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State Board of Health Flavored Vapor Product Ban Set to Expire Feb. 8  

The Centers for Disease Control and Prevention says the national outbreak of vaping-associated lung injury has waned. We would like to update you on the emergency rules passed by the State Board of Health, and other issues of importance to cannabis licensees. Here's what you can expect and what continues to be required:
  • The State Board of Health emergency rule temporarily banning flavored vapor products remains in effect through February 7, 2020. On February 8, 2020, retailers may legally sell flavored vapor products. 
  • As of February 8, 2020, retailers of vapor products are no longer are required to post warning signs about the severe lung injury outbreak. 
  • The emergency rule temporarily banning vapor products with vitamin E acetate remains in effect until March 19. However, vitamin E acetate is known to be linked to cases of severe lung injury and health officials are considering if the ban on it's use should continue after March 19.
  • The LCB Board is expected to withdraw all LCB flavored-vapor-product rules tied to the State Board of Health rules.
  • Marijuana Vapor Product Ingredient Disclosure forms are still required to be submitted by all producer/processor and processor licensees for each vapor product. For more information, see the Links to Required Documents box on our Vapor and Public Health
Important: The Washington State Legislature is now in session and considering bills regarding vapor products, including Governor-requested legislation to ban vitamin E acetate and all flavorings, except tobacco flavoring, in non-THC vapor products. We encourage you to follow legislative action this session.
We appreciate your cooperation throughout the vaping-associated lung injury investigation and other changes impacting marijuana license holders.

Hemp Production Update

It's a New Year, and with it comes new rules for producing hemp in Washington State. In 2017, the Washington State Department of Agriculture (WSDA) launched a pilot program for industrial hemp production, known as the Industrial Hemp Research Pilot.  However, tight regulations and uncertainty surrounding federal law led few people to make use of the program. The passage of the 2018 Farm Bill offered new federal clarity about the production of hemp, differentiating it from cannabis, and creating a pathway for states to create new regulatory structures for hemp in their jurisdictions.
In 2019, the Washington State Legislature passed Engrossed Second Senate Bill 5276 (ESSB 5276), effectively repealing the Industrial Hemp Research Pilot, and replacing it with the Hemp Program, effective January 1, 2020. Today, farmers interested in producing hemp, including licensed cannabis farmers interested in producing both crops, can apply with the WSDA’s Hemp Producer License Application.
While licensed cannabis producers can also hold a hemp producer license, per WSDA rules they cannot grow cannabis with greater than 0.3% THC in their hemp registered land area. (WAC 16-306-050.5) The new rules include testing requirements for hemp producers, and federal reporting requirements with the USDA Farm Services Agency, among other updates. For more information on hemp production, and the new WSDA Hemp Program, you can check out the WSDA’s updated hemp website here.

Wholesale Cannabis Business Maps and Addresses Removed from LCB Website - Now Available Via Public Record Request

Since 2014, in addition to cannabis retail locations open to the public, we have posted on our website a map to all producer/processor locations as well as published a spreadsheet with their addresses. We did this from the beginning as a matter of transparency and public record. For years that information was highly sought by local residents, local governments, media, law enforcement, attorneys, etc.
Over time, we’ve heard from several producer/processors that they opposed this information being made so easily visible public – others praised the state’s efforts to be so transparent.  Recently some licensees have again raised concerns that posting this information posed a safety concern.
 The LCB management team and our public records unit began talking about the issue late last year.  Following these discussions, the agency decided that since the general application period for wholesale licenses is closed, the time is right to remove the non-retail maps and addresses from the website. 
 As of January, the maps and lists of wholesale cannabis businesses are no longer posted to the LCB website. Based on the state’s public records law, that information is still available via public record records request.

