Oregon Cannabis: 2019 Legislative Session Update

Back on March 1, I ran through a legislative forecast and report for Oregon cannabis in 2019. In that post, I touched on six main issues: hemp, marijuana production limits, interstate sales, social consumption, local grow tax and off-work use. As we move into the home stretch of the 2019 session, each issue has been bandied about: some are close to passage and others have died. Below is a rundown of the state of each topic and some thoughts on the general scene. (Spoiler alert: not too impressed.)

Hemp. Hemp is now the number one cash crop in Oregon at $1 billion a year. The draft bill to watch is HB 2740, which, after an initial hearing, was gutted and stuffed with 60 pages of text (we are down to 32 at present). In those pages, there are two chief proposals: 1) the creation of an Oregon Hemp Commission that can levy a 5% production tax on hemp to fund itself; and 2) a general re-write Oregon hemp laws to get us all ready for 2018 Farm Bill. People in the know are arguing that, as written, HB 2740 could put Oregon out of compliance with 2014 Farm bill, while failing to meet federal Department of Agriculture (USDA) strictures under the 2018 Farm Bill — which would be disastrous. The thinking here is that the feds will regulate hemp more like tobacco than tomatoes, and that given early expressions of federal concern over leakage of “high THC hemp” under the Oregon program to date, it would be best if this bill dies. If that happens, Oregon would be well served to convene a group of stakeholders to follow USDA and FDA closely, and craft a proposal that squares with federal developments.

Marijuana Production Cap.  The proposed moratorium on new production can be found at SB 218. This bill would allow the OLCC to refuse to issue marijuana production licenses “based on market demand and other relevant factors.” It initially failed on Senate floor, was revived by a former Joint Committee member, sent back to the rules committee and amended to sunset in 2022. SB 218 has since cleared the Senate and goes to the House for a work session today, May 20, where it has an uncertain future. The deadline is Friday to make a decision.

SB 218 is key legislation for Governor Brown, who wants to show our U.S. attorney, Billy Williams, that Oregon is taking oversupply seriously. But is this a serious fix? No, it is not– and less so with the sunset. As of today, OLCC already has issued over 1,100 producer licenses with another 1,000 in the queue. If Oregon had wanted to cap marijuana production in the OLCC market, it’s about four years and 900 grows too late. So this bill is for optics and would have little practical effect, if passed.

Interstate Sales. This one has been getting a lot of press lately. The proposal at issue, SB 582, recently passed the Senate and would allow for interstate sales upon a change in federal law or enforcement priorities. SB 582 now heads to the House and appears to have a pathway through the building. Around this time last year, when the exchange idea first began to circulate, I opined on the legal and political hazards of interstate sales. I still believe that Oregon legislators and 582 boosters do not appreciate the Constitutional compact clause implications of this proposal (please, someone tell me what I’m missing here) and I don’t think an attempt to open the market based on another flimsy tolerance memo is a great idea. On the flip side, the interstate sales bill would be a strong gesture of support to Oregon producers. It’s also an attempt to prepare those producers for when the walls come down, even if it feels a bit like Christmas shopping in July.

Social Consumption. As predicted, this one failed yet again. The bottom line is that no one wants to pry open the Oregon Clean Indoor Air Act for an exemption. This means no cannabis lounges and probably no temporary event permits or tours in 2019.

Local Grow Tax. This also died. HB 2382 saw too much opposition from too many stakeholders, especially in southern Oregon, and fell by the wayside back in March.

Off-work Use. Dead too, unfortunately. Neither SB 639 and HB 2233 got any real traction in committee, due to a couple of factors: employer lobbying and a prevailing belief that Emerald Steel v. Oregon Bureau of Labor and Industries is controlling. The latter is a discussion for another day, but it looks like medical marijuana patients can still be terminated for off-work use in 2019, even at jobs unrelated to safety or federal grants. That’s a shame.

Expungement and Reduction of Marijuana-related Convictions. There are a few promising bills covering convictions. First, SB 420 would allow individuals to use an expedited process to set aside most convictions for possession, delivery and manufacture of marijuana, so long as the underlying conduct is no longer a crime. If you have a conviction that wouldn’t be illegal now, you can file a piece of paper and expedited process for getting rid of conviction. Elsewhere, companion bill SB 975 would allow for reduction in offense classification for other marijuana convictions.

Ban on Transportation Systems Development Charges (SDCs). Last but not least, SB 365 (a.k.a. the “anti-Deschutes County bill”) has passed the Senate and is moving cleanly through the House. Deschutes County has generally made a mess of cannabis regulation, and it is the lone Oregon county to attempt to levy SDC on cannabis production. The move was unusual because cities, and not counties, tend to instate SDCs. It also likely amounts to a discriminatory tax on grows. Expect this bill to pass.

All in all, policymaking for cannabis in Salem appears to be fairly chaotic: hemp is a mess, troublesome issues like off-work use are unresolved, and certain proposed (and much publicized) legislation has mostly symbolic value. Still, some of the work around the edges will be helpful in 2019, and we are especially hopeful that the conviction and expunction bills continue to move through without issue. We will check back one more time at the end of the session with a full wrap-up.