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Friday, December 9, 2022

Tough times in Oregon cannabis

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Oregon does not want any new cannabis business. This transformation happened very quickly. Until this spring, the Oregon Liquor Control Commission (OLCC) issued most types of cannabis licenses to anyone who qualified according to relatively broad criteria, through a cheap and simple licensing process. Oregon was even the first state to open its program for it Non-resident ownersIn 2016. The weather is different these days.

We first saw OLCC trying to slow things down a bit in 2018, when it happened “Paused” Acceptance of new applications in response to administrative backlog. Then, in the spring of 2019, the Oregon Legislature enacted Stop SB 218 (now expired) on new product licenses. But these measures pale in comparison to the current multifaceted efforts by government agencies to control the program.

The legislature was taken over by domestic industry at this point, perhaps out of sympathy. This has resulted in downward pressure on OLCC to control licenses. The biggest crossbow shot was HB 4016, which was activated comprehensive endowment on new cannabis licenses in the state. This sounds like a big problem, and it was; But in fact, this was just one of a handful of actions that have targeted the industry over the past year.

A end of July, OLCC declared her intention To “tighten change ownership choice” for bad actors in the Oregon industry. In short, the OLCC directed its Administrative Hearings Division to take stronger positions in settlement talks with alleged violators, including by refusing to allow alleged bad actors to sell their licenses to new parties. You can think of this as similar to the guidance the attorney general has given to subordinate prosecutors — which mandates termination of plea deals, and requires accused parties to “pray the paper.”

At the end of August, OLCC also teamed up with the Oregon Water Resources Department to begin unannounced inspections of OLCC producers and ODA cannabis growers. ensued according to HB 4061, which allocated significant funding to combing operations and granted OLCC personnel a kind of “peace officer” status with regard to field actions. The initiative was similar in nature to the controversial initiative last fall Operation Table Rock. This effort saw mass inspections of hemp farms in Oregon, looking for high THC crops.

What’s Next

So what do things look like now in cannabis in Oregon from a regulatory perspective? These are the points I need:

  1. The Oregon legislature will continue to do what the industry requires of it. This means keeping walls around the program and the status quo — including tax issues. Most of the heavy lifting is over, but we can expect to see software overhaul in the 2023 session as usual. The regulated industry is still struggling and will pay for more.
  2. OLCC will continue to take a tougher stance in the office and in the field, according to Ongoing Funding. The goal is to withdraw licenses. In my opinion, the commission appears somewhat disoriented as it attempts to establish processes, policies, and justifications for culling the herd. A tip for operators is simply to stay away from crosshairs.
  3. External help will not come. Both Congress And the Biden administration You continue to be disappointed on weed. California finally joins Oregon Pass the cannabis export invoice last month, but I suspect the two countries won’t be connecting anytime soon. Even if I’m wrong, market conditions in each state are not promising for Oregon licensees.

Takeaway

The cannabis industry in Oregon is in a difficult situation right now. It’s not entertaining. Many companies have no money and Sales are down From the heights of the epidemic era. A few big players – who are essentially immune from meaningful OLCC enforcement actions – continue to put pressure on anyone else. The bright side here is that anyone who can make it through this huge business has a real chance of getting around in the long run. But anyone looking to invest in or own an Oregon cannabis company at this point should be aware of these dynamics.

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