Independent Enforcement Review and Next Steps

A message from Director Rick Garza
The 2019 legislative session included legislation (SB 5318) that strongly emphasized the LCB’s focus to be on compliance and education rather than just enforcement when overseeing the regulated cannabis marketplace. Following the 2019 legislative session, the LCB hired an independent, respected organization Hillard Heintze (HH) to review and report on all aspects of our Enforcement Division’s operations, organizational structure, and management.
Without direct involvement from LCB staff, HH led: interviews with cannabis business licensees, industry members, interviews with cannabis and alcohol trade organizations, forums on each side of the state and interviews with a handful of agency staff. Last month, HH released its final report that included 18 recommendations. There were three themes that emerged in the HH recommendations:
  1. Interpretations of agency decisions (rules, policies, etc.) are inconsistently communicated and applied, not only within the agency but with the regulated community as well;
  2. A lack of transparency and understanding by stakeholders exists about agency decisions and interpretations; and
  3. Stronger outreach, communication, education, and collaboration with the industry is needed to help them understand and comply with laws, rules and policy.
The LCB welcomes and accepts the recommendations in the Hillard Heintze review. In fact, there was nothing in the report that came as a complete surprise. It affirmed many concerns we’ve heard previously or were actions already begun or planned for in the near future. For example, the agency has already taken steps to restructure the enforcement penalty guidelines. We've recently reorganized the Enforcement Division to revise policies and procedures and to develop expertise. In addition, the Licensing Division implemented dozens of collaborative actions in 2019 to increase communication and effectiveness between the two divisions.
Implementing the Recommendations
The LCB will be adopting many of the recommendations in the report – starting with those things we can implement within the first six months. The steps we are taking will impact the agency overall. We will make changes throughout the agency that will reflect the agency’s commitment to transparency and fundamental change. Highlights include:
  • Revising the agency mission statement revision to reflect our “education” role;
  • Revising the enforcement officer’s position description and the division’s policies and procedures to emphasize the importance of outreach and education as well as the approach with licensees in the officer’s work;
  • Revising our apparel and firearm policies to address concerns that our appearance may be a barrier to our goal of establishing effective relationships with licensees;
  • Reorganizing the Director’s Office to include a unit that will focus on outreach and education to further education, understanding and compliance within the industries we regulate;
  • The Director’s Office will also centralize our policy and rules coordination so that agency decisions can be consistently and clearly articulated with agency and staff and the industry. We are creating a Legal/Policy Team that will be the central source of developing and conveying agency decisions;
  • Decisions will be maintained in a central repository that staff and licensees may use to have a reliable, consistent answer going forward;
Thank you for your commitment to working together.  I look forward to our continued work together in 2020.

Did You Know? 

Retailers,
Did you know you can currently sell CBD products purchased outside the regulated market?  
You can, IF it is CBD that has less than 0.3% of THC concentration.
To help you navigate this privilege, we have created some helpful guidelines:
CBD may only be purchased from cannabis processors or it may come from outside the regulatory system (RCW 69.50.378)
CBD purchased outside the licensed market
  • Does not need to have traceability numbers associated on it. 
  • Must be a Cannabinoid Health and Beauty Aid (CHABA) - RCW 69.50.575. 
  • May not be ingestible CBD - no foods, beverages, or vapor products.   
CBD purchased from licensed cannabis processors
  • Can include CHABA and ingestible product (because of the testing procedures, it is safer for consumption).
  • Must be product that is included in the traceability system.

Traceability System Contract

In late December, LCB signed a six-month contract with traceability vendor MJ Freeway for maintenance and subscription services with LEAF Data Systems.
There are no anticipated future software releases for LEAF. Beyond June, 2020, the contract has options for future extensions for up to four, six-month periods. In addition, MJ Freeway will be crediting the LCB $265,000.
The Board is looking to the future of the cannabis framework in Washington State, and traceability is one part of the long-term view. Work is underway to define the long-term perspective, and discussion about traceability workflow, industry feedback and stakeholder wishes are happening. 

Listen and Learn: A Message from Kathy Hoffman, Cannabis, Vape, and Tobacco Policy and Rule Coordinator 

