WSLCB - Special Board Meeting
(March 27, 2020) - Summary

[ Event Details ]

The agency paused the Quality Control Testing rulemaking project, implemented emergency rules allowing deferred excise tax payments, and learned the status of open rulemaking efforts.

Here are some observations from the Friday March 27th Washington State Liquor and Cannabis Board (WSLCB) Special Board Meeting.

My top 3 takeaways:

  • The irregular meeting incorporated temporary restrictions on the State’s Open Public Meetings Act intended to mitigate the spread of the coronavirus pandemic.
    • Many things have been changed subsequent to the confirmation of the first COVID-19 cases in the United States by the Centers for Disease Control and Prevention (CDC) and the Washington State Department of Health (DOH) on January 21st. Since then, Governor Jay Inslee declared a state of emergency on February 29th, limited gatherings and business activity on March 16th, and signed a “Stay Home, Stay Healthy” order on March 23rd. The cannabis industry was deemed an essential service, with licensed producers and processors under agriculture, and retailers under healthcare/public health.
    • On March 24th, Inslee signed two proclamations impacting the Washington State Liquor and Cannabis Board (WSLCB)’s activity:
      • One measure “waives the penalties for failure to timely remit tax payments to the LCB until April 22. The waiver is made retroactive to the date of the governor’s declaration of a state of emergency on Feb. 29.” WSLCB issued a bulletin about the order on March 25th.
      • Another temporary action suspended “certain statutory requirements in the Open Public Meetings Act (OPMA) and Public Records Act (PRA)” until April 22nd. The action prohibits agencies from hosting public meetings unless “the meeting is not conducted in-person and instead provides an option(s) for the public to attend the proceedings through, at minimum, telephonic access.”
    • On March 26th, the Washington State Office of the Attorney General (OAG) revised its March 6th general guidance to agencies on compliance with the OPMA during the coronavirus “event.” Rhetorical question #5 in the earlier document reaffirmed that “The OPMA does not require public comment. If an agency typically permits or wishes to permit public comment, it could consider accepting only written comments for the time being.“
    • The WSLCB announced their special board meeting less than 24 hours before its occurrence, noting the unusual circumstances: “this special meeting is out of the ordinary, and we are actively researching other opportunities for engagement during these challenging times.”
    • On Friday, Executive Assistant Dustin Dickson initiated the meeting---“convened via phone conference” in accordance with Inslee’s proclamation---and confirmed the Board’s remote presence. In addition to the Board Members and Dickson, Policy and Rules Manager Kathy Hoffman was also on the call (audio - 1m).
      • Cannabis Observer learned that Janette Benham, WSLCB’s Policy and Rules Coordinator for alcohol, resigned on March 13th. The agency posted two career opportunities in response and planned to begin reviewing applicants on March 18th. Hoffman’s title change reflected a promotion and she was temporarily responsible for drafting all rules at the agency.
    • Board Chair Jane Rushford introduced the temporary format saying “At this unprecedented time, we at LCB hope that our stakeholders and licensees and their families are safe and well. Thank you for your contributions to keeping our communities safe.” She also lauded the agency’s staff “for their agility, creativity, and overall...responsiveness during this demanding time.” (audio - 1m)
  • The Board withdrew proposed rules for the Quality Control (QC) Testing and Product Requirements rulemaking project until such time as a “venue and method" for the public hearing could be arranged.
    • The QC Testing rulemaking project (WSR 20-03-176) was last discussed on March 10th when the Board postponed its public hearing on proposed rules approved on January 22nd.
    • Hoffman announced she would “request withdrawal” of the QC Testing rulemaking project as the agency found itself “unable to host” a public hearing planned for April 1st. “We are actively exploring virtual options for public hearings and engagement moving forward,” Hoffman said (audio - 2m).
    • The withdrawal of the CR-102 would not end the rulemaking project. WSLCB’s “intention is to file a new CR-102 regarding marijuana quality control rules in the very near future once those engagement options become available and are fully functional.” She assured the Board that the only change when filing a new CR-102 would be an appropriate hearing date “and potentially the forum for the public hearing. This withdrawal merely puts this project on pause until venue and method” were “solidified.”
    • Board members voted unanimously to approve Hoffman’s pause of the rulemaking project.
    • Hoffman later said she was “anticipating April” as the timeframe to file a revised CR-102 but emphasized it was an aspirational date (audio - <1m).
  • Board members adopted an emergency rule enabling retailers to defer payment of excise taxes before hearing a rulemaking update covering cannabis and vapor products.
    • The agency’s last rulemaking update was on February 25th. 
    • Emergency Rulemaking for Deferment of Excise Tax Payments for Cannabis Retailers (audio - 2m).
