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LCB visits Spokane for round-table

Traceability concerns being studied

One of the challenges with those trying to regulate Washington’s legal cannabis marketplace or those being regulated by it is that it’s distinctly different than many other industries.

“It’s not a traditional open market, but more of a restricted monopoly,” said Rick Garza, director of Washington’s Liquor and Cannabis Board, which oversees licensing and enforcement of the nearly 2,000 retailers, producers and processors.

This is partly because the state limits the number of available licenses to grow and sell cannabis, prohibits interstate commerce, and also continually updates its rules and regulations. Even five years into this effort, there’s still a fair amount of fine-tuning taking place.

In the last year, the system has also led to frustration as wholesale prices continue to drop.

At an industry round-table in Spokane in early June, Garza and other LCB officials heard concerns and compliments about the existing system and discussed what could be coming in the future at a state and federal level.

He emphasized that even with the frustrations, Washington’s system is still considered a national model for how government and commerce can work well together, and both entities remain focused on keeping the public safe and cannabis away from kids.

“Oregon, for instance, didn’t start slow and had to cut off the number of granted licenses early,” he said. “Even though many people there had experience growing, their system is still struggling.”

In Washington, however, he said the state has always tried to provide what it believes is a realistic amount of licenses based on total plant square footage, although some in the crowd questioned the methods used to determine this quantity.

A 2016 University of Washington study concluded that the amount of plants is sufficient for the amount of legal customers. But some in the crowd were unsure whether plants are measured by totaling square footage of available space or average height of plants.

Much of the crowd’s larger concerns, however, focused on the software required to keep track of product and orders. After many in the industry were unsatisfied with Biotrack, the state’s original software vendor, the LCB opened up bids for a new vendor last year and terminated its account with Biotrack last October.

It eventually chose a vendor called MJ Freeway, whose LEAF system didn’t go online until earlier this year. In the meantime, growers faced months of technical problems, including inaccurate and incomplete labeling. Some stores even refused mislabeled shipments, which meant many farms couldn’t sell their product.

Garza and other LCB officials continue to meet regularly with LEAF and other traceability experts to figure out what went wrong and make sure all concerns are addressed, including problems integrating the software with any third-party programs.

“We’re trying to test and replicate the problems people are having – hundreds want this fixed,” Garza said. “We’ve apologized for the struggles since we do want everyone to succeed.”

The LCB has also hired Gartner Consulting to look at the “people, processes and technology” and figure out the root causes. It is currently interviewing software integrators and licensees.

While some growers asked for restitution for lost revenue during this transition or a refund of their license fees, the LCB said they couldn’t make this call. The Washington Legislature would have to approve any funding for this, and every grower would have to be invited to specifically share how they were fiscally impacted.

The presentation included an update on enforcement efforts. Justin Nordhorn, chief of the enforcement and education division, said although cannabis advertising draws the most complaints, officers continue to focus on making sure other rules are followed, everything from correct ownership to keeping cannabis away from minors and off the black market.

Nordhorn encouraged owners and growers to contact the LCB with questions, complaints or concerns, rather than wait until something questionable or illegal is discovered.

“If you’re upfront with us and report something in good faith, we’ll be happy to help,” he said. “We want our people to be responsible and professional, and I want to hear ‘I’d rather have contact with LCB vs. other agencies.’”

However, he suggested that businesses respond faster when an LCB officer shows up for a required inspection.

“If we are delayed too long, we start to wonder what you have to hide,” Nordhorn said. “Are there things that aren’t supposed to be there, people who don’t belong or other threats? We’re trained to have these thoughts.”

The LCB officials encouraged participants in the industry to continue to contact them with questions or concerns, and subscribe to various newsletters and its listserv about rule updates, at lcb.wa.gov/laws/get_notifications.

The event was sponsored by Apex Cannabis and the Washington CannaBusiness Association.