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The Washington State Liquor and Cannabis Board (WSLCB) has appointed a new rules coordinator who has a new approach to rulemaking. Her first order of business: considering new testing regulations for the state’s cannabis products.

Katherine Hoffman, the WSLCB’s new cannabis rules coordinator, brings a collaborative approach to the agency’s rulemaking process, allowing industry stakeholders to provide comment on proposed changes. She transitioned from the Washington Department of Health in October.

“There was a contrast in the way that LCB had previously engaged in rulemaking and it was a little faster paced, I think,” Hoffman told Cannabis Business Times. “The approach that I brought to LCB was to slow down that process a little bit and do a little more work … on the front end, exploring all of the different positions that our stakeholders bring to a particular rulemaking project.”

So far, it seems this approach is well-received by the industry.

“What’s neat about Kat is she has her master’s in public administration, so she approaches rulemaking in a very different way than our prior rule coordinator, who came from a legal training background,” said Crystal Oliver, co-owner and founder of Washington’s Finest Cannabis, an outdoor cannabis farm in Eastern Washington, and executive director of the Washington Sungrowers Industry Association (WSIA). “Part of what Kat’s been doing with her approach to rulemaking is she really wants it to be a collaborative and transparent process, and so this is the first time that they’re doing the rulemaking in this fashion, where she has released draft conceptual rules for the industry to weigh in on.” (Oliver is a member of Cannabis Business Times’ editorial advisory board.)

“I got applause when I closed the meeting. That’s not the typical response we get when we close a meeting.”

-Katherine Hoffman, Cannabis Rules Coordinator, WSLCB

The Cannabis Alliance, a nonprofit advocacy group, has made pesticide and heavy metal testing of all the state’s cannabis, not just medical product regulated by the Department of Health, one of their legislative and regulatory priorities, Oliver said. In response, the WSLCB issued a pre-rulemaking notice, called a CR-101, last August, notifying industry stakeholders that the agency is considering adding pesticide and heavy metal testing as a requirement for all marijuana products.

The rules, known as the Quality Assurance Testing and Product Requirements, will include possible changes to lot and batch sizes for testing; fields of testing and pass/fail level adjustments; potency testing requirements; pesticide testing requirements for all cannabis products; heavy metal testing requirements; sample deduction requirements; general testing rule adjustments; product and THC serving limits; and packaging requirements.

The WSLCB held a Listen and Learn Forum April 9 to get input from cannabis licensees, testing labs and others on the proposed rule change, and it is also accepting written comments.

“I got applause when I closed the meeting,” Hoffman said. “That’s not the typical response we get when we close a meeting. So, if that speaks to how the industry receives us, then it was very well-received.”

“I drove five hours each way to attend the QA Listen and Learn session in Olympia last week, and I was really glad I made the drive,” Oliver said. “I was one of very few people there testifying there on behalf of farmers with my role as executive director of the Washington Sungrowers Association. The vast majority of folks in the room were representatives of various testing labs in Washington. The majority of those folks testified in opposition to the increase in lot size.”

One of the more interesting comments at the session, Oliver added, was on transitioning the regulatory language away from referring to THC and CBD potency, and instead calling it cannabinoid concentration, which is more scientifically accurate, she said.

“THC in flower doesn’t necessarily translate to potency because you have the entourage effect of the other terpenoids that are present in the flower,” Oliver said. “I thought that was a very interesting suggestion, and I think it will probably move in that direction, which is a very favorable change.”

Hoffman is now analyzing all of the comments she has received and sorting them by theme.

“What we’re seeing so far is a lot of feedback from producers that if we move forward with these rules, this is going to really severely impact their businesses such that they might not be able to function anymore,” she said.

From the perspective of Oliver and the WSIA, farmers in Washington cannot afford any increase in operating expenses stemming from a change in testing regulations. “Any increase in the cost of testing needs to be offset by either a lot size increase or they need to figure out a way to add these additional tests without increasing the cost to the farmers,” she said.

In the next phase of the rulemaking process, WSLCB staff will draft proposed changes based on public input and present them to the board for consideration. Hoffman might also consider establishing a work group, made up of labs and farms, to help fine-tune the details of the rules.

“The next step would be to look at this comment matrix and decide where we’re going to take this next,” Hoffman said. “Are we going to incorporate these comments? Which comments are going to be incorporated into a potential rule proposal? That will really drive where we go next with this. Do we need to do more listen and learn sessions? Do we need to establish some sort of group that is looking at how this is going to impact labs in terms of the heavy metal and pesticide testing?”

Because this rule change will have a significant impact on the industry, Hoffman is drafting a Small Business Economic Impact Statement, which is required by Washington law, to quantify the affect the new regulations might have on licenses cannabis businesses. She is also required to create a Significant Analysis, which analyzes rules that include any type of cost on the industry.

“That could be an administrative cost where you have to fill out an extra form, or it’s going to require a business or other regulated entity to engage in some other sort of activity that might somehow change their workflow,” Hoffman said. “So, what the analysis really does is look at what the existing rule does, what the new rule is proposing, and how that will impact a regulated community. … That works in tandem with the Small Business Economic Impact Statement.”

Both statements become part of a CR-102 package, which is the next step in the rulemaking process.

“Come the CR-102, the draft that’s been issued should be pretty well-vetted and there should be minimal pushback from the industry,” Oliver said.

The final version of the rules—and the impact they will have on the state’s licensed cannabis businesses—remain to be seen.

“As far as the short term and the long term, it’s really going to depend on what the final rules look like,” Oliver said. “I know at the Washington Sungrowers Association, we’re going to continue to engage in the conversation and advocate for no increase in operating costs for our farmer members.”

Published at Thu, 18 Apr 2019 18:16:00 +0000

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