Oregon’s 2019 legislative session is over, and it was a whirlwind for the cannabis industry. High profile efforts such as the social consumption bills failed to progress and pass into law. Even some bills with broad support encountered big roadblocks along the way to passage, sometimes from both republican and democratic lawmakers. Despite that, some groundbreaking bills were passed into law that will help the industry mature and redress past harms.
Senate Bill 218
Senate Bill 218 makes official the Oregon Liquor Control Commission’s (OLCC) licensing pause that was put into place effective June 15, 2018 and halted the processing of any producer license applications submitted after that date. Senate Bill 218 is designed to deal with Oregon’s overproduction of recreational cannabis by limiting the number of producer licenses while allowing the OLCC to ratchet up licenses, and thus production, as demand increases. An increase in demand sufficient to justify the issuance of new producer licenses is most likely to occur only once Oregon recreational cannabis companies can ship product over state lines legally (more on that later).
Legislators who resisted this bill did so mainly for one of two reasons: First, republicans with a libertarian lean disliked the restriction on the free market, and second, some legislators worried that their constituents who had invested in new businesses with the expectation of receiving a producer license would lose their investments.
Industry advocates in Salem worked successfully to convince republicans that the restrictions on our recreational cannabis industry related to federal prohibition, as well as the involvement of deep pocketed investors willing to run their businesses at a loss while waiting for federal decriminalization or legalization to make them big buyout targets, prevent a free market and make necessary for the health of the industry controls on production.
To address concerns about applicants with a reasonable expectation of licensure losing their investments, the bill was amended to provide what the OLCC had already indicated was its intent: applications received by the June 15, 2018 pause date will be processed, provided they are complete or are timely made complete. This amendment was designed to protect the interests of serious applicants who applied by the pause date without benefiting place holder applications. Thus, all producer applications will need to have a land use compatibility statement from their local jurisdiction submitted within 21 days of the law becoming effective and transfers of ownership or location of production license applications will no longer be allowed.
House Bill 2098
House Bill 2098 is this session’s omnibus cannabis bill. It was originally introduced to make license application and renewal fees nonrefundable, but the relating to marijuana clause worked like a magnet, bringing in a variety of recreational cannabis changes. Here is a quick rundown of what the law does:
- Directs the OLCC to establish an advisory committee for establishing and maintaining standards for testing the potency of marijuana and marijuana products. Oregon recreational marijuana potency testing has been widely criticized as ever higher potency numbers, some bordering on the absurd, have come out of labs that face little scrutiny of their practices. This is a step toward reigning in those practices and creating an even playing field for Oregon producers and processors.
- Allows pharmacists to dispense FDA approved prescription medications containing cannabinoids pursuant to a prescription, rather than requiring that all THC containing substances be disbursed through either the OLCC or the OMMP system.
- Allows the OLCC to establish pilot programs of up to three years in duration to expand access to marijuana to Oregon Medical Marijuana Program (“OMMP”) registry cardholders and their caregivers.
- Tweaked the exemption to Land Use Compatibility Statement requirement applicable to some OMMP grow sites transitioning into the OLCC recreational cannabis program. The change requires that, to benefit from the exemption, in addition to the requirements already in place, the OMMP grow site and each of the persons responsible for the grow site must be registered with the Oregon Health Authority at the time the application to transition to the OLCC program is submitted, but that the registration need not have been continuous.
- Allows OLCC recreational cannabis producers to produce and transfer kief.
- Gives the OLCC the authority to “restrict, suspend or refuse to renew,” as well as seize marijuana products from, a license based on probable cause of an unapproved financial interest or diversion.
- Expands delivery laws to allow retailers to deliver marijuana items to medical cardholders between the ages of 18 and 21 years old.
- Directs the OLCC to revoke a retailer’s license for failure to file or pay marijuana retail sales tax for two of any four consecutive quarters.
- Removes from the definition of “marijuana,” and thus from the statutes and rules governing marijuana activities, FDA approved prescription drugs containing cannabinoids and dispensed by a pharmacy.
Senate Bill 582
Senate Bill 582 is the most exciting of this session’s cannabis legislation, and also had the most tumultuous path. The idea of an Oregon law to permit interstate commerce of marijuana has been percolating and gaining momentum for years. However, early iterations of Senate Bill 582, which included a 30% excise tax and a structure designed to pressure the Governor into acting in direct defiance of federal law, threatened to doom the effort or put Oregon in a worse situation than without it. During session, Senate Bill 582 was revised, dropping the well-intentioned but misguided aspects of the bill, and leaving the following:
Senate Bill 582 allows the Governor to enter into agreements with other states for the purposes of interstate commerce of marijuana products. The law creates no excise or other tax. Importantly, the law becomes operative only upon a federal trigger. A trigger can be either a change in federal law permitting interstate transfer of marijuana items or a Department of Justice opinion or memorandum allowing or tolerating the interstate transfer of marijuana items.
The federal trigger for the law was key because it started a meaningful discussion in the legislature, gave the bill the votes it needed to pass, and got the support of the Governor’s office.
Senate Bill 582 puts Oregon at the front of the pack for interstate commerce and sets the stage to protect Oregon’s industry and allow it to thrive.
Senate Bills 420 and 975
Senate Bills 420 and 975 are a social justice bills that take steps towards redressing the harms of the War on Drugs.
Under Senate Bill 420, people with “qualifying marijuana convictions” will be able to have their convictions expunged without paying filing fees or undergoing a background check. “Qualifying marijuana convictions” are those that are based under conduct described in ORS 475B.301, which relates to home grows, small scale home processing, small scale possession, and small-scale distribution to adults over the age of 21 for non-commercial purposes. Senate Bill 420 is not as broad as originally introduced, nor does it provide for automatic expungement as planned, but it is a step in the right direction.
Senate Bill 975 is similar to Senate Bill 420 and provides for reduction of convictions for people whose convictions are for violations of crimes that have since been reduced in severity, such as from a felony to a misdemeanor, or from a higher-level felony to a lower level felony. Senate Bill 975 also waives filing fees.
Both bills require that the people seeking expungement or reduction of their conviction have complied with the requirements of their sentences.
Senate Bill 365
Senate Bill 365 was a response to local jurisdiction efforts to curtail and impose additional taxes on recreational cannabis businesses.
Senate Bill 365 prohibits the imposition of system development charges on cannabis businesses or activities for increased use of transportation facilities due to cannabis production on land zoned for exclusive farm use.
Senate Bill 365 also requires local jurisdictions to allow recreational cannabis producers to keep their licenses and businesses despite local prohibitions on the activities if those prohibitions were enacted after the producer became licensed.
Despite some high-profile cannabis-related bills dying early on, this legislative session turned out to be an exciting one for the industry. The new laws will have huge effects on the industry, furthering social justice efforts, bolstering Oregon businesses, and helping the industry mature and ready itself for a national marketplace.