Oregon’s Measure 91 legalization initiative called for the Oregon Liquor Commission to regulate the burgeoning cannabis industry in Oregon and the draft rules have released and the initial rules will be finalized the first week of November. The Oregon Liquor Control Commission (OLCC) has held public listening tours across the state as well as several advisory committee meetings comprised of industry representatives and government officials. The Oregon Legislature has tinkered with Measure 91 and various rules as well.
It will be interesting to see how the OLCC Board of Commissioners ultimately settle upon some of these issues. Shameless plug: the Oregon Marijuana Business Conference in Ashland on November 21st will be a great place to hear about the initial rules from the perspective of those in the industry as well as legal experts. Nothing is written in stone yet, but here are some highlights of the rules along with some initial commentary.
- Fees. Processors, wholesalers, retailers, laboratories and researchers will all have to pay an annual fee of $4,750. Growers will pay either $3,750 or $5,750 depending upon the size of the garden. Measure 91 called for fees of $1,250 per year, but legislative changes made to the tax collection and funding of the marijuana system has forced the OLCC to institute these fees. Combined with some cities asking for additional fees, costs this high will price out small Oregon business owners, especially with some cities asking for similar business license fees as well. Hopefully, legislators will make some changes next session, allowing the OLCC to lower fees and bring more people into the regulated system.
- Out-of-state investment rights. The OLCC is mandating that the primary applicant be an Oregon resident with 51% ownership. While the residency requirement and prohibition of out-of-state investment is supported by many in the Oregon industry, it has the potential to stifle the market and actually lead to some out-of-state interests to having an unfair, hidden advantage. It’s hard for marijuana businesses to get loans, so and this requirement will likely lead to businesses hiding who their out-of-state investors are.
- Canopy size. The draft rules call for indoor grow sites capped at 10,000 square feet and outdoor grow sites at 40,000 square feet. A majority of the Rules Advisory Committee voted to support doubling these sites to avoid supply problems and allow for a price that allows the regulated market to compete with the illicit market.
- No discounts allowed. Current draft rules don’t allow for any discounts, including those for medical marijuana patients, veterans and people of low-income.
- Delivery restrictions. Current draft rules don’t allow the delivery of marijuana into cities and states that have banned marijuana retail stores. This means illegal dealers will do it.
- Adult consumption prohibited. Draft rules don’t allow for any adult consumption on licensee property or places with a liquor license to allow marijuana use. Tourists need a place to safely use marijuana legally; state-registered Oregon medical marijuana patients must be able to use their medicine as needed; adults should be able to use marijuana in safe places, out of public view, with other adults.
In addition to the state rules and fees, marijuana businesses will have to satisfy local fees, rules and regulations as well. Some localities have enacted reasonable time, place and manner regulations; some have extensive regulations that are anything but reasonable; others have banned marijuana businesses altogether; and some cities and counties will be leaving the issue to the voters. The OMBC will have a presentation devoted to local regulation on the 21st.
While some changes will need to be made and I’ll have more on the rules once they are finalized, I must commend the OLCC for the work that they have done thus far. The OLCC has listened to a lot of voices and many choices have been forced upon them by the Oregon Legislature. Despite the contention of many that the OLCC doesn’t want marijuana regulations to work, I will have to strongly disagree. The OLCC wants to see the marijuana industry thrive, create jobs and generate new revenue for the state. There will be some growing pains as the industry gets off of the ground, but if we remain vigilant, we will see an industry develop that Oregonians can be proud of.