WSLCB – Listen and Learn Forum – Cannabis Penalties
(October 31, 2019)

After months of effort by an external work group, the complete rewrite of I-502 violations and associated penalties elicited a total of two comments.

Here are some observations from the Thursday October 31st Washington State Liquor and Cannabis Board (WSLCB) Listen and Learn Forum on the Cannabis Penalties rulemaking project.

My top 3 takeaways:

  • Policy and Rules Coordinator Kathy Hoffman explained the listen and learn forum purpose and format, then provided an update on the conceptual draft rules before participants introduced themselves (audio – 4m).
    • The cannabis penalties rulemaking project (WSR 18-22-099) was opened in November 2018, but was changed significantly to accommodate SB 5318’s enforcement reforms even prior to the bill’s passage into law in May 2019. Hoffman said the legislative process acted to “guide and redirect” the rulemaking project. Hoffman and agency staff worked with an external work group composed of licensees and their representatives to develop draft conceptual rules. The agency hosted a listen and learn forum on the initial sections of the draft rules on September 26th and announced the scheduling of a second forum on October 4th. Hoffman’s last rulemaking update covered by Cannabis Observer was at the October 29th board caucus. She reprised her update on cannabis penalties at the October 30th board meeting (audio – 1m).
    • Hoffman explained the agency’s intention was to “elicit feedback” on the draft conceptual rules “in a constructive fashion and then discuss next steps.” Comments would be added to a worksheet “organized by theme and analyzed,” which the agency would share “with industry partners and other interested parties and the Board.” She referenced the listen and learn format, acknowledging session attendees had “done this several times together.” Hoffman promised to go through every section in the agenda, letting any participants sign up to comment, suggest changes, or respond to other’s comments. She indicated this would be the final listen and learn session on the draft conceptual rules in the CR-101 stage before proposing rules as a CR-102 to the Board in November.
    • Hoffman then encouraged participants to introduce themselves (audio – 1m).
      • WSLCB and Office of the Attorney General (OAG) staff
        • Kathy Hoffman, Policy and Rules Coordinator (“for cannabis, tobacco, and vapor products”)
        • Victoria Owen, Policy And Rules Assistant
        • Amy Sharar, Communications Manager
        • Bruce Turcott, Assistant Attorney General for the agency
      • Cannabis industry participants
        • Brooke Davies, Washington CannaBusiness Association (WACA) Deputy Director
        • Luke Hunter, Harmony Farms Director of Compliance
        • Lara Kaminsky, The Cannabis Alliance Executive Director
      • Remote participants and observers
        • Bailey Hirschburg, Cannabis Observer
        • Chris Masse, Miller Nash Graham and Dunn Partner
  • The quick session elicited only two comments on significant regulatory violations and license suspensions, while the majority of draft rules were acceptable to those present.
    • Hoffman explained that while only two sections had speakers signed up she would address each section (audio – 1m).
    • 314-55-509 – Penalty structure (audio – 1m). No comments.
    • 314-55-520 – Category I: Violations of a severity that would make a license eligible for cancellation on a first offense (audio – 1m). No comments.
    • 314-55-521 – Category II: Violations that create a direct or immediate threat to public health, safety, or both (audio – 1m). No comments.
    • 314-55-522 – Category III: Violations that create a potential threat to public health, safety, or both (audio – 1m). No comments.
    • 314-55-523 – Category IV: Violations that are significant regulatory violations (audio – 1m).
      • Hunter raised an issue with the classification of “engaging in nonretail conditional sales, prohibited practices, or both” as a category IV violation while “engaging in retail conditional sales” was listed under category V. He asked “why would non-retail and retail be treated differently in this? I see it as equal public health and safety issue and I believe that this should be moved to section 5 as not as a severe issue” (audio – 2m).
    • 314-55-524 – Category V: Violations that are procedural and operational, and 314-55-525 – Category VI: Statutory penalty violations (audio – 1m). No comments.
    • 314-55-540 – Marijuana License Suspensions (audio – 1m).
      • Hunter called attention to section (3)(b) of the proposed draft which said licensees “May not sell, deliver, service, destroy, remove, or receive marijuana.” Hunter said “the inability for a producer to service marijuana during a license suspension could result in them losing their crop.” He added that he’d witnessed agency Enforcement staff “give grace to processors to allow minimal staffing” as well as “basic maintenance of their plants so they’re not going to lose their crop” (audio – 2m).
  • Wrapping up, broad support was voiced for Hoffman’s work and all who had committed time to helping develop the draft ruleset.
    • Hoffman was “really happy” with the swift conclusion to the listen and learn forum which she felt “reflects a lot of collaborative work” by group members. Hoffman said she believed the ruleset achieved something “everyone can work with moving forward” (audio – 1m).
    • Opening up the remaining moments of the session for final comments, Hoffman heard effusive praise from participants (presented in order).
      • Hirschburg shared his thoughts on the rulemaking process, saying “a number of you, in recent weeks and months have lauded Kathy’s work and her organization and her diligence in pursuing opinion and trying to incorporate it.” He added that rule review was “handled very differently than the agency used to handle its rulemaking process” (audio – 1m).
      • Davies said that her involvement started in 2018 and the project had grown into a more significant rewrite than she’d imagined. “It took a lot of work from Kathy and everybody else involved,” Davies stated. She noted that “we’re pretty happy with the way that these turned out” particularly the “substantially lower fines” (audio – 1m).
      • Hunter referenced his previous career at WSLCB “in adjudicative proceedings” when expressing how it “totally fills my heart with so much joy” to see the reform of cannabis penalties. He was confident the proposal would contribute to “really streamlining that process,” particularly for the Enforcement division (audio – 1m).
      • Kaminsky seconded participant comments, particularly Davies, “in terms of the amount of work that went into this over many, many months.” She was grateful for the “consistent willingness to meet at the table and work together with multiple stakeholders gets us to a place like this where we feel like we’ve been involved at every step of the way which helps us to be more invested in the outcome” (audio – 1m).
      • Turcott offered “kudos to everybody for working through a very complex set of rules.” He noticed a “side benefit” of the penalties review was “industry attorneys and representatives, and then I think the agency representatives and myself, find out sometimes what each others’ view of the rules are in a way that we did not realize.” Turcott felt this was a greater exchange of ideas “than what’s reflected in the final product” (audio – 1m).
    • Hoffman concluded by saying that both comments received would be added to a worksheet created for staff to “consider them moving forward.” Based on how few comments were received, she said it was “very likely that I will be able to move this forward on November 13th” (audio – 1m).
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