Thanks to the passage of Oregon Senate Bill 408, statewide industry leaders can expect improved market potential. Industry leaders are eagerly anticipating the removal of red tape across various cannabis industry issues and the rightsizing of regulatory enforcement. The collaboration between advocacy group leaders, legislators, marijuana trade associations, and the Oregon Liquor and Cannabis Commission proved the key to victory.
Crucially, the bill provides clarity regarding violations. Now, the OLCC can cancel a license only for major offenses that pose a “significant risk of harm to public health and safety” (i.e., intentionally selling to minors). The OLCC is further prohibited from pausing or delaying a license application because of pending compliance actions (unless the offenses in question are severe enough to warrant outright cancellation). The Commission can now charge individual permittees with violations instead of the businesses for whom they work. These new rules are crucial because most breaches originate from “rogue employees” rather than the larger company itself.
Additionally, the Commission must first consider three mitigating factors: evidence that the conduct is not persistent or severe, the ability to demonstrate a willingness and ability to control the premises, and self-reporting of a violation. Licensees now gain the ability to reduce sanctions and penalties by taking proper steps before and after violations are committed.
To more clearly define which offenses lead to license cancellation, Senate Bill 408 also mandates recategorizing violations. Additionally, the bill brings changes that will increase the market-growth potential and operational flexibility for marijuana businesses. Commonly owned producers and processors can now transfer and store product.
The bill transfers rulemaking authority over THC serving sizes from the Oregon Health Authority to the OLCC, with the maximum serving size being increased from 50 milligrams a package to 100 milligrams a package.
Perhaps the most crucial change is SB 408’s long-awaited update on licensing procedures.
In June 2018, the OLCC paused processing new applications out of concerns of cannabis oversupply. Only those applications filed on or before June 15, 2018, have been eligible for issuance. New producer applications had been prohibited until January 2022.
The Commission has now eliminated almost the entire backlog of license applications and is ready to begin processing new applications. However, the OLCC recently announced a recommendation for the Oregon Legislature to extend the moratorium on new producer licenses as there are still concerns over properly addressing market conditions, resources, and equity issues.
The bill’s provisions are not yet in effect. But the OLCC has indicated it will begin passage through rulemaking soon to have permanent rules in place by January 1, 2022.
Oregon cannabis businesses are optimistic that the OLCC’s commitment to fast-tracking SB 408 rulemaking and simplifying licensing will result in a healthy, competitive, and progressive industry. If all goes well, these new rules will benefit everyone, from business owners to consumers who will be happy to see higher THC contents on their flower packaging labels.