WSLCB – Board Caucus
(October 8, 2019)

The Board heard the latest information on the vaping-related public health scare and Washington state’s response in preparation for emergency rulemaking.

Here are some observations from the Tuesday October 8th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus.

My top 3 takeaways:

  • Deputy Director Megan Duffy brought the Board up to speed on the vaping-related public health scare including WSLCB’s responsibilities and upcoming emergency rulemaking by the State Board of Health (audio – 16m).
    • In early September, WSLCB staff became aware of a spate of cases of severe lung-related illnesses associated with vapor products. Agency staff discussed the issue in advance of a September 27th press conference where Governor Jay Inslee signed Executive Order 19-03, “Addressing the Vaping Use Public Health Crisis.” The Board subsequently advanced vapor product rulemaking which would enact 2019 legislation.
    • Duffy said there were “currently a thousand cases in the U.S.seven of which had been confirmed in Washington.
      • As of October 1st, the U.S. Centers for Disease Control and Prevention (CDC) reported “1,080…lung injury cases associated with using e-cigarette, or vaping, products have been reported to CDC from 48 states and 1 U.S. territory. Eighteen deaths have been confirmed in 15 states.”
    • Duffy indicated the executive order tasked the State Board of Health (SBOH) with emergency rulemaking to ban flavored vapor products—“both [tetrahydrocannabinol] THC and non-THC”—at their October 9th board meeting.
    • WSLCB was responsible for a “signage requirement” which had been completed and shared with retailers. She said the Board would “take up consideration” of an emergency rule requiring display of vapor product warning signs on October 16th.
    • WSLCB also reached out to licensees to ensure compliance with ingredient disclosure rules in WAC 314-55-105. Duffy announced the agency was “working on a form that we would make available electronically” so that licensees could more easily document vapor product ingredients.
    • If cause(s) of the illnesses were identified, Duffy expected the agency would take up additional emergency rulemaking to ensure any impacted products were “removed from the market.” She also anticipated vapor product legislation during the following year’s legislative session.
      • HB 1932 was cited as a possible starting point for 2020 vapor legislation during legislator remarks at the press conference and SBOH staff will present a Health Impact Review (HIR) of the legislation at their October 9th board meeting.
    • Depending on the SBOH’s actions, Duffy expected WSLCB could have “some enforcement/compliance role” but it would likely differ for vapor licensees as compared to cannabis licensees. She said staff was looking to the SBOH to ascertain “what that would be, what that would look like, how would that work.” Board Member Russ Hauge inquired if WSLCB was the “enforcement arm” of the Department of Health (DOH) for vapor products. Duffy answered that the agency was, but it was “a different type of authority” than the agency had over cannabis licensees.
      • Enforcement of a new “Prohibition” would be delegated to “any agency under authority of RCW 43.20.050(5).”
      • In conversation, WSLCB staff told Cannabis Observer that the agency was vetting whether or not search warrants would be required to investigate licensed vapor premises.
    • Duffy confirmed that Sara Cooley-Broschart, WSLCB’s Public Health Education Liaison, would participate in the following day’s SBOH board meeting. She suggested Broschart would primarily describe the agency’s existing authority with regard to “the THC world and the non-THC world.” Enforcement Deputy Chief Steve Johnson and Cannabis Policy and Rules Coordinator Kathy Hoffman would also be in attendance to listen to public comment and SBOH “deliberations.” Broschart and Johnson joined the caucus later that morning.
    • Hauge said he’d read that authorities were attributing “a great number of these cases” to usage of unregulated Dank Vapes products, a pseudo-brand of packaging with no discernible company behind it. Duffy responded that she hadn’t heard any “definitive statement” from DOH or federal officials “with a clear cause of the illness.” Broschart articulated an emerging impression from other state investigations that the identified illnesses couldn’t be caused by a single brand’s vapor product line. She added that federal regulators had not limited “the culprit” to vape products from legal or “black market sources,” nor whether it was a combination of substances and devices.
    • Broschart said she’d “spoken to the state epidemiologist yesterday” who had organized an “incident command structure” at DOH which met five times per day. She said the group was focused on identifying cases and that “a couple specific products that have been mentioned but they haven’t confirmed them yet.” Case analysis was occurring “retroactively” and Broschart expected the state would “almost certainly” confirm “dozens of more cases.”
    • Broschart highlighted “the New York cases that were looked at, and that’s just a particular case cluster, were showing it was like a chemical exposure as if you inhaled mustard gas.
