WSLCB - Board Caucus
(February 13, 2024) - Summary

A pattern of postponed or delayed rulemaking came into focus as staff once again offered revised timelines for projects and petitions going back to the summer of 2022.

Here are some observations from the Tuesday February 13th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Policy and Rules staff brought the board up to speed on rulemaking, with extended delays plaguing progress on most of the cannabis projects already opened.
  • Cannabis rulemaking projects began to have delays in 2023 as staff turnover and a team member on leave began to hamper action as Policy and Rules Manager Cassidy West took over the role in the summer of after less than a year at the agency. West worked to fill vacant positions in her team over the following months, but by the start of 2024 the timelines for several rulemaking efforts had been pushed back.
    • Cannabis Observer Founder Gregory Foster raised the issue of the rulemaking delays in public comments to board members repeatedly in 2023.
    • While agencies are required to submit biannual rulemaking development timelines to the Washington State Office of the Code Reviser, typically in January and July, WSLCB doesn’t appear to have submitted this type of update since July 2023. The Code Reviser also maintains records and publishes quarterly updates on all agency rulemaking, which showed a decline in WSLCB rulemaking in 2023 when compared to similar periods in 2022.
  • SB 5367 Implementation (audio - 1m, Video - TVW, Video - WSLCB, Rulemaking Project)
    • Opened by board members in June 2023, West said a survey of interested parties around THC detection and regulation had concluded on February 5th garnering 234 responses, and “draft rules have been revised to incorporate the survey feedback and they're currently undergoing internal review.” This draft would be “publicly disseminated in the next few weeks to hold stakeholder engagement on those rules in March,” she claimed.
      • Having initially projected that “we would tentatively have rules, and the CR-102 filed, on or after October 25th” of 2023, West subsequently extended the release of draft rules to early November. Then, the timeline was extended to “sometime after Thanksgiving, [in] early December” so staff could include more opportunities for public input, which they hosted throughout the last month of the year. By 2024, she’d announced a second round of engagement opportunities, no longer attempting to forecast when proposed rules would be presented.
  • SB 5080 Implementation (audio - <1m, Video - TVW, Video - WSLCB, Rulemaking Project)
    • West reported that the deadline to submit comments to rules@lcb.wa.gov was February 29th, and noted, “we have received a few comments.”
      • The project to implement the 2023 law modifying and expanding the agency social equity program was initiated that November. At that time, West anticipated draft rule language in a CR-102 “to be filed on April 10th with the public hearing to be held on May 22nd.”
      • Staff spoke about progress on equity licensing at length on January 31st, when West shared a presentation with the following timeline for the project:
        • April/May 2024 Develop policy options to consider and draft proposed rules.
        • May 2024 Request Board approval of CR-102.
        • June/July 2024 Request Board approval of CR-103.
        • Aug./Sept. 2024 Rules become effective.
  • Product Samples (audio - 1m, Video - TVW, Video - WSLCB, Rulemaking Project)
    • West told board members draft rules were undergoing an internal review, and they would “disseminate draft rules in March, and hold stakeholder engagement following that.” She expected “pushing the [CR-]102 [to] May at the latest, probably is the most realistic.”
    • Board Chair David Postman asked that, going forward “any time it looks like we're slipping from that, let us know” (audio - <1m, Video - TVW, Video - WSLCB).
      • The project began in March 2023, and agency officials hosted three focus groups on the subject that March, and two in October. At the last of the focus groups, West mentioned that she hoped to schedule a dedicated conversation for producers and processors. In December 2023, she referred to this project as being "on pause for a second” while staff were “looking at a [CR-]102 in January.” By January 2nd, she announced that her team would resume work on the project in February.
  • Harvest or Processing Date (audio - <1m, Video - TVW, Video - WSLCB, Rulemaking Petition)
    • West reported, “I will be providing a response to the board on [March] 13th” related to the petition on adding additional details to cannabis product labeling. She added that they had yet to receive comments on the proposal beyond those of the petitioner.
      • West previously outlined her approach to rulemaking petitions for board members in October 2023. On January 10th Policy and External Affairs Director Justin Nordhorn talked about the challenge in formulating recommendations and presenting them to the board within a statutorily mandated timeline.
  • Retail Medical Cannabis Endorsements (audio - 2m, Video - TVW, Video - WSLCB, Rulemaking Project)
    • Policy and Rules Coordinator Daniel Jacobs told board members a CR-102 with proposed rule changes for endorsement holders was also scheduled for March 13th, but that too “might get pushed out just because we've got a lot of cannabis related stakeholder engagement on other projects coming up here, and especially with it lining up with the end of legislative session.” He shared that Washington State Department of Health (DOH) staff had sent feedback, and staff had “circulated” draft rules internally, “but I'm just not clear at this time whether we're going to be able to keep that timeline because that would require stakeholder engagement on the medical cannabis rules to happen at the end of February, and there's just a lot of different things that are coming to a head.”
      • Rules for medically endorsed stores were established in 2016 and were brought up by agency leaders in November 2022. In February 2023, WSLCB officials first mentioned the petition requesting “businesses to either surrender their endorsement, or for the agency to ask someone to surrender their endorsement if they're not using it.” The petition was discussed in depth the next month and then accepted by the board.
      • While WSLCB staff have done more to highlight the importance of compliance among endorsement holders, the rulemaking project itself wasn’t opened until October 2023. At that time, Jacobs anticipated having “rule language posted on the website ideally in early January,” followed by input from interested parties “and the CR-102…tentatively filed January 31st,” with rules finalized “by the end of March to have them in effect by…the end of April.” However, by January 3rd, Jacobs had pushed back the CR-102 to February 28th and West later noted that the public and “agency partners” could submit comments on the project until February 9th.

• At the Wednesday February 14th board meeting, West shared plans to move ahead with a petition for rulemaking related to Minors on Wholesale Licensed Premises (audio - 1m, Video - TVW, Video - WSLCB, Rulemaking Petition).
  • Although the petition was one of several accepted in August 2022, a CR-101 to begin rulemaking wasn’t approved, and the project was halted in the spring of 2023. On January 9th, West acknowledged the petition and that staff continued to accept remarks on it without offering any dates of future action.
  • During the meeting, West commented that staff had decided to undertake the requested rulemaking and Policy and Rules Coordinator Denise Laflamme would take the lead on the project. West noted that there had been a lot of comments already received on the matter, particularly “children and grandchildren [of licensees] being on premises, and then there was another petition received about contractors under the age of 21 being on the premises to do work.” Both petitions would have CR-101s presented to officially start rulemaking on February 28th, she stated, in order to “do them in tandem.”

• Nearly a year after a petition on licensee payment terms was submitted to WSLCB, staff were almost prepared to present the topic to the board as another rulemaking effort (audio - 1m, Video - TVW, Video - WSLCB, Rulemaking Petition).
  • First mentioned in February 2023, the petition requesting the capacity to to mail checks as payment for “cannabis transactions between licensees” was accepted by board members that March. In May, staff indicated that a CR-101 could be prepared by September. By July 2023 it was among petitions placed on hold which staff hoped “to resurrect…soon.”
  • At the February 14th meeting, West revealed that a CR-101 to start rulemaking would be ready by March 13th and presented by Policy and Rules Coordinator Jeff Kildahl. West estimated, “probably in June or July the 102 would be filed,” although “it depends on stakeholder engagement, we don’t expect a ton on this one.”

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