Oregon Growers Lose License for Multiple Regulatory Violations

The Oregon Liquor Control Commission (OLCC) revoked the licenses of two growers for multiple regulatory violations. Green T Farms and Green Acre Blend surrendered their licenses and any marijuana items remaining.

OLCC staff allege that Green T Farms utilized a trailer to store marijuana. The trailer did not meet the security requirements, and was not within the coverage of the video surveillance camera. The video equipment was not sufficient to ensure back up capability, and could not notify Green T of a breach. Green T Farms is in the process of selling its business.

The proprietors of Green Acre Blend are involved in a marital dispute that resulted in the issuance of a restraining order. The status of the owner’s relationship prevents the entity from complying with the OLCC regulations.

Free Cannabis Legislative Tracker For 20 States: Access THC, Hemp And CBD Bills

Access our free legislative trackers for Arizona, California, Colorado, Connecticut, Florida, Illinois, Kentucky, Massachusetts, Maine, Michigan, Missouri, North Dakota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Tennessee, Utah and Washington. Review and access the cannabis & hemp bills introduced by the State Legislatures in the 2019-2020 session. The trackers include a summary description of the legislation, status and link to the full legislative text.

Missouri and Oklahoma Cities Adopt Business Friendly Medical Marijuana Rules

Missouri and Oklahoma cities are embracing medical marijuana, and adopting business-friendly ordinances. Oklahoma has quickly expanded its medical marijuana program, and generated over $12 million in sales in March. Missouri is also planning for a big rollout as Governor Parson allocated $3 million to the medical marijuana program. To date, the state received over 481 pre-filed license applications and fees totaling $3,470,000. Licenses will be formally accepted on August 3, 2019.

Our data shows that, since the beginning of March, at least 25 cities in these states discussed allowing medical marijuana or have adopted an ordinance. The growth in the number of cities considering medical marijuana is noticeable and encouraging for the industry overall. Unlike cities on the East and West Coasts, the ordinances are generally simple, offer low fees, no caps on licenses and fewer operating requirements. These business friendly towns offer a license opportunity at a lower cost and regulatory risk.

Los Angeles Creates SWAT Team to Tackle Illegal Cannabis Businesses

The Los Angeles City Council approved recommendations to fund a Business, Licensing and Compliance program designed to shut down illegal cannabis businesses. Los Angeles will pay $3 million per year over the next three years to establish an inter-agency enforcement response team comprised of the Los Angeles Police Department (LAPD), the Los Angeles Fire Department, the Department of Cannabis Regulation, and the Los Angeles Department of Building and Safety. The group will share information about illegal operations through a new technology platform, and work together to direct enforcement efforts.

Over the past year, Los Angeles has developed creative administrative measures to tackle the growth of illegal cannabis businesses including shutting off their electricity and access to premises. In the report dated November 9, 2018, the LAPD indicated that, during the prior year, it executed 143 search warrants on unlicensed businesses, and made 435 arrests. The LAPD confiscated 67 firearms, over $600,000 in money and 34,852 pounds of cannabis. The arrests did little to stop the reopening of the unlicensed businesses. The LAPD indicated that additional enforcement efforts were needed as the misdemeanor charges for most violations was not adequate.

US Government Says Pot Smokers Lack the Good Moral Character Required of US Citizens

The Department of Homeland Security (DHS) issued a policy statement notifying persons seeking US citizenship that the process is at risk if they use marijuana or engage in marijuana related business activities. The DHC policy explains that persons who are convicted of a marijuana charge or admit to engaging in marijuana activities do not exhibit the good moral character that is required of a US citizen.

The policy statement is the latest warning shot to persons applying for US citizenship. Denver recently issued a Marijuana Information Bullet to notify industry participants that the US Department of Justice (DOJ) has denied two applications for citizenship by persons who are employed in the cannabis industry. Denver has asked the marijuana industry to inform current and future employees about the negative impact that working for a cannabis company may have on an individual’s ability to become a US citizen or to stay in the United States. Persons who are impacted by this US DOJ policy should speak with an immigration attorney.

5 Key Take Away's from Maine's Recreational Marijuana Regulations

Maine published draft recreational marijuana regulations more than two years after residents voted to legalize marijuana and amid contracting chaos. In September 2018, Maine hired a consultant to help draft the regulations, which resulted in a lawsuit from a competitor. Maine is now paying the losing consultant $10,000 to review the draft rules in exchange for dropping the administrative appeal.

Maine released the draft rules in response to a freedom of information act request from the Press Herald. The rules will be formally published twenty days ahead of a hearing to receive public comments.

