US Department of Justice Announcement

Agency operations will continue as normal
Recently US Attorney General Jeff Sessions rescinded the three memos (Cole, Ogden, Wilkinson) that outline the federal enforcement guidelines for recreational, medical and tribal operations. Those enforcement priorities can further be broken down into three themes: preventing youth access to cannabis, preventing the criminal element from operating within the system, and preventing diversion of product outside of Washington State. While the memo is no longer in effect Washington's system is designed to meet those expectations and the agency will continue to enforce the spirit of the memo.
The agency has received a lot of inquiries on the topic and we would like to reiterate our position and the relevant facts:
  • The WSLCB will continue to uphold the will of Washington state voters by licensing and regulating the industry.
  • Both Governor Jay Inslee and Attorney General Bob Ferguson have been steadfast in defending Washington's system and have both indicated they will continue to do so in the event of federal intervention.
  • While AG Sessions rescinded the memos he did not indicate an imminent move towards enforcement actions against regulated systems. Federal enforcement is at the discretion of the Regional Assistant Attorney Generals.   
  • Any changes to the status quo will be communicated to licensees via email notification. If you haven't already you can sign up for them here.  

Licensing Updates

Non-Operating Retailers
During the 2017 legislative session, RCW 69.50.325 was amended to require the WSLCB to establish a license forfeiture process for marijuana retailers that are not fully operational and open to the public. There are exceptions for retail marijuana stores licensed in areas with bans or moratoriums, specifically the agency may not require license forfeiture if actions by the city, town or county with jurisdiction over your business prevents you from operating. If you are a licensed marijuana retailer who is not reporting sales, we will be asking you to submit documentation to maintain your license.
The WSLCB is reaching out to retailers who have not reported sales to determine why they are not operational. In order to avoid forfeiture, retailers who are not operating must submit documentation from the city, town, or county indicating that local rules are preventing the business from opening. The WSLCB may discontinue retail licenses that do not submit verifying documentation. 
New Form for Multiple License Holders
To help us track multiple license holders and ensure licensees do not own more than three producer/processor or five retail marijuana licenses, we have added a new form to the application process. The License Association form asks you to identify all other licenses associated with a true party of interest.
This form is required for new applications, assumption applications, and changes in governing persons.
Current Issues Impacting Licensees
Straight from our investigators these are topics and issues they are seeing a lot of 
Tax Obligations
It's important to remember that we will not process any change applications or renewals if you owe taxes or have outstanding fees (including violations). WAC 314-55-050(12) and RCW 69.50 require all applicants to pay taxes and fees before we process any application related to your business.
Landlords and Leases
Please remember that RCW 69.50.328 and WAC 314-55-018 prohibit retail licensees from leasing to a non-retail licensees, and vice versa.
Investing Additional Money
After you are licensed, all money invested in the business from an outside source must be disclosed to the WSLCB.  This includes new investments from all true parties of interest, previously approved financiers, and new financiers.  If you are paying for any business expense with anything other than profits generated by the business, it is considered an outside source.  Start the process by submitting the Application for Adding a Financier form, available on our website.  You must receive board approval before you receive the money.  
Licensing Webinars
Our Licensing Division provides free WebEx classes for applicants and licensees about a variety of alcohol and cannabis related topics. These classes, led by agency experts, are geared towards users and their questions. 
Please check out the upcoming classes and sign up for the topics that interest you.  We record each session, so if you missed a session you are interested in, check out our archives.

Legislative Session

The legislature is back in session, and now is a good time to explain the agency's role when it comes to proposed legislation. Due to our role as the regulator for the cannabis industry, our staff serve as advisers on potential impacts. When a bill is introduced it is forwarded to the agency for analysis. Our staff assess the bill to determine its fiscal and policy impacts, particularly how it impacts public safety and if it conforms to the recently rescinded Cole Memo. The agency's budget unit determines how much it will cost to implement the legislation, and maintain it going forward including start-up costs, purchases, new employee hires, etc. Members of the LCB are also frequently requested to testify about industry-related bills alongside other impacted parties (industry, public, etc.).    

