Oregon’s New Cannabis Laws: 2021 Edition

30 Jun Oregon’s New Cannabis Laws: 2021 Edition

The 2021 Oregon legislative session wrapped up on Sunday, June 27. Thus I am here with our annual update on the state’s new cannabis laws. This year, I count 10 passed bills that deal squarely with cannabis. Some of these bills already have been signed by Governor Brown, while others are still making their way to her desk. As a reminder, if the Governor doesn’t sign an enrolled bill within 30 days, it becomes law regardless. I don’t expect Governor Brown to veto any of these 10 bills, with one possible exception.

From an industry perspective, the session was notable for what passed, as much as for what did not. I’m going to start this post by covering two big bills that failed, and then we’ll move on to the winners.

Bills that Failed

HB 3112     Cannabis social equity

In my preview of this session back in January, I wrote “if we are ever going to see a cannabis social equity bill become law, this should be the year.” Unfortunately, it wasn’t the year. The reasons this bill failed are complex, but HB 3112 was killed behind the scenes after four months of fits and starts.

Every year that goes by without a cannabis social equity bill makes the lift a little heavier. In January, I examined some of the challenges HB 31112 would face, and I concluded:

“Unfortunately, this ship has sailed to some extent. There are thousands of cannabis industry licenses issued at this point in Oregon, and would-be beneficiaries of the Oregon Cannabis Equity Act will start from a moored position. The legislature should have dealt with this way back in 2015.”

In the bigger picture, the fate of HB 3112 was not unique. HB 2002, the omnibus, statewide bill targeting structural and systemic racism in Oregon, also fell by the wayside. That said, Oregon did pass a raft of standalone racial and criminal justice bills, which you can read about in a broader session summary here.

SB 864     Increased taxes

This bill would have increased the maximum percentage of tax that a city of county could impose on the sale of marijuana items, from 3% to 10%. SB 864 got sort of close in that it passed the Senate, but industry was staunchly opposed and, perhaps more importantly, the House Revenue Committee Chair let it drop. One factor there may have been the extra $1BB dollars contained in the state May revenue forecast, plus the $2.6BB received from the feds.

It will be interesting to watch what happens with cannabis tax increase proposals in the future, especially if state coffers run light again. A big cut of the cannabis tax revenue will be siphoned off by Measure 110 going forward. I am on record saying that cannabis taxes could go a bit higher, although for the sake of our clients I hope they do not.

Bills that Passed

HB 3000     Regulation of impairing artificially derived cannabinoids; etc.

This was a large, significant, omnibus hemp bill, which did a million things. Here are the big ones for me:

• Authorizes the Oregon Liquor Control Commission (“OLCC”) to regulate artificially derived cannabinoids.
• Allows a licensed OLCC processor to process hemp below the 0.3% THC threshold, and transfer those products into general commerce.
• Prohibits anyone other than a licensed marijuana retailer from selling specified industrial hemp commodities or products to consumers.
• Requires the OLCC to adopt rules establishing maximum concentration of total delta-9 THC and other cannabinoids, including artificially derived cannabinoids, in single serving of cannabinoid product.
• Directs the Oregon Department of Agriculture (“ODA”) to administer the Oregon Hemp State Program for production, processing and sale of industrial hemp.
• Requires ODA to conduct criminal records check on applicant for industrial hemp grower license.
• Requires ODA to establish requirements for tracking transfer of certain hemp commodities and products.
• Directs ODA to adopt rules to require hemp growers to report to any loss of crop, or intention to not plant.
• Requires grower ordered to destroy or remediate hemp crops to provide ODA documentation of destruction or remediation.
• Directs ODA to refuse to issue registration or take other specified action if someone plants hemp crops or commits certain violations prior to applying for grower registration.
• Allows marijuana processor to transfer, sell or transport hemp commodity or product to parties that are not marijuana processors, retailers or wholesalers, if the commodity or product meets specified requirements.
• Prohibits sale of hemp commodities and products intended for human consumption to consumer unless the commodity or product meets specified requirements.
• Establishes civil penalty up to $10,000 for certain persons growing industrial hemp crop that contains specified THC concentrations.
• Establishes Task Force on Cannabis-Derived Intoxicants.

Most of these items are self-explanatory, but the key takeaways for me are that 1) industry should be pleased with this bill overall; 2) Oregon is looking really hard at solutions for bad behavior –predominantly in Josephine and Jackson Counties–related to its lightly regulated hemp industry, and 3) despite the consumer protection bent of HB 3000, Oregon chose not to ban all artificial cannabinoids as 11 other states have done to date. Oregon will regulate those cannabinoids instead. I believe the state should be commended for its rational response in the context of evolving research, and its respect for market dynamism. We will follow up soon with a more detailed post on this development.

