Last Tuesday, I wrote about Oregon’s “Local Option”, which allows cities and counties to legislate against marijuana related activities under certain circumstances and to certain extents. There are two key factors governing whether and how a given Oregon city or county can opt out. These are best understood as: (1) what type of marijuana related activities the city or county is trying to proscribe; and (2) whether the city or county voted 55% or more against Measure 91, which legalized recreational marijuana in Oregon.
I also wrote that the League of Oregon Cities (LOC) would provide guidance to Oregon cities and counties wishing to legislate against marijuana. The LOC did exactly that, with a 34 pager that includes sample ordinances. These ordinances cover: (1) an opt out for early recreational pot sales, which otherwise begin October 1, 2015 statewide; (2) a “Council Opt Out” for the jurisdictions that can opt out by administrative fiat, because their populations voted 55% or more against Measure 91; and (3) an “Opt Out by Voter Referral” for the pro-Measure 91 locales. Finally, there is a “Local Tax By Voter Referral” ordinance, for counties that do not wish to opt out of the cannabis game, but rather, wish to collect a 3% point of sale tax on recreational sales in addition to the 17% sales tax levied by the state under HB 3400, the recreational marijuana statute.
Several of my clients currently scouting anti-cannabis locales have asked me whether the opt-out provisions of HB 3400 are “legal.” The answer is yes, almost certainly. Can lawsuits be brought against those locales? Yes (this is America). Will the lawsuits succeed? Probably not, although it depends on the scope of the ordinance at issue and how well it is drafted (the LOC templates look pretty good). At the end of the day, Oregon is a “home rule” state and cities and counties are allowed to make rules without permission from on high, so long as those rules are not incompatible with state law. Here, Oregon allows cities and counties to legislate against marijuana in various ways. So far, 12 of them have done so.
One narrow area in which litigation against an “opt out” city or county may be fruitful is in the context of medical marijuana growers who were growing prior to July 1, 2015. Unlike existing medical dispensaries and processors, which HB 3400 mostly insulates from local bureaucrats, the statute is silent on whether existing growers can be stopped. That narrow issue may soon be ripe for litigation – the sort that takes years to resolve.
Ultimately, there are three initial questions that marijuana entrepreneurs should be asking about Oregon’s “Local Option.” First, in which city and county does the business wish to operate? Second, does the business want to serve medical or recreational customers, or both? Finally, what role does the business want to fill in that market and what license or licenses does it wish to acquire? Once these decisions are made, operators can begin to assess whether and how the “Local Option” may apply. Hopefully, it won’t.