As some of you might know, I came to the LCB in late October of 2018 from the Washington State Department of Health, and before that, I served at the Washington State Attorney General’s office and the Washington State Health Care Authority. Rule development processes at each of the agencies varies, but the one common denominator was significant stakeholder engagement during the rule development process, well before proposed rules are presented to the approving authority.
Some of you also might know that I am a third year PhD student in leadership and change. In the course of those three years, I’ve been able to take a deep and critical look at stakeholder engagement models, and work with some of the preeminent scholars in the areas of organizational development, community development and engagement, leading change in complex environments, and a variety of other topics. 
When presented with the opportunity to lead changes to the marijuana, vapor and tobacco product regulatory environment, I was excited to bring an engagement model that I had tested when I was at DOH. “Listen and Learn” is based on David Cooperrider’s model of Appreciative Inquiry. According to Dr. Cooperrider’s website, AI represents a paradigm shift in the world of sustainable organizational development: a radical departure from traditional deficit-based change to a positive, strengths-based change approach. AI is a proven methodology that was designed to address the most important change agendas faced by many leaders, and is focused on leveraging “positive core” strengths to design and redesign systems. If we sketched AI out, it would look like this:
What does this mean to you? This means you can be part of envisioning, designing, learning, and discovering what "could be" when we host Listen and Learn sessions for specific rule development projects. Even though the LCB is required to stay within its statutory authority when designing or redesigning rules, that does not mean that we’re not interested in your innovative ideas and participation in developing those rules. That’s what Listen and Learn session are designed for.
So, what is Listen and Learn? It is a highly facilitated engagement model designed to provide a safe space for anyone who is interested in offering likes, dislikes, and suggested on, generally, a draft conceptual rule set.  This means when the LCB is exploring whether to revise a rule set or create new rules, we’ll be inviting you to join us. Listen and Learn sessions are not a place to debate or argue, but to engage the entire community in positive, forward-thinking idea sharing. In the future, we’ll begin to incorporate other engagement models for rule development designed for different groups, different types of rules, that offer different types of facilitated engagement.
Since April of 2019, I’ve hosted five successful Listen and Learn sessions. I look forward to working with you in the coming year, and encourage you to be a part of the process. As I said at the very first session, there is enough room at the table for all of us….and if there isn’t, we’ll get a larger table.
I invite you all to pull up a chair, and join the conversation. Look for 2020 Listen and Learn sessions starting in February.

Important Change Regarding Monthly Marijuana Sales/Tax Report

Marijuana licensees will now need to use a new version of the Marijuana Monthly Sales/Tax Report (Form LIQ 1295), also known as the Retailer Sales and Excise Tax Form, when sending your next Marijuana Monthly Sales and Tax Report. Those who do not use the new form will be out of compliance.Even those who did not have any sales must submit a monthly report. LCB is not able accept the old forms or reports from any point of sales / integrators systems. The official forms on our website are the only acceptable methods that can be used.
The new LIQ 1295 form is on our website:
  •  Click this link to open the 1295 form directly, or
  • In your web browser enter lcb.wa.gov/mj2015/faqs-on-taxes. You’ll see the link to the Retailer Sales and Excise Tax Form among the answers to the questions. 
Completed reports can be emailed to marijuanataxes@lcb.wa.gov. When mailing payments, to make sure account gets credited appropriately, please include a printed copy of Monthly Sales and Tax Reports and write your license number on the check, cashier check or money order.
If you have questions about marijuana taxes, visit our website (lcb.wa.gov/mj2015/faqs-on-taxes) for answers to common questions. You can also call our tax line (360) 664-1789 or email your question or request to marijuanataxes@lcb.wa.gov.

Planning to Make Changes to Your License in 2020? Use These Helpful Tips

Your license must be valid for the Licensing Division to process change requests.
Did you know you have to renew your marijuana license with Business Licensing Services (BLS) every year? If you do not renew it before it expires, you are operating without a license. 
Licenses must be valid for licensing to work on change applications.  If you have an open change application and your license expires while Licensing is processing your application, we will give you two weeks to renew your license.  If you do not renew your license, licensing will withdraw your application. 
BLS will mail you a renewal notice approximately six weeks before your business license expires.
Moving?
You cannot move your marijuana business location without prior approval from the LCB. Your license is tied to your location. If you move without prior approval, the LCB may discontinue your license. As soon as you know you plan to move to a new location, apply for a change of location through Business Licensing Services, here. If you have a situation that requires you to move quickly due to circumstances beyond your control, please contact your enforcement officer in writing about it. Even in these circumstances, prior approval is required before you can change your location.  
Online Resources
Licensing staff frequently withdraw change applications because the licensee is not ready to make the changes. To help you understand what is necessary to make changes, Licensing employees developed PowerPoint guides to explain the processes for changing locations and splitting producer/processor privileges and completing assumption and change of governing people applications.  Knowing what to expect helps expedite the change process. 
Once you are ready to make changes, you can find the applications on our website
Send all change applications to Business License Services (BLS) for processing at PO Box 9034, Olympia WA  98507-9034.  
Questions for Business Licensing Services (BLS)
You can reach BLS on their website, by phone at 1-800-451-7985, or by email at bls.dor.wa.gov.

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WSLCB Mission: 

Promote public safety and trust through fair administration and enforcement of liquor, cannabis, tobacco, and vapor laws.