HB 2284A     Hemp commodity commission

Apparently lawful hemp operators wanted a commission to tax and market themselves, similar to the Oregon Wheat Commission or the Oregon Beef Council. It’s an interesting development for a relatively new state industry. We’ll be watching closely.

SB 408     Marijuana program adjustments

This is a Christmas tree bill that industry should be happy with. To start, it does a lot to pin down OLCC on enforcement issues we have critiqued for years on this blog. SB 408:

• Specifies reasons for which OLCC may delay processing, approving or denying an application for marijuana licensure.
• Requires OLCC to consider mitigating factors when revoking, suspending or restricting a license.
• Requires OLCC to establish by rule a schedule of numbers and types of violations that indicate disregard for law by an applicant or licensee.
• Requires OLCC to report, not later than December 31, 2021, and December 31, 2022, on rulemaking related to establishment of violations schedule and public safety.

Implemented properly, these changes should help set industry expectations for application processing, and more importantly, remove nebulous standards and protocols when licensees are charged with violations. On the administrative enforcement side, SB 408 also:

• Authorizes OLCC to revoke, suspend or restrict a marijuana license for reasons including diversion of marijuana to interstate or illicit market, and for introduction of cannabinoids or marijuana not produced by an OLCC licensee or tracked METRC.
• Authorizes OLCC to revoke a marijuana retailer license for specified reasons.

Finally, SB 408 attempts to tighten a few program gaps and clarify some vague terminology found in current rules and statutes:

• Allows commonly owned marijuana producers to transfer to one another marijuana and usable marijuana, and defines “commonly owned.”
• Allows marijuana producers to receive specified marijuana items from marijuana processors.
• Specifies information required in a transfer manifest for transport of marijuana.
• Requires OLCC to adopt rules to allow marijuana producer to receive specified amount of marijuana seeds from any source in Oregon.
• Increases the personal possession limits to two (2) ounces of marijuana in public place.
• Directs OLCC to adopt rules related to THC concentration in single serving of cannabinoid product or cannabinoid concentrate or extract.

HB 2519     Intrastate deliveries

This bill allows delivery of marijuana items by retailers to consumers in adjacent cities or counties, so long as those jurisdictions have adopted ordinances allowing for such delivery. Good fix.

SB 808     OLCC peace officers

This small bill makes a crucial change. It gives OLCC regulatory specialists the “peace officer” distinction (basically, law enforcement status), concurrent with OLCC’s expanded jurisdiction over artificial cannabinoids and hemp more generally. The idea here is to equip inspectors for encounters down in the wilds of Jackson and Josephine Counties to start, where sheriffs have stacks of warrants outstanding for unlicensed cannabis activity, and where fear of cartel-type activity is growing.

HB 3295     County eligibility for tax distributions

This little bill is targeted directly at Deschutes County (which I believe is moderately pro-cannabis at this point, given recent Commissioner rollover). HB 3295 requires counties, with a few exceptions, to convene cannabis advisory panels before they adopt specified ordinances related to marijuana, in order to be eligible for Oregon Marijuana Account money. It also modifies county eligibility requirements for money from that account.

HB 3369     Medical marijuana medical professionals

This commonsense bill allows nurses (like doctors) to discuss medical marijuana use with patients. It also specifies licensed health care providers who may recommend medical use of marijuana to registry identification cardholder. Cool.

SB 307     Oregon medical marijuana card discount for veterans

Another commonsense bill. This one waives fees (which are very small anyway) for certain veterans wishing to obtain a medical marijuana card. Each qualified veteran must have a total disability rating of at least 50 percent as result of injury or illness incurred or aggravated during active military service, and each must have received a discharge or release under other than dishonorable conditions. Back in January, I wrote “seems like low-hanging fruit, with the only question being whether 50% is the right number.” Same question, I guess, but it’s good this passed overall.

HB 2111A     Changes name of OLCC

Changes the name of the “Oregon Liquor Control Commission” to “Oregon Liquor and Cannabis Commission.” This is appropriate and it’s sort of strange it took so long, especially given the acronym remains unchanged.

SB 96     Regulation of inhalant delivery systems

Last but certainly not least, SB 96 authorizes OLCC to regulate testing and labeling of inhalant delivery systems that include hemp-derived vapor items. Of all the bills this session referred to Governor Brown, this is the only one where signature is an open question. I don’t have a great read on that, but I assume she will sign. If so, this regulation would be a significant undertaking for OLCC. Stay tuned.