Oregon Cannabis: Who Are the New Rules Really For?

New Oregon Liquor Control Commission (OLCC) rules affecting outdoor recreational growers went into effect on September 1, 2018. It’s likely that the rules are in direct response to concerns expressed by Attorney General Jeff Sessions and, more recently, Oregon US Attorney Billy Williams, over Oregon’s marijuana industry. As we’ve previously reported, Attorney Sessions is not a fan of marijuana and Williams has expressed concern over Oregon’s marijuana overproduction and black market.

Significantly, the new OLCC rules: 1) severely curtail the amount of marijuana flower that medical marijuana cardholders are allowed to purchase in a day, from 24 ounces to 1 ounce; and 2) require recreational outdoor marijuana grows to notify the OLCC prior to harvest. Both rules were issued with the stated intent to reign in diversion outside of the OLCC system. The purchase limit rule is “temporary”, meaning it expires in six months and could be modified or rescinded after investigations are completed. The harvest notification rule is permanent, and discussed in detail below.

Under the harvest notification rule, outdoor growers are now required to report all harvests to OLCC no later than 9 a.m. on the date of the harvest. The purpose of the rule is to keep a better track of the harvests, where they are going, and to combat transporting weed out of state. Failing to comply is a Category III violation for each day the violation occurs.

The new tracking requirements will also come with audits from the OLCC. OLCC investigators will make sure plant counts and harvest amounts match whats in the system. If it doesn’t, the OLCC could issue the outdoor licensee a charging document, alleging a violation of the OLCC rules and threatening suspension, license revocation, or a civil penalty.

Right now, there are 23 inspectors statewide to audit and inspect the state’s 397 outdoor grows. Most of the outdoor grows are located in Jackson and Josephine counties (and won’t be going anywhere anytime soon.) The OLCC has readily admitted it is overworked and understaffed. This begs the question: Will the OLCC even have time to implement the new audit program? Only time will tell.

The more important question, though, is whether the new rules will actually stop Oregon marijuana from crossing state lines. It seems unlikely that the new rules will help. First, as any licensee knows, its expensive to be regulated as much as the marijuana industry is. Licensees invest significant money into required security systems, tracking requirements, general compliance costs, in addition to the costs of running a business. It seems ridiculous that any business in Oregon that has spent significant amounts of money just to be compliant and licensed would risk losing its license and livelihood by diverting marijuana out of state.

Additionally, the feds have been cracking down on out-of-state Oregon marijuana trafficking. Most of that seized marijuana is being grown illegally and not from the regulated industry. In other words: stricter regulation of OLCC licensees isn’t likely to move the needle much on diversion into unregulated markets.

So, again, what’s the point of the new rules? They really do seem like an attempt to appease US Attorney Billy Williams, who has been vocal about his dissatisfaction with the Oregon system. Perhaps by regulating the industry more, Mr. Williams will trust that Oregon is doing what it can to keep legal weed within its state lines.

For more on Oregon cannabis and the oversupply issue, check out the following: