSLCB leaders had in establishing the WA SECTF whose members delivered initial recommendations in January 2022.
    • Smith relayed that “most” recommendations from the task force were included in their rulemaking project for social equity, and that a public hearing on the CR-102 was scheduled for Wednesday September 14th. The proposal covered “all of the program eligibility requirements and a process to qualify for license.”
    • Turning to the licenses which were “forfeited, revoked, cancelled, or not previously issued,” Smith stated that eight licenses would be available for successful equity applicants in King County. Should WSLCB proposed rules be adopted, these businesses could “locate anywhere available in their county” rather than a specific jurisdiction.
    • “Some of the highlights about programs” she identified were a 30-day application window, online education and training options, and review of applications by a third party vendor. The highest scoring applications would be processed by Smith’s division, and ties settled through “a double blind lottery.” She described the “need to meet all the licensing requirements,” inclusive of finding a “location, security requirements, we’ll do financial vetting on…who's a true party of interest” or is “putting money into the business just as we do now and that's before any licenses will be issued.”
    • The Washington State Department of Commerce would oversee a technical assistance grant program, Smith commented, which had educational components on “business development,” sales, marketing, and financing. “The second piece” she noted was “a one-on-one personal mentorship” to be “facilitated [in a] mentor/mentee event” which could lead to the mentor helping with a “business plan” covering real estate, tax preparation, “website creation,” and other “specific duties.”
    • Smith told the committee agency officials had contracted with a company to "to build our virtual website and help us with our virtual events” which would consist of "instruction videos" explaining the application process. She suggested questions be submitted online so they could more easily be tracked and added to the agency frequently asked questions on the topic.
    • “There's a lot of work going on,” concluded Smith, who offered to return any time “before we open that 30-day window” to share more information.
  • Councilmember Sarah Perry thanked Smith for presenting. “There's a lot of bias, for many reasons, that you have to work through,” she remarked, “and I just think it's a really important conversation” (audio - 1m, video).

• Policy and Rules Manager Kathy Hoffman went over revisions to “pesticide testing regulation” before one council member called for a briefing on high-THC cannabis products (audio - 5m, video).
  • Hoffman said agency representatives had “moved forward with mandatory…pesticide testing for all adult use cannabis products in Washington state.” She noted that while designation of medically compliant cannabis had always required pesticide and heavy metal testing, it wasn’t until 2018 after hearing concerns “from many stakeholders” such as medical cannabis patients that a long-term rulemaking project was undertaken resulting in pesticide testing being adopted in rule on March 2nd. Hoffman highlighted changes in lot size; testing and sampling protocols; remediation; and cost implications.
    • Compatible changes to pesticide action level rules were adopted by the board on June 8th. 
  • In an effort to “reduce the impact of this rule change,” Hoffman explained there was a “producer/processor phase in period that allows product produced or processed prior” to the pesticide requirements to be sold to retailers through September. Next, she indicated “a retail sell-down period” for those retailers to then “sell through that product through the end of” 2022, similar to sell-down periods after packaging and labeling changes.
  • Hoffman concluded that these rule changes were expected to bolster consumer confidence and showcased a WSLCB commitment to implementing safe standards as “we continue random testing and pesticide investigations, as we always have, to ensure product safety.” She claimed an “updated traceability system allows our Enforcement and Education staff to see quality control failures earlier." 
  • Kohl-Welles pointed out that in her first year on the Council in 2016, she’d pushed for regulators to begin pesticide investigations and asked about the results of their partnership with Washington State Department of Agriculture (WSDA) staff. Hoffman stated WSDA officials tested 75 samples a month, the selection of which was “largely complaint driven," and the contract assisted in “other work that we're doing in terms of investigations” (audio - 2m, video).
  • Expressing a broader interest in cannabis policy, Perry wanted a “separate conversation” pertaining to “issue[s] around potency and to dispel some myths around that and some scare tactics around that, but also some very real concerns with the issue.” Honing in on “those with behavioral health issues taking particular medications and the overwhelming issue of a psychotic episode when mixing these” substances, she requested comment or a future presentation on “the concern around the potency issue and how we monitor this.” Vollendroff chimed in, hopeful the inquiry “whets everybody’s appetite" to learn more about the matter in a separate meeting, before pointing to the University of Washington Addictions, Drugs, and Alcohol Institute (UW ADAI) symposium on “High-THC Cannabis in Legal Regulated Markets” scheduled for Friday September 16th. He promised to follow up with Perry and schedule another briefing in “the near future” (audio - 2m, video).

