In the two previous entries in this series (here and here), we discussed the packet of rules amendments recently adopted by the Oregon Liquor Control Commission (“OLCC”) to implement the many cannabis bills passed by Oregon last year. Specifically, we discussed a new rule allowing Marijuana Promotional Events, and a small amendment to the definition of “financial interest” that will have a big impact. Today we want to talk about some important changes to canopy sizes.
Before discussing the specific changes, it is important to note that these rules amendments were adopted in an uncertain time in Oregon’s recreational market. As we have noted before, prices for outdoor flower appear to be falling quickly and many producers have contacted our office about the possibility of pushing the OLCC to limit producer licenses, or enact a moratorium on new licenses. (Note: As of January 8, there were 896 active producer licensees in Oregon, with about 1,000 more in the queue). The reality is that the OLCC does not have statutory authority to either limit licenses or enact a moratorium. Only the legislature can make this kind of change, and we think that it is unlikely that it will be considered in the upcoming short session. Unlimited licenses will be the law of the land for the foreseeable future.
While the OLCC may not be able to limit licenses, it does have the authority to set canopy sizes, i.e. the size of the allowed cultivation area for each producer tier. Obviously, while existing producers may favor a moratorium on new licenses, they certainly don’t want a reduction in canopy sizes. From this point of view, the new rules are a bit of a mixed bag.
Previously, the OLCC’s rules allowed for an unlimited number of immature plants on each grow site. The canopy areas designated for each producer were for mature plants only. For example, a micro-tier I producer could have up to 625 square feet of mature plants and an unlimited number of immature plants. Many outdoor grow operations maximize yield by ensuring that they have a constant supply of near-mature plants ready to replant in their canopy area after each harvest. The new rules will put a damper on this strategy.
Specifically, the recent amendments create a new distinction between mature and immature canopies. Mature canopy sizes are identical to the previous rule, but can now contain both mature and immature plants. The new immature canopies are significantly smaller than the correlated mature canopy for outdoor producers. Here is the new breakdown:
Mature Canopies – Indoor (same as previous rule)
- Micro tier I: Up to 625 square feet.
- Micro tier II: 626 to 1,250 square feet.
- Tier I: 1,251 to 5,000 square feet.
- Tier II: 5,001 to 10,000 square feet.
Mature Canopies – Outdoor (same as previous rule)
- Micro tier I: Up to 2,500 square feet.
- Micro tier II: 2,501 to 5000 square feet.
- Tier 1: 5,001 to 20,000 square feet.
- Tier II: 20,001 to 40,000 square feet.
Immature Canopies – Indoor or Outdoor
- 625 square feet for Micro tier I producers.
- 1,250 square feet for Micro tier II producers.
- 5,000 square feet for Tier I producers.
- 10,000 square feet for Tier II producers.
Remember that outdoor producers could previously have as many immature plants on a site as they could fit. This change drastically reduces that number. However, producers should keep in mind that “if immature plants are grown on racks or shelving within the immature canopy, only the footprint of the area containing the immature plants will be used to calculate the immature canopy.” OAR 845-025-2040. So grow vertically!
It is also worth noting that the rules amendments implement a further restriction on all production canopies. All producers that renew after April 1, 2018 will be limited to 20 total canopy areas, and each canopy area must be separated by a physical boundary (a wall), or at least eight feet of open space.
While it remains to be seen whether this amendment will have any effect on Oregon’s supply glut, it seems certain that the legislature won’t be considering the issue anytime soon.