The Oregon Recreational Marijuana Program: Final Rules are Finally Here

UnknownIn our most recent update on Oregon’s evolving thicket of cannabis rules, we mentioned that the temporary rules for the recreational program would expire last week, on June 28. New, permanent rules took effect the next day, and you can find them here. That 90-page document is helpful in that it contains struck-through language for temporary rules that failed to make the cut, and it adds new rules in bold typeface. Still, if you would rather not scroll through the 90 pages and ferret out the changes, here is a tidy overview.

All licensees

  • The residency requirement for ownership of, or investment in, a cannabis business is gone. This change came in under HB 4014, which opened Oregon’s marijuana programs to entrepreneurs and investors. Oregon is now the most open state to out-of-stater (even out of country) entrepreneurs and investors.
  • All cannabis business employees must hold a marijuana worker permit, not just retail employees. Information about the permit testing and licensing process is not yet available, but according to the OLCC site, a criminal background check will be required. While we wait for guidelines on this process, it is a good time to get educated.

Producers

  • A producer licensee may not co-locate on the same lot or parcel as another producer licensee under common ownership, or even under diverse ownership if OLCC “reasonably believes that the presence of multiple producers on the same lot or parcel creates a compliance risk or other risk to public health or safety.” Subjective standards like these can be maddening, so it will be important to have a line in to OLCC to be able to better assess whether the agency believes there may be a “compliance or other risk” before going all in on a location.
  • The Micro Tier licenses—I & II, indoor and outdoor—are here. These are a nice look for producers who wish to ease into the business of growing marijuana. Note that micro-growers may only sell to micro-wholesalers (see below).
  • Medical growers may now become licensed by OLCC, and apply to transition their inventory into the OLCC program. There are a number of steps that must be followed, so potential joiners will want to review OAR 845-025-2100 carefully. Pursuant to SB 1511, the prohibition on co-location of medical and OLCC licensed production sites has been removed.
  • No industrial hemp may be present on site, perhaps due to cross pollination concerns. If you want to grow industrial hemp, elsewhere, that program is looking good and we have already walked a few clients through licensure.
  • Producers may now sell to “non-profit dispensaries” (see below), a new category of retailer under the rules.

Wholesalers

  • Like producers, wholesalers may now sell to non-profit dispensaries.
  • The Micro Tier I & Micro Tier II wholesaler licenses are here. Like the same-class producer licenses, these are a less expensive, smaller scale market entry point.
  • Wholesalers may now register with the OLCC to wholesale medical marijuana. Should the state just get it over with and merge the two programs entirely already? Absolutely.

Processors

  • Processors may now receive from, or distribute to, a cannabis research certificate holder, and sell to non-profit dispensaries.
  • The rules for medical processors are now under the purview of OLCC, further blending the two programs. Of all classes of licensees to date, things have been hardest on processors, who are forced to pay a hefty registration fee to both the Oregon Health Authority and OLCC, and comply with overlapping rules.
  • The procedure for transitioning from medical to recreational is detailed nicely. In short, notice and an accounting of inventory are required both pre- and post-transition.

Retailers

  • The 1,000 ft. distance requirement from schools can be reduced to 500 feet if a local government adopts an ordinance allowing such proximity.
  • As with processors, the rules for medical retailers now fall under OLCC purview.
  • As with processors, the procedure for transitioning from medical to recreational is detailed nicely, with accounting of inventory required both pre- and post-transition.
  • As with processors, retailers may now transfer marijuana to research certificate holders.

The next several months will be key for recreational market players, as the permanent rules have been set and the number of applications received by OLCC continues to increase. The OLCC’s stated goal remains to have the program fully built out by this fall, although you can be sure that the market will mature appreciably in the next 18 months. We will continue to push licenses through and assist clients from Oregon and beyond in structuring these businesses with a firm commitment to program compliance.