Oregon Cannabis: Key Updates from the OLCC at Third Annual Cannabis Law Institute

29 Sep Oregon Cannabis: Key Updates from the OLCC at Third Annual Cannabis Law Institute

Last Friday and Saturday, members of the Oregon Bar gathered (online) for the third annual Cannabis Law Institute (CLI) put on by the Cannabis and Psychedelics Law Section of the Oregon State Bar. Topics included agricultural liens and receiverships, securities in the cannabis industry, federal and state hemp updates, Oregon’s Psilocybin Act, and the failures of legalization. An excellent ethics programs concluded the event.

As has become tradition, the Oregon Liquor and Cannabis Commission (OLCC) also presented agency updates and a program review. This post discusses some of the information shared by the OLCC and discussed at the CLI.

Operation Table Rock

Pursuant to HB 3000, the OLCC teamed up with the Oregon Department of Agriculture (ODA) and law enforcement this summer to conduct inspections (or raids depending on your point of view) of hemp farms—primarily in Southern Oregon—to look for marijuana masquerading as hemp.  (Our coverage of this and other aspects of HB 3000 may be found here and here). Known as Operation Table Rock, these “inspections” have led to at least one lawsuit and raised the ire of many hemp farmers in Southern Oregon. (See also this coverage by Hemp Industry Daily).

According to the OLCC, the ODA is leading this offensive against cannabis and approximately 60% of inspections found cannabis with high rates of delta-9 THC, i.e. over the 0.3% limit. When pressed the OLCC demurred to the ODA as to whether those crops were destroyed. Apparently the OLCC/ODA are using the LightLab Cannabis Analyzer to perform on-site field tests that give immediate results of the “presumptive” and “quantitative” delta-9 THC content based on the stage of the cannabis plant. The field results are considered a “certified test,” according to the OLCC, and so no further lab testing is required for the agencies to reach a conclusion. I expect challenges to this in the coming weeks.

For growers that have not been visited yet, you should know that when the OLCC/ODA is denied access, the OLCC is seeking administrative warrants. OLCC representatives stated that the agency has diverted substantial resources to Operation Table Rock in the past few months. When asked how farmers can challenge tests, the OLCC demurred to the ODA. I expect more clarity here as well as we approach harvest season.

Operation Table Rock is a significant change to how the ODA has managed hemp in Oregon. Where the ODA once approached hemp as just another crop, it is now taking an heavy-handed approach to enforcement. How long this continues is anyone’s guess at this point.

Staffing Changes at the OLCC

The OLCC reported on a number of leadership changes. Many involve familiar faces. Mark Smith is moving from heading up the metro marijuana compliance program to heading up the medical marijuana program. Smith is being replaced by Michelle Cate. Jason Hansen, who has been the Director of Licensing, is now the Director of Compliance. Hansen’s replacement is Andy Jurik, previously a regional manager. The OLCC is also working to fill numerous vacancies including hiring up to 8 marijuana licensing inspectors, filling 10 inspector positions on the compliance side, hiring 4 regional managers, and 2 additional case presenters. Once these positions are filled and the new hires get up to speed, licensees should expect more involvement from investigators.

New Regulations Governing Oregon Marijuana

The 2021 Legislative Session resulted in the enactment of several bills concerning recreational marijuana. These include SB 96, regulating the testing of hemp and vapor items. SB 408, which includes OLCC enforcement reform and other changes to license privileges. HB 2519 that provides for out-of-jurisdiction delivery and HB 3000.

The OLCC presently is in the rule-making process and has formed a number of Rule Advisory Committees (RACs). The OLCC intends to update its rules to take effect on January 1, 2022, the effective date of most of the majority of the bills.

In the coming weeks and months, licensees should pay close attention to their inboxes and be ready to provide comments at the public RAC sessions. If my experience serving on the last RAC was any indication, the OLCC takes seriously industry comments on proposed rules.

A few of the new rules that should take effect on January 1, 2022, include: Producer to producer transfers; Increasing the possession limits to two ounces and corresponding changes to sales limits; Opt-in period for counties and cities with respect to out-of-jurisdiction deliveries; and a host of changes to harmonize the rules with the 2021 Legislative Session.

Moratorium on Producer licenses

The OLCC currently has an administrative moratorium on the processing of new applications for all types of licenses. But as most readers know, the moratorium on producer licenses occurred via statute (SB 218). See here, here and here for coverage of SB 218. The statutory moratorium expires on January 2, 2022. Questions abound about what will happen then. The OLCC indicated that once SB 218 sunsets, the OLCC cannot “not take” new applications for producer licenses. However, the OLCC indicated that its “administrative pause” would still apply. So it seems that persons who desire a new producer license ought to apply as soon as SB 218 sunsets, but applications won’t be processed, at least for now.

Will SB 218 be revived? One OLCC slide stated that the agency would recommend to the OLCC Commissioners, Legislature, and Governor to continue the moratorium for two more years. The slide cited drought conditions, plenty of legal supply, and illegal supply depressing the market as support for continuing the moratorium. But at least one OLCC representative stated that the agency had no “current recommendation” whether SB 218 should be revived. (This is yet another reason to lobby the OLCC at the RACs, depending on where you fall on this issue.)

If you are confused as to the OLCC’s position on the producer license moratorium, so are we. When pressed as to how the moratorium works to reduce the unlicensed market, the OLCC had no real answer, other than to say that it lacked data on that market and that it was not sure about recommending a further moratorium. At least one attorney has placed the rise of unlicensed grows in Southern Oregon squarely on the feet of the OLCC. Others have blamed the 2018 Farm Bill as creating a wild west environment because of the lack of ODA oversight on hemp production. We will have more to say on the relationship between the producer moratorium and the rise in unlicensed marijuana cultivation in the coming weeks.

_____

As an attorney practicing in cannabis, I would like to thank the OLCC for appearing at the CLI and for its openness and candor. Finally, a huge thanks to Cassie Peters, Chairperson of the Oregon Cannabis and Psychedelics Law Section, for her tremendous efforts to make this event happen! (With assistance from other members of the section’s executive committee of which I am glad to be a part.)