      • Hoffman explained that the Governor’s amending proclamation on March 24th necessitated a corresponding emergency rule “to provide temporary relief from cannabis excise tax penalties to marijuana licensees who are affected by Governor Inslee’s proclamation.” She described the emergency rule as “a waiver retroactive to February 29th, 2020 of penalties for failure to pay or late payment of excise taxes that become due while governor’s Proclamation 20-13 is in effect.”
      • Hoffman emphasized that neither the proclamation nor the proposed emergency rule “relieve any LCB licensee from its statutory obligation to remit taxes” to the agency in accordance with WAC 314-55-092.
      • The Board approved the emergency measure without further comment.
    • Voluntary Compliance Program (VCP, WSR 19-15-074, audio - <1m). Hoffman reported that staff were “exploring options” to engage stakeholders “in the coming months so that we can facilitate listen and learn forums like we had scheduled before the pandemic.” The VCP work group last met on February 24th and the agency cancelled a listen and learn forum planned for March 17th.
    • True Party of Interest (TPI, WSR 18-22-054, audio - <1m). Hoffman expected to move ahead with a listen and learn forum followed by a CR-102 “as soon as is reasonably possible.” The TPI work group last met on February 18th to consider draft conceptual rules and the agency cancelled a listen and learn forum planned for March 26th.
    • Incremental Expansion of Tier 1 Canopy (WSR 20-01-171, audio - <1m). As with all of WSLCB’s rulemaking projects, tier 1 expansion was on hold until the agency ironed out appropriate “stakeholder engagement options.” Two prospective listen and learn forums were never officially scheduled for the end of March and beginning of April.
    • Implementation of HB 2826 - “Clarifying the authority of the liquor and cannabis board to regulate marijuana vapor products.” The WSLCB’s request legislation was signed into law on March 25th and became effective immediately (audio - <1m).
      • The session law codified and expanded certain WSLCB and DOH authorities claimed in the wake of the vaping associated lung injuries (VALI) health scare.
      • Prohibition of ingredients and devices. The law enables the agency to prohibit “the use of any type of additive, solvent, ingredient, or compound” but expands that emergency authority beyond marijuana vapor products to all marijuana products. It grants a new authority allowing for “prohibition of any type of device used in conjunction with a marijuana vapor product.” These prohibitions must be undertaken in consultation with DOH or “any other authority the board deems appropriate” and must correspond to concerns for public health or “youth access.”
      • New definition of “youth access.” The fundamental definitions of the Uniform Controlled Substances Act were amended with a new definition: ‘(xx) "Youth access" means the level of interest persons under the age of twenty-one may have in a vapor product, as well as the degree to which the product is available or appealing to such persons, and the likelihood of initiation, use, or addiction by adolescents and young adults.’
      • Reporting ingredients to DOH. The new law requires WSLCB licensees to submit to the DOH under oath “a complete list of all constituent substances and the amount and sources thereof in each marijuana vapor product, including all additives, thickening agents, preservatives, compounds, and any other substance used in the production and processing of each marijuana vapor product.”
        • It’s a reasonable question to ask what DOH plans to do with this information. If one were to believe the final fiscal note attached to the bill after the end of the legislative session, the answer would be: nothing? The agency stated, “the bill does not instruct DOH to store nor process the information, therefore there is no fiscal impact.” Sadly, this assertion may have been a procedural maneuver to ensure the Governor’s signature and avoid challenges to the legitimacy of the law were the agency to belatedly claim fiscal impacts which were never accounted for during deliberations on the bill.
      • Allowance for and prohibition of characterizing flavors. The compromise language scaling back the State’s war on flavors was codified as follows: “marijuana processors may incorporate in marijuana vapor products a characterizing flavor if the characterizing flavor is derived from botanical terpenes naturally occurring in the cannabis plant, regardless of source, and if the characterizing flavor mimics the terpene profile found in a cannabis plant. Characterizing flavors authorized under this section do not include any synthetic terpenes.” The WSLCB is further authorized to prohibit characterizing flavors if deemed “a risk to public health or youth access.”
        • A reputable source shared a potential unintended consequence of this language: ‘Most people are unaware that several "terpenes" found in cannabis are not terpenes, but actually esters or terpenoids and won't be allowed moving forward. A terpene is only made of hydrogen and carbon, while terpenoids also include oxygen. Citral, alpha-terpineol, menthol and geraniol are examples of items which are NOT terpenes, but terpenoids.’
      • SB 6254, the corresponding request legislation on non-cannabis vapor products authored by DOH in coordination with the Governor, failed.
      • Hoffman said “implementation and planning was going on” around HB 2826.
    • Vapor Product Emergency Rules (audio - <1m). Hoffman told the Board that “three emergency rules related to [tetrahydrocannabinol] THC vapor products and vitamin E acetate” could potentially be “influenced by [HB 2826] work.” She added that the emergency rules, which were revised and extended by the Board on February 5th, were set to expire on May 5th.

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