Five (5) key take away’s from Maine’s recreational marijuana regulations include:

  • Maine chose a simple license regime that includes cultivation facility, testing facility, products manufacturing facility, and marijuana store.

  • Applicants obtain a conditional license, and then must obtain approval from a local municipality that has voted to allow that class of marijuana establishment or .where the county has opted in to allowing the class of marijuana establishment.

  • Except for independent testing facilities, Maine will verify that management and the majority of owners of licensees are natural persons who are Maine residents.

  • Maine is charging reasonable application fees ranging from $60 to $500. Annual license fees range from $350 to $15,000.

  • The regulations do not provide for social equity programs, social lounges, or temporary events.

Municipal Risk: A Problem Without a Near Term Solution

State cannabis laws can provide counties or local jurisdictions with the ability to determine whether to permit cannabis activity, and to mandate the place, time and manner in which a cannabis business can operate. There is risk though, that a county or city can change its mind.

This occurred recently in Mountain View California. The new city council voted to repeal an ordinance that permitted four cannabis dispensaries. Over 130 local residents spoke at the four hour meeting. The new mayor lost the vote to repeal the cannabis ordinance. The city council’s action raises a red flag for businesses relying on a local jurisdiction for a cannabis permit. Ten businesses that were vying for the city’s four spots invested capital and time. The risk associated with starting a business in a city changes along with administration.

The power a city or county holds over a cannabis license was also highlighted in a recent court of appeals decision in Oregon. The state granted a production license, which could not be used due to local ordinances prohibiting cannabis production. The Oregon Appeals Court sided with Kittitas county, and indicated that under current Oregon law, a cannabis license is useless without a local zoning law permitting the activity.

Municipal risk can delay the application process at any stage with resulting litigation due to local scoring methodologies and transparency requirements. Cities are also increasing this risk by rethinking how social equity programs fit into the permit allocation process as they are handing out licenses using other methodologies. Businesses seeking permits should consider local politics, stability of past city councils, and formal process setting procedures when deciding where to spend capital on license applications. A safer approach may be to purchase a license holder in a city that has stabilized, and established a track record of supporting the cannabis industry.

Washington Legislature Passes Bill to Implement Hemp Licensing Program

Washington’s Legislature passed a bill that creates a hemp licensing and regulatory program that is required to implement the 2018 Farm Bill. The Department of Agriculture (DOA) is responsible for implementing rules establishing the hemp production licensing regime by June 2019. Businesses that are already licensed under the industrial hemp research program can transfer over into the new program. Businesses will continue to operate under the current research program if the DOA is not able to meet the June 2019 deadline.

The legislation charges with DOA with developing standards for creating hemp extracts that is intended for consumption, and the production of nonhemp food in accordance with state and federal regulations. The Department of Agricultural and the Liquor and Cannabis Board to establish policies and buffers that would prevent the cross pollination of marijuana and hemp. The bill requires the policy to provide preference to the producer that was first to grow, and require the second to cease operations.

Washington Legislature Passes Intellectual Property Licensing Agreement Bill

The Washington Legislature passed bill HB 1794 to expand the ability of cannabis businesses to enter into intellectual property agreements for trademarked goods or services. The bill will become law if it is signed by Governor Islee. The new law would allow parties to enter into exclusivity arrangements, receive royalty payments up to 10% of gross sales, and employ quality control measures to ensure the brand’s integrity.

Businesses entering into a marijuana licensing agreement must disclose the arrangement to the Washington Liquor and Cannabis Board and comply with recordkeeping requirements. Businesses licensing intellectual property that comply with the terms of the agreement are exempt from qualifying for a marijuana business license.

Maine's Legislature Proposes Progressive Marijuana Production Tax

Most state regulators tax marijuana producers based on the quantity or a fixed rate applied to the square footage of the canopy growth. Maine wants to change this approach. Maine’s Committee on Taxation will hold a public hearing on Thursday, April 18th, 2019 on a bill that will charge marijuana producer’s 15% of the average market price that is determined by the state. The tax will not apply to vertically integrated marijuana producers.

Maine’s approach is novel. The industry can benefit from a transparent market prices. We are most concerned about the transparency and fairness of the approach used to generate the average market price, and the likelihood of manipulation. The legislation states that the department will determine an average quarterly market price for flower, trim, immature plants and seeks. The bill fails to address how the average market price is calculated per category including the look back period; the initial pricing used to create the average market price; how changes in local conditions are incorporated; and how the producers use the average market price to assess taxes to be paid. These details should be provided so that producers can adequately assess the changes to cash flow, the certainty of which a flat rate provides.