      • Broschart was referring to correspondence and a supplementary appendix from researchers at the Mayo Clinic published by The New England Journal of Medicine on October 2nd. Their preliminary research “reviewed lung biopsies from 17 patients” from around the country of whom ‘Eleven met the criteria for a “confirmed” diagnosis of vaping-related lung injury; the remaining six met the criteria for a “probable” designation.’ Their findings made no correlation to “mustard gas” exposures.
      • However, the last Mayo Clinic researcher listed on the published correspondence (and the only one who provided an email address) was interviewed by the New York Times. On October 2nd, the Times published an article titled “Lung Damage From Vaping Resembles Chemical Burns, Report Says” which attributed the claim to the researcher: “The injuries also look like those seen in people exposed to poisons like mustard gas, a chemical weapon used in World War I, he said.”
      • The inflammatory claim could be said to have spread like a noxious gas across the contemporary media landscape.
    • Broschart admitted that investigators “really haven’t identified anything yet” and promised to keep updating the Board. Broschart expected the WSLCB was “probably settling in for many, many more months of this, unfortunately.”
    • Hauge asked Johnson whether his division was “detailing any extra assets” for vapor enforcement. Johnson responded that the division was preparing to pull resources from retail liquor enforcement if needed to “augment and support” vapor and cannabis enforcement. He said Washington had about 1600 vaping retail outlets and another 500 cannabis retail stores.
    • Hauge also asked about unlicensed vaping stores which Johnson confirmed there were “still several out there” and that the agency’s officers “respond to those when we find them, or when the complaints come in.” Beyond that, Johnson reported that enforcement continued to find vapor products being sold by tobacco retailers unaware they needed to obtain separate licensing.
    • Later in the caucus, Hauge returned to the subject of vaping products. He said he’d been tracking the story in the news and thought the agency could expect “more uncertainty for a longer period of time.” Hauge was adamant that he had “no issue with the policy of really figuring out what we’re going to do before we open up the market any more than it already is.” He still believed Washington cases would not be attributed to “something from the regulated [502] market” but was ready to “be a little heavy-handed to sort this out.” Board Chair Jane Rushford echoed Hauge’s concern and was grateful Hoffman and Broschart were working to provide “a way to guide [the Board] through the emerging steps” (audio – 3m).
  • Board Member Ollie Garrett recounted her experiences at a Colorado symposium on cannabis regulation detailing what she learned about social equity efforts around the country (audio – 29m).
    • Garrett first mentioned her planned involvement in the Denver Marijuana Management Symposium during the September 17th Board Caucus. Garrett was the Board’s leading voice for equity in the cannabis industry and the agency’s proposal for a social equity program.
    • Garrett highlighted a tour of LivWell, one of Colorado’s largest vertically-integrated cannabis companies, saying she joined a group that toured both a grow site and a retail establishment. She admitted some confusion about Colorado’s plant tagging requirements for medical and recreational plants.
    • For the symposium’s social equity panel, Garrett said that Portland’s equity program administrator, Prosper Portland, was involved and pointed out how legal cannabis efforts increasingly included equity components from the outset. She indicated many legal cannabis states have defined “small businesses” in the cannabis industry to be companies with less than 20 employees. Garrett added that states are requiring labor agreements for businesses with more than 20 employees, particularly in California. She heard of one state where all cannabis businesses had to have a “social equity plan” published online.
    • Garrett learned that some states directed cannabis tax revenue “back to [an] underserved community.” The most common thing Garrett heard states with equity programs would have done differently was earlier “engagement with the industry, and all state agencies, and [a] more humble approach coming into the industry.” Garrett summed it up as “outreach early on” and said another state was considering legislation to provide “free cannabis to low-income patients.” She offered other state-specific updates:
      • The State of California saw their cannabis sector “stepping up with [providing workforce] training” for new employees. Some colleges in the state were developing cannabis curriculum on the legal industry. State officials there claimed to be conflicted about the “opt-in and opt-out” rights for local governments which led to a patchwork of zoning and bans. The state was now attempting to “give more incentives for [localities] to participate.” 
      • In Nevada, tribal governments around Las Vegas had become key “landlords,” leasing space for cannabis businesses.
      • In Michigan, a state which legalized in 2018, tribal nations were top financiers for cannabis startups. Regulators there were reportedly shying away from reference to “enforcement” officers in favor of “compliance” officers. The state had also set up a practice of using former Fire Marshals for Medical Marijuana Plan Reviews/Inspections as they were familiar with instructing businesses on regulatory compliance. Garrett said that one official from the state told her that “the last thing we want to do is issue violations, we want to help.” This attitude even extended to sales to minors where the emphasis was on issuing a “compliance report” to mitigate repeat sales rather than being punitive.
