When HB 3400 passed, I wrote that Oregon’s new recreational marijuana law looks pretty good for anyone living west of the Cascades. That is because the bill famously allows any city or county in Oregon to ban commercial marijuana activity only if 55 percent or more of the county’s voters opposed Measure 91 for marijuana legalization. All of those “qualifying” cities and counties are east of the Cascades. For non-qualifying locales, like the western Oregon cities and counties, any proposed ban must be approved by local voters (meaning, the same local voters who endorsed Measure 91).
This statutory right of cities and counties to ban marijuana is euphemistically known as the “Local Option.” As a last minute compromise to push HB 3400 through, it bent several Measure 91 principles to the breaking point and was very controversial. In her signing statement, Governor Brown tellingly cautioned that “I support the compromise in this very limited area because I recognize that marijuana remains illegal under federal law. I do not expect to see this ‘opt out’ solution in future legislation…”. And with that, Oregon was stuck with the Local Option.
Here is how the Local Option works. If a qualifying city or county wants to ban medical marijuana dispensaries or processing sites, it submits its prohibition ordinance to the Oregon Health Authority (OHA). If the city or county wants to ban recreational cannabis producers, processors, wholesalers or retailers, it submits its prohibition ordinance to the Oregon Liquor Control Commission (OLCC). Upon submission, the relevant agency cannot issue licenses in the opted-out jurisdiction. There are some nuances here, including grandfather provisions, but that’s the gist.
Any city or county that wishes to opt out must act by the end of 2015 and we have started to see some movement. According to the OLCC, six local governments (one county and five cities) already have enacted local laws banning all business activity related to recreational marijuana. Three of these, including Douglas County and the cities of Brownsville and Sandy, are non-qualifying locales and must submit their bans to a popular vote in November 2016. The qualifying cities of Nyssa, Vale and Ontario in Eastern Oregon enacted immediate bans. In addition, Umatilla County just banned marijuana licenses by a unanimous vote (apparently no one spoke in opposition to the ban at the hearing). That county has not yet submitted its ordinance to the OLCC.
It is unlikely, but not impossible, that some key cannabis jurisdictions could fall. Deschutes County, for example, home to over 2,000 medical marijuana growers, is considering a ban at its August 12 meetings. I have spoken with clients this month who lament that, in addition to the difficulty of business planning while waiting for the OLCC to draft recreational program rules, they must now face (at least some) uncertainty that a moratorium could ensue.
The Oregon League of Cities (LOC), a powerful association which supports the Local Option, says in its July 31 Bulletin that “the League is preparing regulatory guidance for its members, including a summary of the 2015 legislation, a description of cities’ regulatory options, and sample ordinance wording that will be released on August 14.” Almost certainly, many cities and counties are waiting for this guidance from the LOC and will use it to inform their bans. By the time October 1 rolls around and temporary pot sales are happening, cannabis entrepreneurs should have a good idea of which locales will in fact exercise the Local Option.
Whether we like it or not, Oregon is going to be a patchwork of cannabis-friendly cities and counties, along with all the rest. So, what should industry entrepreneurs be doing? In addition to business planning, I have been advising all of our Oregon clients—especially those in borderline cities and counties—that the advocacy angle of running a cannabis business is far from over. It is essential to monitor and influence local affairs. HB 3400 may be law, but unlike with most industries, part of running a marijuana business is advocating for your right to do so. The Local Option ensures it.