We provide lawmakers with a clear, comprehensive look at how any bill will impact the cannabis industry and what long term effects that impact will have.  

Important Dates

  • January 8, 2018 First Day of Session
  • February 14, 2018 Last day to consider (pass) bills in house of origin
  • March 2, 2018* Last day to consider (pass) opposite house bills
  • March 8, 2018 Last day allowed for regular session.
* After the 54th day, only initiatives, alternatives to initiatives, budgets and matters necessary to implement budgets, matters that affect state revenue, messages pertaining to amendments, differences between the houses, and matters incident to the interim and closing of the session may be considered.

Recent Pesticide Notice

Last week we sent a bulletin on behalf of our partners, the Washington State Department of Agriculture, regarding four products that contain undisclosed pesticides that may cause your product to fail testing. If you have utilized one of the products below please follow the appropriate steps in the "Action Required Section."
Fertilizers:
  1. Bud Factor X, WA Reg. No. 1465-0111
  2. Finisher 0.0083-0.011-0.0505, WA Reg. No. 2067-0025
  3. Honey Chome 0.5-0.5-1, WA Reg. No. 2800-0010
  4. King Kola 0.3-2-3, WA Reg. No. 2800-0008


Action Required

Producers
  • Immediately discontinue use of these products and remove these products from the licensed premises.
  • Advise all processors to whom you have sold cannabis treated with these products that it may have been treated with pesticide ingredients that are not allowed.
Processors
  • Provide a notice about the possible use of pesticide ingredients that are not allowed to retailers who carry your products that may have been treated with these products.
Retailers
  • Post the notice provided by the processor in a conspicuous location on your licensed premises.

Research to Policy, What Does it Mean?

Trecia Ehrlich, MPH, WSLCB Researcher
 
As a research consultant with a public health background, I dig up research to provide information, education, and context, as we make policy decisions. While research helps us make decisions about everything from advertising to waste, to farm worker health, this consultancy also allows us to think about the questions we still want answered.
The National Institute of Health and other organizations that fund cannabis research send their grants all over the United States. By talking with researchers all over the country, I am able to help them plan or modify their study design to help us in answering some of the questions we’ve had for years. Many researchers who have received cannabis grants do not reside in legal states, and therefore they are researching in a different demography, geography, and sociopolitical context. 
Connecting with researchers who have active grants is slowly moving us forward as we aim to learn more about cannabis and pregnancy, cannabis potency, and many other questions that Washington and other legal states want answered. Stay tuned for more on research!

Email Notifications

The agency recently transitioned from Listserv to GovDelivery for email notifications. We've added more notification topics for specific subjects like traceability updates, training and rulemaking. You can manage your subscription and select subtopics here.

Observations from the Field

-A message from Deputy Chief Steve Johnson
As the traceability implementation date draws closer it is important for licensees to understand what their responsibility is in the process and what our concerns are regarding compliance. Failure to maintain traceability is currently the most frequent violation for licensees. Educating yourself in advance will help you avoid this violation.
First, it's incredibly important for you or members of your staff to participate in the training. Familiarizing yourself with the system will only benefit you and your business in the long run. There are training resources available and I encourage you to view the videos and training materials online. If something doesn't make sense, now is the time to raise the issue, not after transition when you are out of compliance.   
From a technical standpoint we will be watching closely to ensure licensees maintain traceability during/after implementation. Licensees should be proactive about compliance in advance of this period by checking with their third party software provider to ensure their software solution is ready for the transition. If your software will not keep you in compliance licensees should be prepared to continue manually tracking inventory and uploading it when the new system comes online. Our officers will be in the field during implementation checking to make sure licensees are tracking inventory so make sure your protocols are in place and all staff are familiar with them. 
Thank you for your time and if you have any questions please reach out to the contacts at the bottom of this page, or call (360) 664-1728. 