      • Oregon’s government had begun using their Minority and Women Business Enterprise Certification program for cannabis, leading to “certified” minority or women-owned companies that qualified for a “discount on licensing” or “deferred payments on certain things.”
      • Arizona was said to issue a “huge penalty for those who lie” about financing or fraud. The state also sought to “minimize subjective language, and [provide] free legal assistance to applicants.”
    • Garrett noted strong interest from many states in “delivery, hospitality, social consumption areas” in addition to “acceleration work” allowing a mentorship where someone “work[s] out of” another company’s facility. Hauge asked if there was a “barrier” to the Board creating an accelerator program. Rushford suggested “there’s a credential that is assigned after an internship or mentorship, that would be where the work lies. How does that get recognized and credentialed?” 
    • Overall, Garrett found the symposium a positive experience, calling it diverse as well as “interesting and informative.” She said it was a good mix of new and experienced cannabis stakeholders and that she got a lot out of “people being at the table” in addition to one-on-one conversations. Garrett noted that between 400 and 500 symposium attendees engaged and the event “stayed full the whole time.”
  • The Board briefly mentioned traceability; the Hillard Heintze enforcement report; upcoming agency meetings; as well as bans and moratoriums.
    • Traceability (audio – 2m). Hauge asked about responses to the ninth contract amendment with MJ Freeway extending the relationship with the traceability vendor for another two months. Rushford said she’d follow up with staff but had seen “no email traffic on it” although Director of Communications Brian Smith had “sent something out to licensees.” Hauge said regardless of the response rate the agency saw, a working traceability system remained of “critical importance.” Rushford asked to schedule a traceability and IT update for the Board’s next caucus on October 15th.
    • Hillard Heintze Enforcement Report (audio – 3m). Hauge raised the question of when the Board could expect a report evaluating the Enforcement division from consultants at Hillard Heintze. The consultancy firm hosted a discussion on the subject on July 30th which Enforcement Chief Justin Nordhorn mentioned on August 7th. After initially being told the report would be ready at the “end of December,” Rushford pushed Hillard Heintze staff to provide a draft by the end of October. Garrett asked who from the agency had been the lead on the project. Rushford answered that she considered Director Rick Garza the “sponsor” and WSLCB Director of Human Resources Clarice Chizomam Nnanabu to be the project lead for the agency. Rushford instructed Executive Assistant Dustin Dickson to confirm an estimated arrival date “because [the Board is] eager to dive into that.”
    • Several meetings involving the board received mentions (audio – 6m):
      • The Annual Board Planning Meeting, last held in July 2018, had been scheduled for the end of October but Rushford said it “felt crushed into too many other activities.” Instead, she proposed moving it to “early February” of 2020 so that they could consider priorities after getting “into that [legislative] session pattern” and having “time to process the forthcoming information” from the Hillard Heintze enforcement report.
      • Garrett and Dickson wanted to discuss scheduling the next Cannabis Advisory Council (CAC) meeting with Director of Legislative Relations Chris Thompson to determine whether it was preferable to convene before next year’s legislative session or after it started. Rushford recommended meeting before the session to hear input on the agency’s request legislation. The CAC last met on July 17th.
      • Rushford anticipated attending the Washington State Prevention Summit with Broschart and Hoffman with a message emphasizing “how to be effective in the rulemaking process” similar to an agency presentation at last year’s summit. She called the group a collection of “wonderful professionals that we just don’t see” but heard from through the WHY Coalition. Hauge observed “that constituency really hasn’t been an active player in our rulemaking like other interested parties have been.” Rushford added that Broschart had “been amazing as a conduit for us.”
    • Cannabis Bans and Moratoriums (audio – 5m). Garrett inquired as to whether WSLCB “tried to do anything” to address jurisdictional concerns. Hauge was skeptical, questioning if it was the Board’s “role to challenge a jurisdiction’s decision to not allow cannabis into it’s space.” Garrett suggested it was more about how to “educate” rather than “challenge.” Hauge noted that the Association of Washington Cities (AWC) and Washington State Association of Counties (WSAC) should be the first points of contact in that effort. Rushford said that she’d met with representatives from the groups recently to “touch base” and that they’d raised concerns “about the potential of a farmer’s markets” which had been a “big issue for them in the past.” Hauge brought up the overturning of a moratorium in Clark County earlier in the summer. Garrett argued that the issue of bans and moratoriums was related to the number of outstanding title certificates the agency had for retail stores in those areas.
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