WSLCB - Board Caucus
(June 29, 2021) - Summary

Details of a board member’s discussion with state counsel on synthesized delta-9-THC led to conversation about the policy statements and agency regulatory powers beyond rulemaking.

Here are some observations from the Tuesday June 29th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

• Board Member Russ Hauge described meeting with counsel from the Washington State Office of the Attorney General (WA OAG) on the subject of licensees using delta-9-tetrahydrocannabinol (delta-9-THC) synthesized from hemp-derived cannabidiol (CBD) in legal cannabis products.
  • First mentioned on June 22nd, Hauge reported that the meeting with Assistant Attorneys General Bruce Turcott and Penny Allen wasn’t "a briefing from them to me" but was instead about them "gathering information about the questions being asked” by board members. He told fellow board members the central inquiry was "what should our response be, if we know that delta-9 is being manufactured from CBD” (audio - 4m).
    • Turcott and Allen had informed Hauge that although they’d recently attended a conference for “attorneys who advise regulators on cannabis” which focused on delta-8-tetrahydrocannabinol (delta-8-THC) converted from CBD, they’d heard “no discussion” of synthesized delta-9-THC.
    • Hauge was clear the conversation was not about specific licensees, but acknowledged, “I might have mentioned clēēn:tech, but that was about it."
      • clēēn:tech President Marcus Charles addressed the board on his company’s work around synthesized cannabinoids on May 26th and June 9th.
      • See this video published on the company website which claims the company leases “technology to regulated producers and processors around the world on a subscription basis.” 
    • The lawyers told Hauge they would provide a "general statutory construction based opinion for our consumption as soon as is reasonably possible,” but cautioned that an exact timeline for the board to receive the opinion wasn’t possible. Turcott and Allen also told Hauge they’d be “discussing this matter with others as well” including WSLCB staff, but he did not come away from the conversation able to “forecast what their opinion is going to be.”
      • See available WA OAG opinion topics on WSLCB, cannabis, and marijuana.
  • Board Member Ollie Garrett asked whether Turcott and Allen recognized the urgency of the matter. Hauge said he made clear the presumption of an existing “pipeline" of synthesized delta-9-THC into the legal market, “and we’re very concerned that we respond to that appropriately.” Board Chair David Postman concurred that the need for expedience was understood by WA OAG representatives and he anticipated receipt of an opinion by “the end of this week, I would guess next week at the outside.” Internal staff discussions on possible action would continue (audio - 2m).
  • Hauge said he was “at a loss as to what the counterargument is” to regulatory action stopping the use of synthesized delta-9-THC in the legal cannabis system. He referenced an opinion letter to board members written by attorney Clark Wu of the Arizona law firm Bianchi & Brandt which presented a “legal basis for the production of hemp-derived delta-9 THC in processor facilities licensed by the Board” using CBD imported in compliance with state law. He relayed Wu’s assertion that nothing barred supplementing a marijuana product with CBD as long as the total delta-9-THC content remained greater than 0.3%. Hauge summarized Wu’s argument that processors could then use chemistry “magic on it, wash it in acid, or do whatever the process is” to make more delta-9-THC for the legal market, noting “I don’t find that argument very persuasive myself” (audio - 2m).
    • The letter from Wu generally describes an “Enhancement Process” and focuses on how the products could be considered in compliance with state regulations: “All hemp-derived CBD isolate is lawfully sourced domestically, undergoes all required quality assurance and potency testing as required by W.A.C. § 314-55-109 (i.e., potency, pesticides, heavy metals, and residual solvents) prior to purchase, and then entered into Washington State’s Traceability program, and;
      • On June 16th, two days prior to the letter, Hauge suggested a problem with the practice was that processors might be importing “CBD from China or wherever.”
    • During the first phase, the CBD isolate is combined with existing marijuana products (i.e., marijuana extract containing greater than 0.3% delta-9 THC) legally produced by a licensed processor to enhance such products with CBD prior to processing, and the resulting product is (and remains) a marijuana product that contains more than 0.3% delta-9 THC;
    • The marijuana product with enhanced CBD concentration is further refined in the second phase by a licensed processor, and the resulting (final) marijuana product also contains more than 0.3% delta-9 THC; and
    • All marijuana products produced using the Enhancement Process are only offered for sale in Washington’s regulated marijuana market.”