LCB Advances with Technology

Like any state agency, the LCB is dependent on technology for our day to day operations. But lately, we’re advancing with the ways we use technology to help make our work more accessible and transparent to our licensees and the general public.
In December, we implemented GovDelivery, a cloud-based solution for communications, meeting and agenda management, and digital services. GovDelivery helps the LCB streamline messages, better reach targeted audiences and provide transparency with what we do.
In October, our boardroom was enhanced with a robust camera and microphone system that ties into our computer network. This has enabled us to up the game when it comes to broadcasting Board and other meetings via webinar. We’re also in the beginning stages of preparing to be able to receive live testimony at Board meetings. The goal is to have this feature implemented by the summertime. This makes testimony for some of our licensees more feasible, especially when they reside in remote parts of the state.
In addition to adding the technical enhancements in our Board room and implementing GovDelivery, our Communications team also made the switch to using GoToWebinar as our webinar delivery platform. The LCB will continue to offer webinars to marijuana licensees on a quarterly basis, to help share information and provide learning opportunities. If you have a suggestion for a webinar topic you feel would benefit all of our licensees, don’t hesitate to share that idea with our Communications team.

Cannabis Rules Update

Several rulemakings are currently underway and are detailed below. As always, we encourage your participation in the rulemaking process and value public input. You can find information about any current rulemaking on the Proposed Rules webpage under Laws and Rules on the WLSCB’s website. You can also find additional materials related to rulemaking items brought to Board meetings on the Board’s webpage under Board Meeting Schedule and Information, here.
Cannabis Advertising Rules
Changes to rules are needed due to changes in advertising laws passed by the Legislature that became effective on July 23, 2017.  More information on those changes is available here: https://lcb.wa.gov/sites/default/files/publications/Marijuana/5131-Advertising-Notice.pdf.
The rule proposals incorporate provisions placed in statute, as well as provide additional guidance to ensure legislative intent is carried out.
  • Definitions of “plant” or “product” as depictions of plants and products are prohibited on outdoor advertising.
  • Definitions of “billboard” using industry standards, “adults-only facility,” and providing exemptions for “open” and “ATM” signs, etc., are included.
  • Adding a minimum size requirement for warnings on advertisements other than outdoor advertisements modeled after requirements for political ads. No warnings required on billboards or two 1600 sq. in. signs on the premises due to limitations on content in the law.
A public hearing on the rules was held on January 10th. The WSLCB is currently reviewing comments received and testimony and will be making technical changes prior to adopting the rules.
Staff will request adoption of the changes by the Board at the February 7th Board meeting.
Packaging and Labeling Rules
Over the past year, the WSLCB held a work group with representatives from the industry organizations, DOH, and the Washington Poison Center to take a global look at packaging and labeling rules. Information gathered as part of this work group directly informed draft changes.
The rules proposals are aimed at streamlining requirements to increase efficiency, readability, and to alleviate industry concerns and respond to consumer input on warning statements. Items of note in this rulemaking include:
  • Allowing certain products to be packaged loosely in resealable child-resistant packaging without being individually wrapped
  • Universal symbol for cannabis products similar to Colorado and Oregon
  • Reducing warnings and shortening language for clarity and efficiency
  • Addressing “accompanying materials” – reductions and signage options
Rulemaking will include an extended effective date to ensure industry has ample notice and can cycle through existing product (not less than six months)
The proposed rules (CR-102) will be brought to the Board to request approval for filing on February 7th. This will also open a public comment period and set a public hearing date for people to comment on the proposed changes. Once the Board approves filing the CR-102, the draft rules will be posted on the WSLCB’s Proposed Rules webpage and notice will be sent to the listserv.
2017 Cannabis Legislation Rules
This rulemaking incorporates rules changes needed from changes to law by the Legislature in 2017 as well as other changes identified by staff, industry, etc. Highlights of the proposed changes include:
  • Retail license forfeiture process as required by changes to RCW 69.50.325
  • Sales of immature plants/clones and seeds to patients (currently operating under interim policy)
  • Adjustments to penalties for advertising violations – Required by 5131
  • Removal of prioritization for license applications
  • Parameters for disclosing licensing and consulting agreements as required by law
  • Removal of 24 hour quarantine prior to transfers
  • Removal of 72 hour quarantine prior to destruction of waste
  • Volume discounts – carefully drawn to avoid undue influence and cross-tier relationships while still allowing volume discounts similar to other industries
  • Allowing extraction services between processors without having to purchase the entire product and sell back to the other processor plus the cost of the extraction service
  • Additional detail to the definition of “especially appealing to children” and adding a definition of “cartoon” for advertising and packaging and labeling
  • Other clarifying and technical changes to ensure clarity and efficiency of rules
Production and Canopy Rules
A CR-101 was filed in December for cannabis production and canopy rule changes. This is the initial stage in the rulemaking process providing notice that the agency intends to engage in rulemaking on a subject. The WSLCB is currently gathering comments and proposals for potential rule changes on this subject and pulling together information for a draft to be considered by the Board.
Potential rule changes will address how the WSLCB may handle a situation where canopy may be adjusted, increased or decreased, should data indicate that we should do so. There are some conditions in our producer rules for this for reductions for individual growers, etc., but it doesn’t anticipate all scenarios where this may be necessary or advisable.
How can you participate in the rulemaking process?
Check out our Proposed Rules webpage under Laws and Rules on the WLSCB’s website and submit comments to rules@lcb.wa.gov. All rulemaking activity occurs at Board meetings. You can access Board agendas and meeting materials at the Board’s webpage: Board Meeting Schedule and Information.

