Oregonian to OLCC: Allow Out-of-State Marijuana Business Investment


When crafting a marijuana legalization measure, it is necessary to balance several objectives, including: personal freedom and public safety; tax revenue and responsible use; free speech and advertising restrictions designed to keep marijuana out of the hands of minors; and out-of-state competition vs. protecting in-state mom and pops. When drafting Measure 91, we co-authors carefully considered these various interests and felt that we had developed a sensible law that would stake a moderate middle on these issues and move the state of Oregon forward with a cannabis industry that would follow in the footsteps of our successful microbrewery and winery industries, while most importantly ending the arrest and citation of thousands of people for marijuana offenses. Apparently, voters agreed, supporting Measure 91 with more than 56% of the vote.

To balance the need to bring in out-of-state capital and protect Oregon’s homegrown industry, we concluded that the best way to balance these interests was to provide for a low, barrier to entry and provide for transparency. With a $1,250 license fee for growers, producers and retailers, Oregon entrepreneurs could be vertically-integrated for just $3,750 and market themselves as true Oregon small businesses.

We didn’t include a residency requirement so Oregonians could bring in the resources from other states and Oregonians could compete effectively, just as Oregon’s world-class craft brewers and wineries have done. Unfortunately, the Oregon Legislature changed the taxing and funding mechanism for the Oregon Liquor Control Commission (OLCC), who now regulated adult cannabis commerce in the state, increasing licensing fees to more than $4,000,hurting the ability of mom and pops to vertically integrate, and imposed a residency requirement, making it harder to bring in out-of-state investors. The OLCC took the residency requirement passed by legislators to conclude that only businesses with a 51% Oregon owner could get a license.

The Oregonian Editorial Board believes that the strict residency proposal goes too far:

Oregon should not hobble itself by limiting out-of-state investment and involvement, which could bring innovation and operational efficiency as well as cash to a new agricultural/retail sector that OLCC projects will generate $130 million in retail sales in 2017. (That projection runs comparatively low, meanwhile, as the economist Beau Whitney of Greenpoint Oregon, in legislative testimony from June, scaled the likely marijuana market here to be far larger.)

The best new businesses are those capable of responding to market conditions adroitly and to their advantage: If it takes an out-of-stater with a financial position in the firm to manage an Oregon-based pot operation – from increasingly sophisticated grow fields to supervised distribution to the retail sales counter – let it be so. Jobs to Oregonians won’t be lost if such a business succeeds. Jobs could be fewer if such a business were to limp along or fail.

Prosperity for Oregonians comes first and foremost. It would be shortsighted if a promising new marijuana market, cleared at last by the passage of Measure 91, were to suffer growth constraints because of errant, if good-willed, provincialism.

If the OLCC prevents businesses with out-of-state ownership from obtaining marijuana business licenses, there could be lawsuits that could distract the agency, or even lead to an injunction that delays the issuance of licenses. The OLCC could consider grandfathering in existing out-of-state businesses, but then those businesses would have an unfair advantage against Oregon’s mom and pops, not having to worry about any other outside competition.

The best policy is to adhere as closely to the text of Measure 91 as closely as possible, as the voters intended. A majority of Oregonians want to regulate marijuana like beer and wine, and neither of those industries prohibit out-of-state businesses. Oregon craft brewers like Ninkasi and HUB can compete just fine with Busch and PBR, thank you. In time, Oregonians will support Oregon-grown marijuana businesses. Let’s not be fearful of competition, let’s let the cream rise to the top and I’m confident that the Oregon cannabis businesses and entrepreneurs are up to the task.

Shameless plug: I’ll touch on the text of Measure 91, how it has been altered by the Oregon Legislature and the latest regulations proposed by the state at the upcoming Oregon Medical Marijuana Business Conference (OMMBC) on September 12-13 in Portland. 

Anthony, a longtime cannabis law reform advocate, was Chief Petitioner and co-author of Measure 91, Oregon's cannabis legalization effort. He served as director of both the New Approach Oregon and Vote Yes on 91 PACs, the political action committees responsible for the state's legalization campaign. As director of New Approach Oregon, Anthony continues to work towards effectively implementing the cannabis legalization system while protecting small business owners and the rights of patients. He sits on the Oregon Marijuana Rules Advisory Committee and fights for sensible rules at the legislature as well as city councils and county commissions across the state. Anthony helps cannabis business comply with Oregon's laws and advises advocates across the country. He also serves as content director of both the International Cannabis Business Conference and the Oregon Marijuana Business Conference, helping share the vision of moving the cannabis industry forward in a way that maintains the focus on keeping people out of prison and protecting patients. He was a member of the Oregon Health Authority Rules Advisory Committee, assisting the drafting of the administrative rules governing Oregon’s state-licensed medical marijuana facilities. He first co-authored and helped pass successful marijuana law reform measures while a law student at the University of Missouri-Columbia School of Law. He passed the Oregon Bar in 2005 and practiced criminal defense for two years before transitioning to working full-time in the political advocacy realm. His blogs on Marijuana Politics are personal in nature and don't speak for or reflect the opinions of any group or organization.