• Policy and Rules Manager Kathy Hoffman responded to questions Board Member Ollie Garrett raised about the provenance of the clarifying statement and any reported health problems attributable to delta-8-THC.
  • Garrett turned attention to the April 28th agency policy statement on delta-8-THC and the clarifying bulletin issued on May 3rd, saying she’d heard “miscommunication” about the bulletin from people including Jeremy Moberg, CannaSol Farms Owner and Washington SunGrowers Industry Association (WSIA) Board Member. She asked why clarification of the original statement was needed and who had requested it (audio - 10m).
    • Board Chair David Postman remarked that “a lot of people” found the policy statement “difficult to understand” and it had been “interpreted by different people in different ways.” He observed that though the documents had emphasized delta-8-THC, in “both the policy statement and in the clarification it talks about delta-8” as well as “other products that are converted into delta-9, or others.”
    • Garrett wanted assurance that the documents were produced because agency staff believed clarification was needed, and not at the behest of “the Governor’s office or anything like that.” Hoffman stated that staff weren’t instructed to release the clarifying statement by the Governor's office, rather it was a response to questions they’d received “from licensees and others” to summarize the policy statement “in more simple terms.” The statement had been written based “largely on what statute says,” she indicated, and had “a lot of legal terminology in it.” Agency staff also wanted to indicate “where we were going to go in terms of rulemaking.”
    • Garrett asked what other agencies had staff that were “aware” of concerns over synthesized cannabinoids when the documents were being drafted, saying she wanted to understand “what did transpire, how it happened, and to make sure the right communication is what’s going on.” Hoffman responded that representatives of the following agencies collaborated on the statement “back to March”:
      • Washington State Department of Health (DOH)
      • Washington State Board of Health (SBOH)
      • Washington State Department of Agriculture (WSDA)
      • Washington State Pharmacy Quality Assurance Commission (WA Pharmacy Commission)
        • The commission affirmed a “plain language” interpretation of a statute defining THC asked for by WSLCB officials on April 27th, the day before the policy statement was issued.
    • Garrett also asked Hoffman about “any recorded health [risks]...of delta-8 or delta-9 derived from hemp...from any source.” Hoffman had asked the Washington Poison Center (WAPC), DOH, and SBOH and learned “there haven’t been any adverse events reported” in the state. However, she’d found reported adverse events “largely in states with just medical marijuana markets, or no legalization at all,” noting a warning issued by health officials in West Virginia but no “accidental over-ingestion, or any kind of side effect” had been reported in Washington.
  • Garrett wondered about board power to engage in emergency rulemaking regarding synthesized cannabinoids. Hoffman brought up the Vaping Associated Lung Injury (VALI) emergency rules in 2019, where there had been numerous cases of “popcorn lung” reported both in Washington and nationwide, leading to an executive order declaring a public health emergency. WSLCB officials could engage in emergency rulemaking in accordance with RCW 34.05.350 on emergency rules and amendments in that situation, she said, “because there was a public health crisis in Washington state.” As health officials were seeing “nothing at this point” related to consumption of synthesized cannabinoids, there was no emergency action agency leaders could take. Hoffman added that both WA OAG officials and Hauge agreed with this understanding of board members’ power (audio - 3m).
    • Permanent rules to prevent the use of vitamin E acetate in vapor products, the compound found to be causing VALI, were adopted by SBOH in October 2020.
  • Hauge stated that the lack of mention of synthesized delta-9-THC in the clarifying statement was due to the document being drafted “long before we had any hint” that delta-9-THC converted from CBD “was being used to supplant" cannabis biomass in the legal sector. He asserted the statement wasn’t intended to be used to “tie our hands and render us unable to proceed” with regulatory actions (audio - 8m).
    • Postman hadn’t “heard anyone suggest that” because the goal of the board and staff was “to find a way to address” delta-8-THC in the legal market as well as other potentially intoxicating compounds in cannabis. He described this process as “rules in the short term, legislation in the longer term, so we’re not chasing after the next new thing.” He viewed the statements as inclusive of “what we didn’t know, but needed to be able to address.”
    • Considering the THC rulemaking project initiated by the board on May 12th, Hoffman relayed, “at that time we were going off the premise that really what we were worried about” was delta-8-THC “in the market” and the CR-101 was focused on that concern. She read how the policy statement covered the “conversion of CBD, hemp, or both to delta- 8 THC, delta-9 THC, or any other marijuana compound that is not currently identified or defined in the Revised Code of Washington (RCW), the Washington Administrative Code (WAC), or both.” However, staff planned to “broaden the scope of the CR-101 to contemplate” conversion into other compounds. Garrett asked if this point had been left out of the clarifying statement, to which Hoffman answered that it had been included, just not in the CR-101 scope. Postman stated that he thought including this point in the CR-101 was warranted.
    • Postman added that he’d heard “a lot of talk” that the clarifying statement had been released to "appease" the Washington CannaBusiness Association (WACA) but noted that the Executive Director and Lobbyist for the group, Vicki Christophersen, had opposed it.
      • Christophersen offered pointed criticism of the board and the agency on May 12th.
      • Two lobbying firms led by Christophersen have been employed by Marcus Charles to represent clēēn:tech according to required reporting to the Washington State Public Disclosure Commission (WA PDC). In February, his company contracted Christophersen Inc. at $10,000 a month to lobby for “Energy and utilities” as well as “Environmental Affairs - Natural resources - Parks.” In May, clēēn:tech retained Coaxis Public Affairs, also registered to Christophersen, at $7,000 a month. Christophersen has received around $6,000 a month plus expenses from the Christophersen Inc. contract with WACA since 2016.
      • On June 21st, clēēn:tech incorporated a non-profit cannabis policy advocacy organization called Coalition for Cannabis Innovation.