Canopy Analyst Team

The agency recently created this team to get a better understanding of what Washington's canopy actually looks like. We asked the team's coordinator Lukas Hunter to speak about it.
With two months under our belt we have examined over 160,000 cannabis plants. Our primary goal is to gather information on the growth rate of cannabis utilizing different growing methodology. This is no easy feat, and this research has never been conducted on such a large scale. We work hard to ensure that we are capturing all the data that we need to understand the factual cannabis canopy that is grown in Washington.
From left to right: David Ennis, Ilya Kluchnikov, Matthew Harper, Cheryl Palady, Lukas S. Hunter
Gathering this information will help prevent diversion by understanding the correlation between the size of cannabis plants and yield of usable marijuana from that plant. There is variance in this equation (based upon different growing talent), but given the 1.5 million plants grown in Washington, state averages should yield concrete averages. In other words, by the end of this project we will know what size a Sativa dominate strain grown outside in the dirt in Yakima should look like vs. an Indica dominate strain grown indoors hydroponically. Pairing our findings with traceability data, we can determine how much useable marijuana those two different plants should theoretically produce. Ultimately this data will be used to better regulate the industry.

Traceability Update

The “go-live” date for the new traceability system was pushed back from January 1, 2018 to February 1, 2018.
Based on discussions with the vendor, MJ Freeway, and internally at the LCB, the preparation period was extended to ensure optimal readiness of the system, and the smoothest transition possible for licensees.
January 14 marked a “code freeze” for software development, meaning that no more new code could be added to the system. This provides a two-week allowance for testing, stabilizing and optimizing the software. After the system launches on February 1, licensees will have until February 15 to enter their current plants and inventory. All lab (QA) results will need to be added by March 2. If licensees use a third party software provider that has validated with Leaf Data Systems, these steps may be completed for them. Licensees are responsible for confirming what their third party software system providers plan to upload into Leaf Data Systems on behalf of customers. 
Currently, the following third party software providers have completed the validation process with Leaf Data Systems, and a few more are in the process of validation:
  • BioTrack THC
  • CannaData Solutions
  • Cova Software
  • Dauntless
  • DopePlow
  • Early Bird Solutions/Cannasol
  • GreenBits

  • GrowFlow
  • LeafOps
  • MJ Freeway
  • Mister Kraken
  • S2 Solutions
  • Soro Software
  • WeedTraQR
There are some steps that licensees will need to take to transition to the new traceability system. To learn more about the transition, visit the Getting Started with Leaf page on the LCB website. 
Who to Contact
We expect the transition to Leaf will be seamless however if you do encounter issues we've put together the following list of contacts to address your problem.
Technical Support for Leaf Data Systems*
Questions About Your License
Training Questions for Leaf Data Systems

Questions About Taxes
Traceability Compliance Questions
* Starting February 1, 2018

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

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