WSLCB – Executive Management Team
(August 7, 2019)

Agency leadership discussed the Regulators Roundtable, progress on restructuring the Enforcement Division, and preparations for the legislative session.

Here are some observations from the Wednesday August 7th Washington State Liquor and Cannabis Board (WSLCB) Executive Management Team public meeting.

My top 3 takeaways:

  • Agency leadership heard reports from the Regulators Roundtable (audio – 21m).
    • Around 70 cannabis regulators convened in Alaska on July 22nd, with 27 jurisdictions from the US and Canada represented. Washington officials have been consistent participants in the semi-annual event, most recently in Massachusetts in November 2018 and Colorado in May 2018.
    • The WSLCB’s representatives were Enforcement Chief Justin Nordhorn, Policy and Rules Coordinator Kathy Hoffman, and Research Consultant Trecia Ehrlich. Director Rick Garza and Cannabis Examiners Manager Kendra Hodgson had planned to participate, but remained in Washington to help manage fallout from the still smoldering MJ Freeway Leaf Data Systems release. Washington state was also represented by Senior Policy Advisor Sheri Sawyer from the Office of the Governor and Assistant Attorney General Bruce Turcott, one of the lead counsels for the agency. Turcott was present for the EMT’s earlier executive session and stayed to offer rare public statements about his experiences in Alaska.
    • Participants noted the format of the event was changed from discussion in the round to a more traditional conference format including invited keynote speakers and breakout sessions.
    • Susan Audino, a prominent chemistry laboratory consultant and delegate to cannabis standards bodies, spoke about lab methods and the “dynamics of cannabis.”
      • Hoffman felt Audino’s information was directly relevant to the Department of Ecology (DOE)’s Cannabis Lab Accreditation Project. Audino’s distinction between quality assurance (QA) and quality control (QC) was helpful as Hoffman had become concerned the terminology the agency used in its open rulemaking project on Quality Assurance Testing and Product Requirements (WSR 18-17-041) might be incorrect, feedback she’d heard from DOE and planned to follow up on. Hoffman was reassured by Audino’s statement that “all botanicals are really hard to test.”
      • Turcott appreciated hearing about cannabis testing standards being developed by established scientific bodies.
    • Jonathan P. Caulkins, an academic and BOTEC consultant, discussed “trends in supply and demand.”
      • Nordhorn felt Caulkins’ presentation was “particularly interesting.” Caulkins emphasized the impact of publicly traded cannabis companies and used the marketing strategies of the tobacco and alcohol industries as examples.
      • Turcott described Caulkins’ speech as raising the profile of the known unknowns regulators were observing in cannabis policy, including high potency products.
    • Hoffman expressed new confidence that the diversity of state government structures meant the WSLCB could “take their [cannabis] frameworks under advisement” but should not expect to directly appropriate them. Turcott reiterated this point when mentioning a breakout session for legal counsels, saying differences made transposing regulations between states difficult.
    • Nordhorn observed delivery, social use, and equity were increasingly common policy discussions nationwide.
    • In a breakout session, Norhdorn discussed industrial hemp and other federal cannabis legislation in addition to “[cannabidiol] CBD issues” with other state officials. He claimed Washington was one of the few states diving into hemp regulation.
    • Another breakout group focused on delivery programs in legal states and challenges around hospitality establishments, jurisdictional opt-out, and the “licensing nexus” between medical- or recreationally-focused deliveries.
    • Hoffman was interested in an “accelerator or incubator provision” for micro-businesses in a recent Colorado law. She said it was designed for a “low capital intensive program they’re putting together.”
    • Board Member Russ Hauge asked if any Canadian representatives were able to speak “on a national level” about that country’s licensee vetting process and regulation of publicly traded cannabis companies. Nordhorn replied that issue wasn’t specifically addressed, but they did hear about Canada’s emerging packaging and labeling (PAL) system. Hoffman said a regulator from the Oregon Liquor Control Commission (OLCC) had made an “excellent” PAL presentation and would be joining the agency and industry representatives for a call on Monday August 12th.
    • Turcott noticed states that were early to legalize like Washington, Colorado, Oregon, and Alaska were serving as role models to jurisdictions that only had medical cannabis or were weighing legalization. He said Canadian representatives had shifted from politely observing to “actively contributing.”
