Spokane LCB Hearing Aug. 8th

August 9, 2013

I’m writing this after just returning home from the last scheduled public hearing here in Spokane on regulations regarding I-502 implementation and hosted by the Washington State Liquor Control Board (LCB). Not only were many good topics brought up and explained but it would appear I have a retraction to make regarding an earlier post.

First, the correction.

In my post from July 5th, I-502: July Revised Draft Rules, I brought up the possibility that wording added to the regulations regarding medical cannabis might cause a constitutional conflict allowing for an easy lawsuit to shut down the recreational market. That turns out to not be an issue. I was able to ask and get clarification on the subject from the board and it was made clear that we are past that point and there is no constitutional conflict even if such wording were to be added. Further, because it has been signed, for the first 2 years of the initiative it would take a 2/3 majority vote by the legislature to do such a thing.

Can the feds still shut down the market? Sure, and it was made clear more than once that those actions are well outside the realm or jurisdiction of the liquor control board and is not much they can do. But a simple conflict of multiple subjects under one initiative is not one of the ways it might be done.

Now, on to the hearing.

I was surprised that the recent federal raids on the coast were not mentioned. I would have lost money on that bet if you read my earlier posting on the subject. Judging from the audience I would say that it was already common knowledge and none needed to be reminded. A raid by the DEA was mentioned but was referring to a separate, earlier action if I heard the location right.

Outdoor growing of cannabis is basically dead on arrival for most business applications. More than once the board indicated that getting a license approval to grow just 1 acre was very unlikely. For obvious reasons it wasn’t specifically stated, “No large outdoor grows”, but it was clear this is the direction things are going. Rather remote is the possibility that a 50-100 lbs. annual yield in seed stock will operate a business much less cover startup costs for most food producers.

More’s the pity.

The topic of medical cannabis was talked about a great deal. That might seem counter productive at first but I was very glad to hear the discussion for a couple of reasons.

One, I was already in the process of writing my next post on I-502 entitled, “Washington’s Red Herring: Medical Cannabis”. There was a good deal of information heard that I will need to rewrite some of it with and other I had not known to be included. Perhaps not comprehensive but at least it will be up to date.

Second, and what I will talk about here, is a matter of context.

The articles in our newspapers paint this picture that medical dispensaries are selling to just anyone. That medical growers are really the shadow black-market suppliers in Washington and up to half of our projected tax revenues will be lost to them. To be blunt and in no uncertain terms that is not what I heard tonight at the LCB hearing.

What the LCB said was when the Governor signed off on our medical laws large sections of rules and regulations were vetoed out at the same time. This is why Washington has the most unregulated medical system in the country. The effect was essentially to wave a huge “Raid Us!” flag to federal prosecutors.

So, by sticking to their heavy regulation guns the LCB is essentially saying, “Hey look. Recreational cannabis will be even more regulated and monitored than Hanford. Whataya want?” End paraphrased quote.

Put that way, in that context directly from the LCB without a newspaper filter the extensive regulations actually make some sense. Having the former state representative sitting there who signed the medical legislation saying this is how it was, this is how it is, this is why we are proceeding this way, I’m willing to take the LCB at its word.

Do I still think the retail market will fail? Sure I do. But at least I have a clearer understanding of the method behind the madness. And in all reality if it does the blame will not be on medical cannabis or the LCB. Retail prices above the black-market standard will take care of that all by itself.

Other topics raised were the various aspects of banking, money handling and transportation, harvesting. I grouped those together since they share many of the same concerns.

Transportation has to be done in-house. That is to say the vehicle and persons operating it cannot be of a different company or contracted. The vehicle must belong to the producer, distributor or retail business. Similarly the workers operating them must be direct employees of the same whether hourly, salary or seasonal. So a contractor type business that handles transportation is not on the table. The same applies to a harvest/grooming type business where workers would be farmed out (Ha) to producers.

For banking the LCB pretty much made it clear that again this was something that did not fall under their jurisdiction. What they did do was bring along additional staff and advisers that could answer some of those questions.

Generally everything talked about is already floating around in the news sheets out there. Given the constraints and lack of established rules I thought that most concerns were addressed as well as can be expected. The only possibility I heard and not already read about is what was loosely called a state type bank but in practice would be better described as a depository. That was quickly followed up with the reiteration that these are just ideas and only emphasize that the payment/banking problems are currently being worked on.

And no, just opening a bank account in Uruguay wasn’t mentioned either.

The concerns about the organic regulations and cloning was brought up a few  times. The rooting hormone most commonly used to create viable clones is technically not organic but that wasn’t the subject. I think the context was to recommend growing only from seed to retain organic status and not hormone cloning. Basically from the point of view that seedlings rather than clones supply producers.

I’m not entirely certain. In my opinion the concept of starting a production company just sell to other producers is a lose/lose game.

Any grower with three brain cells to pool together is going to change the sex on some clones, flower them as males and harvest the pollen. If properly stored pollen lasts a good long time and doesn’t need dedicated production space. Building up your own seed stock from strains that grow best under your particular business model indoors or out is just sound planning and added insurance against the future. With a market this heavily regulated purchasing clones or seedlings from another producer is a constantly recurring expense that is entirely unnecessary.

The one concern about organics that I did catch clearly was that the license application window coming up would allow starting plants from anywhere. Once into the system and tracking started that window would then close. If clones are not viable organics then where is a producer startup to turn? The answer was essentially the same thing I posted earlier, that it was a minor problem that should allow for a quick fix.

That fairly sums up the general topics discussed. On the whole I thought it went well and found it to be informative and worth the walk downtown rather than pray for parking. I obviously question the viability of the recreational market as proposed but found nothing wrong with with the LCB, additional staff or advisers. Given the scope of the task at hand I think they are doing a pretty good job. I’ll just end this post by thanking them for once again coming to Spokane for these hearings.

The West Report
The opinions expressed in The West Report are the author’s own. Feel free to repost or share, we just ask you credit or link to this article as a source.

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