Of all the Oregon marijuana activities, medical processing always seemed strangest from a rules point of view. Until recently, there was virtually no mention of pot processing in ORS Chapter 475 (the cannabis regulation statutes) nor in the related Oregon Health Authority’s (OHA) administrative rules. Although those rules made little sense from a business perspective, they did appear designed to insulate program participants from criminal liability, and processors have always participated in the program — even before dispensaries came online back in 2013. More than anybody else, processors have always operated in gray and dark gray markets.
Last summer, HB 3400 finally required OHA to establish a processing site registration system and to “track and regulate the processing of marijuana by a person responsible for a marijuana processing site.” That was the first step in transitioning the old card-juggling regime to an inventory reporting system, where the inventory is both carefully tracked and heavily regulated. Going forward, Oregon cannabis processors must comply with a thicket of administrative rules touching on all aspects of operation. The only exception is for those working on a very small scale and not selling through to dispensaries. Really, things couldn’t be more different.
Because Oregon’s medical processor application came online last Friday, we have been busy shepherding clients through the process, which is a multi-step endeavor full of timing pitfalls. The online portion can be completed immediately, but a bevy of forms must be submitted within 5 days, other forms must be submitted within 30 days, and then an approval and another form, and finally an inspection. It’s quite a process! The good news is that a processor with a pending application may legally operate throughout the application period, despite a recent scare, and even if that processor is making extracts.
Like the recreational cannabis processor application, the medical processor application is expensive ($4,000 with $500 non-refundable) and there are various requirements for various endorsements, from edibles to extracts. Applicants who already have applied for an Oregon recreational processor license will find much of this duplicative, right down to the land use statement and security requirements. The situation feels goofier still because recently passed Senate Bill 1511 actually allows recreational processors to register and process for the medical market. With that said, (1) it will be a while before the Oregon Liquor Control Commission (OLCC) writes rules around that, (2) nobody really knows what those rules will look like, and (3) very few recreational processors will be licensed this month, anyway. But yes, we hear you.
The OHA application is important for Oregon processors already up and running in the medical market because it allows them to keep doing what they were doing. The application also will allow processors to begin selling through to the recreational market sooner than previously expected (but only until the end of this year) under the “early start” provisions of SB 1511. For new applicants, when and whether to apply will come down to how quickly the applicant can ramp up and become operational, what products they wish to manufacture, and ultimately, in which market or markets they want to exist. Suddenly, there are so many options.