Oregon Cannabis Industry Proposes Changes to Rules and Statutes

Oregon Cannabis Industry Proposes Changes to Rules and Statutes

This note discusses the proposed legislation for this year’s Oregon Legislature. Specifically, Senate Act 408, entitled “Enforcement Reform,” which seeks to change the recreational marijuana bylaws and the promulgation and application of administrative regulations by the Oregon Liquor Control Commission (“OLCC”). The main proponents of SB 408 are the Oregon Retailers Association of Cannabis (“ORCA”), the Oregon Cannabis Association, and FARMS Inc. The bill is sponsored by Senator Prozanski.

From our seat, representing marijuana producers, processors, retailers and wholesalers, SB 408 looks pretty good. Below are some of the changes proposed by SB 408.

Limits when the OLCC can delay processing requests or take other enforcement action

Currently, ORS 475B.060 provides that upon receipt of a license application, the OLCC will not “unduly” delay the processing, approval or rejection of the application, or, if the application is approved, the granting of the license. The law does not provide any further guidance on when the OLCC can delay processing. As a result, what happens when an application is submitted can be a mystery to the applicant – months and months go by. Sometimes a delay occurs because the OLCC is dealing with a significant backlog. In other cases, however, the OLCC withholds the application for various reasons, which are often unknown to the applicant.

SB 408 would modify ORS 475B.060 applicants by specifying the circumstances in which the OLCC can delay processing, approving, or rejecting an application. The new language would provide that the OLCC can “only” delay in three circumstances. First – if the applicant or a person named in the application already has a license and the OLCC has issued a notice of the proposed revocation or suspension. Second, if the applicant applies for a license on premises where the applicant wishes to take ownership of an existing licensed company and the OLCC has published a notice of the proposed revocation or suspension of the existing company’s license. Third – when the OLCC has received information from law enforcement that the applicant is trading or trading in the illegal marijuana market.

So the idea here is a good one as it is meant to help the OLCC and applicants know when and why an application may be delayed.

Asks the OLCC to establish a schedule of violations outlining what constitutes a violation of the law

ORS 475B.256 explains when the OLCC can revoke, suspend, or limit a license. A common cause of concern for licensees is the “bulk provision” in ORS 475B.256 (b). This subsection states that the OLCC may revoke, suspend or limit a license if the OLCC determines that “there is any other reason which, in the opinion of the Commission, for reasons of public convenience or necessity, revocation, suspension or Restriction of the license justifies “. This is a lot of discretion. SB 408 removes this subsection.

SB 408 suggests a number of other positive changes to 475B.256. One of these would be to require the OLCC to draw up a schedule detailing the number and type of violations that, if committed within two years, would mean disregard of the law and failure to inspect the premises. This would be a welcome change as it limits the OLCC’s discretion and gives the OLCC clarity as to which conduct may and may not lead to a revocation, suspension or restriction.

As the marijuana industry evolves, the application and enforcement of regulations by the OLCC should become increasingly clear – as well as what penalties are appropriate for what types of violations. A recurring problem for licensees is uneven enforcement. It does not matter whether there is actually uneven enforcement, only the occurrence of uneven enforcement is bad for the OLCC – just as it is for the judiciary. Reports like this don’t help. We welcome changes to 475B.256 that provide better process and clarity for the OLCC and licensees.

New rule for the transfer of certain products by manufacturers

Producers have long been restricted in the transfer of products. This created a veritable market for wholesale licenses whose whims are not important here.

SB 408 would make changes for the benefit of producers. It would specifically allow a grower to (i) supply or receive cannabinoid products, extracts, and concentrates made from the grower’s marijuana by a processor that do not contain marijuana from another grower, (ii) a grower’s own marijuana that the processor has not processed (i.e. it can be returned to the grower) and (iii) marijuana between two growers who have common property.

Increase the ownership limit by one to two ounces

SB 408 would increase the possession restrictions on usable marijuana in a public place from one to two ounces. There is nothing more to say.

Reduce the use of plastics in Oregon’s recreational marijuana industry

For a “green” industry and state, Oregon marijuana products are sure to use lots of plastic packaging. SB 408 would instruct the OLCC to consider changes to laws or regulations that would reduce the use of plastics in the recreational marijuana industry and report on its findings.

I encourage readers to click the link above and read the invoice for themselves as this post only discusses some of the changes proposed by SB 408. I believe industry representatives support SB 408 in general. If you think so, contact your state representative and ask them to issue SB 408.

For more information on the OLCC, recent changes and other legislation, please visit: