Strong Letter From Oversight Chairr

In a strongly written letter to Sharon Foster, Chair of the Washington Liquor Control Board, LCB, State Representative Chris Hurst, Chair of the House Government Accountability & Oversight Committee laid out his researched, thoughtful and experienced opinion about weak and inadequate sections of the agency’s proposed rules for the growing, processing and sale of recreational cannabis. The LCB is responsible for implementing Washington’s recreational cannabis use law, I-502, which was passed by the citizens in November of 2012.

Four Objections

Claiming that comments shared by himself and others have been ignored, Hurst takes brittle umbrage to four major provisions of the proposed rules. In his letter he tells the board that public safety concerns that he and others have raised with the LCB in the past weeks and months are not mentioned in the rules. He states further that his “gravest concerns focus on the inadequate rules regarding security, the lack of prescreening of applicants, disclosure of non-conviction drug related activities, and the reliance on a non-prescreened lottery system to choose applicants.”

In addition to security rules, Hurst calls out for minimum standards for security provisions, which are lacking now in the proposed rules, and tells the LCB Chair, the proposed lottery system for applications “will likely result in wasted time and resources.”

He closes his letter, sent today, by urging the LCB to “go beyond a requirement to disclose criminal convictions and require full disclosure of all prior illegal drug manufacturing or distribution activities for the past 10 years; whether or not there have been convictions for those activities.”

No Hearings Announced

Hurst, whose committee has jurisdiction over most issues relating to oversight of government, has no announced plans for a hearing on the proposed rules or the process of the LCB.

If the Devil is in the details, an extended look at the proposed rules has revealed a legion of evil spirits. If State Government is still functioning, July 3rd is the scheduled date for a revised version of the rules. A diverse cannabis community waits for the white smoke. If the legislature does not pass a new budget by midnight Sunday, the LCB will shut down as per an OFM agency operations list.

Hurst’s letter below:

June 25, 2013

Sharon Foster, Board Chair
Liquor Control Board
3000 Pacific Avenue
Mailstop 43076
Olympia, WA 98504

Ms. Foster:

Over the course of the last six months, I have been closely monitoring the process to implement a comprehensive regulatory structure for the legal sale of marijuana, pursuant to the passage of I-502. I have met with representatives of the Liquor Control Board, industry stakeholders, local jurisdictions and constituents with the range of concerns each party has regarding the rules being developed by the Liquor Control Board. I am concerned that the draft rules do not adequately take into account the public safety concerns that I and others have raised with the LCB in the past weeks and months. My gravest concerns focus on the inadequate rules regarding security, the lack of prescreening of applicants, disclosure of non-conviction drug related activities, and the reliance on a non-prescreened lottery system to choose applicants.

At a page and a half, the rules regarding security create few minimum standards for placement or types of equipment to be purchased and installed by licensees. By not setting minimum standards, the equipment purchased by licensees will prove to be inadequate in assisting LCB enforcement officers or police officers in their investigations. Colorado has developed a robust system which sets specific requirements for placement of cameras inside retail and growing premises, lockboxes for recording devices to prevent their destruction by thieves, minimum resolution of cameras and networked cameras that can be viewed from a central location by government enforcement officers. I am urging the LCB to look at the standards currently in place for medical marijuana in Colorado and to review the thorough proposal submitted by Canna Security as a pattern for standards. Having robust and specific rules on camera placement and other security measures will ensure the safety of employees and the public, and also maintain the integrity of our nascent legal market.

Another area of significant concern regards the structure of the application process. The lottery system is inefficient and will likely result in wasted time and resources. For instance, there is no information in the draft rules on any pre-requisites being needed to put ones name into the pool of names to be drawn. As currently structured, this lack of a pre-screening process will likely result in many unqualified applicants being drawn; leading to wasted time of LCB employees evaluating their full applications and delaying the process, which would then have to start over with a new name being drawn. In order to avoid this costly result, the LCB should require pre-applicants to document that they are sufficiently capitalized to start the business.  Other pre-screening precautions that should be implemented include; requiring a sizable safety deposit with the LCB and other ways to prove that their operation will be insurable when a license is granted. No one should be allowed to even put in for the lottery without demonstrating that they have a commitment for insurance sufficient to fully cover their anticipated liability for these operations. These steps are necessary to ensure that only businesses with adequate solvency, financial backing and liability coverage are selected. Businesses with adequate financial backing are essential to a functioning legal market which will assist in stabilizing prices and help in the erosion and eventually, the elimination of the illegal market.  In addition, businesses that have invested significant amounts of money will be far more likely to comply with the LCB regulations since they have more to lose by failing to do so. Poorly capitalized operations have little to lose if they violate the rules.

Finally, the LCB should go beyond a requirement to disclose criminal convictions and require full disclosure of all prior illegal drug manufacturing or distribution activities for the past 10 years; whether or not there have been convictions for those activities. Applicants with such a history have a far greater propensity to continue flouting legal requirements as a licensee and should be made to demonstrate a willingness to comply with the law by, for example, paying all past state and federal taxes on income from their prior activities. Failure to fully disclose such activities should be grounds for rejection of their application, or later revocation of a license if this information comes to light after the license is issued.

I applaud the efforts of the Liquor Control Board in developing these draft rules. It is my hope that by working together and addressing the points I’ve made above that we can create a successful, efficient system that ensures the safety of the public and employees of licensees.

Sincerely,

Rep. Christopher Hurst
Chair, Government Accountability and Oversight Committee

cc: Chris Marr
Ruthann Kurose
Rick Garza
Governor Inslee

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