    • At the end of the event, attendees were moving towards “formalizing the association” of cannabis regulators by forming an executive committee to draft articles of incorporation and by-laws. The group may ultimately include industry representatives. No proposed amounts for member contributions were agreed upon.
    • The next roundtable will be in Maryland in the first half of December.
  • Enforcement Chief Justin Nordhorn provided a detailed update on the reorganization of the Enforcement and Education Division already well underway (audio – 14m).
    • Nordhorn said the reorganization began in June. Reassignments had been “completed,” transfers “are underway” and he would be conducting interviews for a new Deputy Chief for Administration next week. The reorganized division will have separate branches for Operations and Administration, the latter of which will oversee all adjudicative hearings, training, and internal affairs investigations.
    • Enforcement would downsize from four geographical regions for retail liquor enforcement to three, a move intended to “shore up the operations on the cannabis side.” Nordhorn said eastern and western Washington would each have their own cannabis enforcement Captain under the new arrangement with infrastructure “set and in place by September 1st.”
    • Hauge wanted to know what would happen if consulting firm Hillard Heintze—hired to evaluate and recommend changes to the agency’s Enforcement and Education Division—recommended changes to the agency’s Enforcement and Education Division. Nordhorn said he had asked Hillard Heintze to review the reorganizing plan before implementation and claimed they thought it “made sense” as it was structured like similar efforts they’d observed in other law enforcement agencies. The enforcement officer’s union suspended negotiations for six months to await Hillard Heintze’s report, which Nordhorn said could lead to further changes. Nordhorn felt it was imperative to move proactively as the enforcement restructuring bill SB 5318 was effective in statute and included provisions for additional enforcement personnel.
    • Board Chair Jane Rushford asked about the “compliance education piece.” Nordhorn said the reorganization would put all cannabis enforcement “under one roof” by separating out liquor retail enforcement and creating cannabis enforcement units that cover production, processing, and retail with officers responsible for about 60 licenses each.
    • Enforcement will move from three retail compliance checks a year down to two in order to free up resources for “an added educational component” including licensee training and on-request consulting programs.
    • WSLCB Deputy Chief Steve Johnson issues a weekly bulletin about Enforcement and Education Division activity around the state which Cannabis Observer has been requesting throughout 2019. The last four bulletins acquired provide more detail on the reorganization, the planning of which has been underway since April.
  • Director of Legislative Relations Chris Thompson provided an update on WSLCB’s study of taxation based on cannabis potency and preparations for the 2020 legislative session (audio – 4m).
    • An agency study on varying the excise tax rate by product potency was legislatively-mandated by a proviso in the state budget. Thompson explained the agency had hired a consultant to assist in delivering the study whom he’d discuss project scope with next week. A workgroup consisting of state, tribal, and local officials; academics; and industry and prevention community representatives had been formed and would convene on August 22nd to start looking at the topic with the intention of meeting the study’s December 1st legislative deadline.
    • Thompson reported Director Rick Garza had urged him to set up regular communication with interested legislators to keep them abreast of WSLCB’s activity. Thompson planned to start a monthly bulletin for that purpose in the coming weeks.
    • Thompson said he’d met with the Office of the Code Reviser on Friday August 2nd regarding agency request legislation for the 2020 session, and anticipated receiving bill drafts within the next week. The draft legislation concerned “creation of a social equity program” in addition to “a proposal to enhance access to medical product as well as simultaneously provide some opportunities for small producers to become more sustainable.” Thompson planned to seek out lawmaker feedback before sharing the proposals with stakeholders and would review with the Board by the end of August. The deadline for submission to the Governor’s office and the Office of Financial Management (OFM) was September 13th.
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