• Board Chair David Postman reviewed current activity of the board on the use of delta-9-THC converted from CBD, including revisions to an existing rulemaking project and hints of a possible regulatory response beyond the rulemaking process.
  • Postman asked staff about next steps for action on synthesized delta-9-THC. Hoffman planned to offer board members a revised draft of the CR-101 at the July 7th board meeting to expand the scope of the rulemaking project. She considered rulemaking authority to be “very limited" under RCW 69.50.342(1)(m), and suggested further prohibition authority would need to be obtained from the legislature. Hoffman observed that a better definition of ‘synthetic cannabinoids’ would help staff and the industry, highlighting the definition adopted by lawmakers in New York (audio - 2m).
    • A change to the CR-101 would likely impact the timeline offered by Hoffman when she first presented the rulemaking effort to the board on May 12th. At that time she anticipated a CR-102 with proposed changes “by August 18th,” but a revision would likely push that goal out 30 days.
    • Learn more about how officials in New York and other states are handling delta-8-THC policy.
  • Hauge moved the discussion beyond the rulemaking level, saying he didn’t want to appear to favor "doing nothing" until elected officials took up the issue during the 2022 legislative session. “The damage will be done if we wait,” he said, and the board would “not be serving the public if we punt until the next legislative session." Garrett seconded his view, then Hauge vaguely intimated that rulemaking was “not the only tool in our bag” (audio - 6m).
    • If agency officials lacked rulemaking power to deal with the “existential threat” of synthesized delta-9-THC, Hauge suggested “let’s find out what else we can do and let’s do it as soon as is reasonably possible.” Hoffman said waiting on lawmakers “was not our intent,” but she wasn’t certain the current rulemaking authority granted to the board would be enough to “fix it.” Garrett repeated that "there's other ways other than rules" to influence policy and licensee behavior.
    • Hauge referred to WSLCB as having “the authority to regulate” things under their purview, remarking “I do not think that the agency is impotent in the face of substances not coming from" the legal market being introduced into it. He expected staff could “find some things to do” if board members found “the will to do it.” Postman added that "no one in the agency has suggested to me we are impotent in our ability to deal with this," predicting that "in the next week or so" the board would have a better sense of possible actions they could take. “We have a number of tools available to us" before the legislative session, he said, but agency representatives had to first complete research and analysis steps.

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