Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth.
Robert Frost, The Road Not Taken
At the end of this month, the Oregon Health Authority (“OHA”) will issue a notice to all Oregon medical cannabusinesses about the new medical seed-to-sale tracking requirements that will come online no later than July 1, 2018. As we previously mentioned, in passing SB 1057 earlier this year, Oregon decided that expanding the current recreational seed-to-sale tracking program (METRC) to the medical program will help cut down on cannabis being diverted to illegal markets. This move comes not a moment too soon in light of the Attorney General’s recent letter to Oregon Governor Kate Brown that is highly critical of Oregon’s success in meeting the Cole Memorandum enforcement guidelines. It appears the Department of Justice (think Jeff Sessions) has come to believe the Oregon Medical Marijuana Program is a major source of illegal cannabis exporting. The tracking requirement is a new financial burden on Oregon’s medical cannabis industry and it will eliminate one of the few remaining economic advantages legitimate medical businesses had over recreational businesses.
All signs point to the conclusion that Oregon ultimately wants to eliminate its medical cannabis program and convert all legal marijuana production to the recreational system. So, it isn’t surprising that the State is using this new tracking requirement as an opportunity to implicitly encourage medical cannabis businesses to convert over to recreational. As will be explained in the forthcoming notice, each medical cannabis business will have until December 1, 2017 to make an election on whether to continue under Oregon’s medical regime (with the new tracking requirements), or to convert to the recreational regime. Critically, even if you intend to continue as a medical operation you can’t just sit on your hands: If you don’t make an election either way by January 1, 2018 you will be at risk of losing your business.
The process for converting from a medical cannabis business to a recreational cannabis business does not appear to be too arduous. After timely submitting your election, you must submit an Oregon Liquor Control Commission (OLCC) license application by January 1, 2018. You will then be allowed to continue your medical cannabis operation until you get your recreational license, or as the OLCC explains it: “Once approved for an OLCC retail license you must cease all medical business practices and no medical marijuana products may be located on the licensed premises. The investigator reviewing your application will keep you informed of the status of your application, you will know when it is the appropriate time to possibly sell down all medical products to prepare for OLCC licensure.”
If you run an Oregon medical cannabis business, you’ve probably already seen your competitors flocking to the recreational system. Many of our clients that produce medical cannabis have informed us that it is becoming more and more difficult to find medical dispensaries willing and able to take on their product. At this point, it would seem you should all be taking the recreational road.