• Director of Enforcement and Education Chandra Brady talked about agency efforts to increase safety at cannabis retail outlets, including lobbying for federal banking legislation which she claimed could move stores away from a reliance on cash (audio - 4m, video).
  • Brady’s staff had been looking into helping cannabis licensees following a rash of retail robberies early in 2022. By May 11th, her team helped organize training and security assessments while agency leaders zeroed in on helping lobby for federal banking reforms—specifically the SAFE Banking Act—as one way to mitigate legal cannabis markets from being cash-only.
    • On August 2nd, Director Rick Garza brought up a briefing by Brady to members of congress the week before at an event hosted by the U.S. Cannabis Council (USCC). On August 10th, another agency leader lauded Brady for describing WSLCB efforts to reduce occurrence of the crimes to federal officials at the USCC event.
  • Speaking to the council, Brady stated that after reports of increasing robberies her division "immediately created a safety pamphlet with some suggestions about how to increase security and safety for these licensees, business owners, and their employees." She mentioned the agency’s partnership with the Washington State Crime Prevention Association (WSCPA) on “educational seminars” teaching safety tips to businesses and their staff to help “prepare for the before, during, and after if something should happen to them.” 35 requests for assessments by retail stores had been made, said Brady, whose personnel made contact “850 times during that six month period with retailers in King County.”
  • As for the SAFE Banking Act, Brady felt that “one of the large risk factors” for businesses remained their reliance on physical currency, and that “until [it] passes" those businesses remained at risk due to lack of banking and “electronic payment” options.
    • In September 2022, congress was again considering adding SAFE Banking Act language as part of other legislation, a move endorsed by U.S. senators and most Americans.
    • There had also been calls for social equity considerations in the act’s language, including by leaders of the Cannabis Regulators of Color Coalition (CRCC). Read the group’s research paper published on August 12th, “Not a SAFE Bet: Equitable Access to Cannabis Banking, An Analysis of the SAFE Banking Act.”
  • Kohl-Welles asked about trends in cannabis retail robberies and whether incidents had been in decline since earlier in the year. Brady commented that there wasn’t a consistent reporting method for the offenses separate from other crime statistics for the state. This made their analysis of trends largely anecdotal, but they were aware that the offenses had declined following the arrest of two juveniles suspected of several robberies and the murder of a Tacoma budtender on March 19th. Kohl-Welles recognized the threat to staff and customers, observing that reports for several of the crimes suggested perpetrators were focused on “obtaining cash, not on the cannabis products, which is…important to note” (audio - 2m, video).

• King County Sheriff’s Office (KCSO) Chief of Staff Mark Ellerbrook offered an explanation for postponement of the work of the cannabis business security task force created on May 17th (audio - 4m, video).
  • Ellerbrook pointed to the motion passed by the council directing King County Executive Dow Constantine to stand up a task force and compile a “report delivered by the end of August.” His team had “reached out” to council member offices to “see if we could get an extension on that,” allegedly due to staffing challenges, and they were "given the nod" to push their report back. He continued, “we're going to be doing that over the fall and winter and we're actually in the process of hiring a consultant to help with the convening” of stakeholders and official agencies stipulated in the council’s motion. Ellerbrook forecast a final report would be delivered at “the end of the first quarter of 2023.” He concurred with the value of the outreach already undertaken by WSLCB, and added that sheriff’s deputies had also met with several area cannabis businesses to give additional safety “feedback,” something he was confident had “gone a long way in the drop off that we’ve seen” in robberies. His department continued to participate in making retail locations safer, Ellerbrook argued, even if a report on the situation would take longer than anticipated.
    • Ellerbrook briefly spoke about the SAFE Banking Act, saying KCSO "strongly supports" the change. The "unique situation" required getting cannabis retailers opportunities for “non-cash financial resources” so they were no longer “a simple, logical target" for violent crime (audio - 1m, video).
  • Kohl-Welles asked if KCSO representatives had reached out to the county’s congressional delegation. Ellerbrook confirmed they had and noted Constantine’s office was considering the legislation part of “their legislator priorities at the federal level” for an upcoming trip by officials to Washington, D.C. (audio - 1m, video).
  • Councilmember Reagan Dunn, sponsor of the original motion, "appreciate[d] the good work that’s going on" (audio - <1m, video). Kohl-Welles, a co-sponsor with Dunn, agreed and looked forward to the task force’s eventual report (audio - <1m, video).

Information Set