Oregon Cannabis Industry Proposes Changes to Rules and Statutes

13 May Oregon Cannabis Industry Proposes Changes to Rules and Statutes

This note discusses legislation proposed for this year’s Oregon legislative section. Specifically, Senate Bill 408, titled “Enforcement Reform,” that seeks to amend the statutes governing recreational marijuana and the Oregon Liquor Control Commission’s (“OLCC”) promulgation and application of administrative rules. The chief proponents of SB 408 are the Oregon Retailers Association of Cannabis (“ORCA”), the Oregon Cannabis Association and F.A.R.M.S. Inc. The bill is sponsored by Senator Prozanski.

From our perch representing marijuana producers, processors, retailers and wholesalers, SB 408 looks pretty good. Below are a few of changes proposed by SB 408.

Limits when the OLCC may delay processing applications or take other enforcement action

Presently, ORS 475B.060 provides that upon receiving an application for a license, the OLCC may not “unreasonably” delay processing, approving or denying the application or, if the application is approved, issuing the license. The statute gives no other guidance as to when the OLCC may delay processing.  Consequently, what happens when an application is submitted—and months and months go by—may be a mystery to the applicant. Sometimes delay occurs because the OLCC is dealing with a substantial backlog. But other times the OLCC places a “hold” on the application, often unbeknownst to the applicant, for a variety of reasons.

SB 408 would amend ORS 475B.060 applicants by specifying the circumstances when the OLCC may delay processing, approving, or denying an application. The new language would provide the OLCC may delay “only” under three circumstances. First – if the applicant or a person named on the application already holds a license and the OLCC has issued a notice of proposed revocation or suspension. Second – if the applicant is applying for a license at premises where the applicant seeks to assume ownership of an existing licensed business and the OLCC has issued a notice of proposed revocation or suspension of the license of the existing business. Third – where the OLCC has received information from law enforcement that the applicant is engaging or has engaged in commerce in the illegal marijuana market.

So the idea here is good one as it should help the OLCC and applicants know when and why an application may be delayed.

Requires the OLCC to develop a violation schedule outlining what constitutes a disregard of law

ORS 475B.256 explains when the OLCC may revoke, suspend or restrict a license. A frequent cause of concern for licensees is the “catch-all” provision in ORS 475B.256(b). That subsection says the OLCC may revoke, suspend, or restrict a license if the OLCC finds “there is any other reason that, in the opinion of the commission, based on public convenience or necessity, warrants revoking, suspending or restricting the license.” This is a lot of discretion. SB 408 removes that subsection.

SB 408 proposes a number of other positive changes to 475B.256. One of those would be a requirement that the OLCC develop a schedule outlining the numbers and types of violations that, if committed in a two-year period, would indicate a disregard for the law and failure to control the premises. This would be a welcome change because it cabins OLCC discretion and gives the OLCC clarity on what conduct may and may not result in revocation, suspension, or restriction.

As the marijuana industry progresses, the OLCC’s application and enforcement of its rules should become clearer and clearer – as should what penalties are appropriate for what kind of violations. A recurring issue for licensees is uneven enforcement. Whether there actually is uneven enforcement is besides the point, simply the appearance of uneven enforcement is bad for the OLCC—just as it is for the judiciary. Reports like these don’t help.  We welcome changes to 475B.256 that provide the OLCC and licensees better process and better clarity.

New rule for allowing transfers of specified products by producers

Growers have long been restricted in transferring products.  This created a veritable market for wholesale licenses, the vagaries of which aren’t important here.

SB 408 would make changes to the benefit of growers. It would expressly allow a grower to deliver or receive (i) cannabinoid products, extracts, and concentrates made by a processor from the grower’s marijuana that contain no other grower’s marijuana, (ii) a grower’s own marijuana that the processor did not process (i.e. it can be returned to the grower), and (iii) marijuana between two growers that have common ownership.

Increase possession limits from one to two ounces

SB 408 would increase the possession limits for usable marijuana from one to two ounces in a public place. Nothing more need be said.

Reduce the use of plastics in Oregon’s recreational marijuana industry

For a “green” industry and state, Oregon marijuana products sure use a lot of plastic packaging. SB 408 would direct the OLCC to consider changes to laws or rules that would reduce the use of plastics by the recreational marijuana industry and make a report on its findings.

I encourage readers to click the link above and read the bill yourself as this is post just discusses a few changes proposed by SB 408. Those in the industry, I believe, are generally supportive of SB 408.  If you feel the same, contact your state representatives and tell them to enact SB 408.

For more on the OLCC, recent changes, and other legislation see: