Recreational Marijuana in Oregon How it Will Look Rob Patridge, Chair, Commission ODMO, December 2015

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1 Recreational Marijuana in Oregon How it Will Look Rob Patridge, Chair, Commission ODMO, December 2015

2 ROLE OF COMMISSIONERS Guide policy Facilitate public engagement Support communication Adopt final rules

3 1936 REEFER MADNESS

4 WHATSLEGALOREGON.COM EDUCATE BEFORE YOU RECREATE

5 OLCC CONTINUING COMMITMENT TO ENGAGEMENT Website: 1.2 million hits, central clearing house for information up from 800,000 in September. Gov Delivery: 29,327 marijuana listserv subscribers provides announcements and rule updates, up from 16,000 in September Online survey: 16,500 participated, identified priorities, informed community meeting process Listening meetings: 11 cities, 3,000 participants, many involved or planning to be involved in industry Technical subcommittees and Rules Advisory Committee: 38 meetings, 100+ participants industry, local government, law enforcement Temporary rules public hearing - October 9 th Commission adopted temporary rules October 22 nd Creation of Law Enforcement Advisory Group and Business Subcommittee Permanent rulemaking begins in January; rules to be adopted by June 28, 2017

6 INTERAGENCY COORDINATION OLCC Responsible for licensing producers, processors, wholesalers, retailers, labs, research certificates, marijuana handler permits Adopts rules for packaging, advertising Not responsible for personal possession, personal use, home grow, or medical marijuana Oregon Department of Agriculture (ODA) Responsible for licensing food establishments Weights and measures Pesticide use Oregon Health Authority (OHA) Develops testing requirements Certifies labs (ORELAP) Adopts rules for labeling, serving size, and dosage Department of Revenue (DOR) Tax collection

7 LICENSE TYPES Producer: The only license able to cultivate marijuana. Laboratory: Tests marijuana products for pesticides, mold, etc. Processor: Manufactures edible marijuana products and marijuana extracts. Wholesale: Buys and sells at wholesale. Research (certificate): A certification for research purposes only, no sale of product is allowed. Retail: Sells marijuana items at retail to adults over 21. Responsible for payment of tax at point of sale. Marijuana Handler Permits: Required for retail shops

8 RESIDENCY Statute: Requires applicant to be both an Oregon resident and the legitimate owner of the business Temporary rules: Applicant is defined as any individual or legal entity that has a financial interest in the business and is directly involved in controlling the ordinary course of business. Safe harbor for investors. Oregon resident(s) must own at least 51% of business in order to be considered a legitimate owner(s) Non-resident owners must not be directly involved in the operation or management of the business. Provision in temporary rules that allows the OLCC to review non-resident applications until 30 days after the 2016 Oregon legislature adjourns

9 CANOPY LIMITS Statute: Consider market demand when setting canopy limits Set canopy limits to reflect equivalent yields for indoor and outdoor grows The licensed premises for an outdoor grow is defined as the entire lot or parcel Indoor: Tier I: up to 5,000 square feet Tier II: 5,001 10,000 square feet Outdoor: Tier I: up to 20,000 square feet (.45 acre) Tier II: 20,001 40,000 square feet (.9 acre)

10 CANOPY LIMITS Temporary rules: Greenhouses: Categorized as indoor if utilize artificial lighting, otherwise categorized as outdoor Allows multiple growers in separate sections indoors, one grower per outdoor lot or parcel Allow local governments to petition for larger canopy limits Issues raised: Separate category for greenhouses Multiple outdoor growers on one lot Desire for larger canopy sizes

11 RETAIL Sales to consumer per day One ounce usable marijuana 16 ounces edible, 72 ounces liquid Five grams extract or concentrate Four immature plants, 10 marijuana seeds Restrictions OHA rules 5 mg per serving, 50 mg in a scored package, 10 max in a nonscored package, 100 mg for medical products All products must be tested Must verify 21 years of age or older No free samples, may not sell for less than cost of acquisition No coupons or discounts except uniform volume discounts May not require a consumer to purchase other products or services with marijuana (prevent tax avoidance)

12 EDIBLES, TESTING, PACKAGING, ADVERTISING Statute: OLCC licenses processors and laboratories, adopts rules for packaging, advertising OHA certifies labs and develops requirement for pesticide testing, adopts rules for labeling, serving size, and dosage ODA provides guidance for acceptable pesticide use; responsible for licensing food establishments Temporary rules: Protect minors Packaged in a child-resistant container or in a child-resistant exit package at the time of sale Not packaged or labeled in a manner that is attractive to minors Advertising may not target minors, excessive use or promote illegal activity and must contain warnings Protect consumers All products are tested Labeled in accordance with OHA rules Issues raised: Defining attractiveness to minors Availability of certified labs Industry self-regulation of advertising

13 TRANSPORTATION AND DELIVERY Statute: Retailers may deliver recreational marijuana directly to consumer Licenses may move product to another licensee Temporary rules for home delivery: $100 limit per delivery and requirement that home delivery be located within the licensee s jurisdiction Delivery limited to residences Must verify ID Temporary rules for licensee to licensee transfer: Must enter transfer into the Cannabis Tracking System Must carry and produce Cannabis Tracking System manifest Issues raised: Advisory committee s concerns for employee and public safety Verification of manifest

14 LAND USE, WATER RIGHTS COMPLIANCE Land Use Compatibility Statement HB 3400 (Section 34) requires Land Use Compatibility Statement from the city or county that authorizes the land use Standardized form on OLCC website no action required until January 4th Must act within 21 days if land use is allowable as an outright permitted use or by date of the final local permit approval if the land use is allowable as a conditional use Commission will not issue a license if the Land Use Compatibility Statement shows that the proposed land use is prohibited Water Law Compliance Understand assignment of water rights Work with local DNR Watermaster

15 FEES Statute: Set fees that recover, but not exceed, the cost of administration Fees for each license type cannot exceed the cost to administer that license type Budget Note: tier fees for all license types; fees must be less than those charged by OHA Temporary rules: Estimates based on Colorado and Washington experience adjusted downward for population, and upward for Oregon s medical marijuana retail outlets All license types: $250 application fee Grower: $3,750 tier 1; $5,750 tier 2 All other license types: $4,750 Issues raised: License fees are higher than $1,000 in Measure 91 Estimated number of licenses may not be accurate, fee volatility Detailed cost accounting for each license type is time consuming and problematic

16 LOCAL REGULATIONS - OPT OUT Cities and counties may adopt ordinances that prohibit the establishment of recreational marijuana licenses Must opt out by December 27, 2015 Must refer to November 2016 general election if less than 55% voted against Measure 91 Must provide notice and ordinance to OLCC OLCC will not grant licenses if election is scheduled Lose opportunity to share tax revenue Opt out as of November 20: 13 counties, 46 cities, 24 referrals Home grow and personal use may not be prohibited The governing body of a city or county may adopt ordinances that impose reasonable time, place and manner regulations for all license types

17 REVENUE DISTRIBUTION Revenue Distribution: 40% common school fund 20% Mental Health Alcoholism and Drug Services 15% State Police Account 10% Cities for law enforcement duties under recreational marijuana 10% Counties for law enforcement duties under recreational marijuana 5% Oregon Health Authority Cities and counties who opt out of any license type are not eligible to receive tax revenue Taxes: 17% tax in OLCC retail stores (in 2015 recreational products taxed at 25% in medical dispensaries) May impose up to 3% additional local tax

18 CO-LOCATION Statute: Requires OLCC-licensed retailers to obtain marijuana items from other OLCC licensees Prohibits OLCC from investigating for compliance with OMMP Temporary Rules: Prohibit issuing an OLCC license at a location that is registered with OMMP, except for growers who opt-in as allowed by statute. Issues raised: Stakeholders have expressed interest in co-location of recreational and medical dispensaries and processors OLCC would need tracking in the Cannabis Tracking system as well as be granted sufficient authority to regulate

19 HELPING APPLICANTS BE SUCCESSFUL Compliance Philosophy Provide tools and knowledge to operate responsibly Non-punitive in nature but provides enforcement mechanisms Online application and rules training Informational meetings for potential licensees and local governments: Bend, Medford, Eugene, Salem, Portland Cannabis Tracking System Training Interagency coordination Business Readiness Guide Website and Gov Delivery

20 Business Readiness Guide

21 2016 SESSION COMMISSION REQUESTS Policy Issues: Simplifying accounting for fees license fees may not exceed the cost of the program instead of individual license types Timing of land use compatibility statement require applicant to obtain the LUCs prior to submitting their application Include consideration of delivery and possession of controlled substances and possession and furnishing of alcohol (misdemeanors) as license denial criteria for marijuana handler permits Start up resources contingencies funds if number of applicants is higher than forecasted Technical Fixes: Tax language cleanup DOR tracks collection of taxes Delegation of authority minor alcohol language Financial interest clarify discretion and materiality Bonds DOR requires tax bonds Liquor Funds reimbursement timing move repayment to September 30, 2017

22 TIMELINE Commission adopts temporary rules Oct. 22, 2015 Commission temporary rules technical issues Nov. 20, 2015 Training - Online license application tool Dec Accept license applications Jan. 4, 2016 Training: Cannabis Tracking System 1 st Quarter 2016 Oregon Legislative Session February 2016 Grower, Processor, Lab Licenses issued 2 nd Quarter 2016 Public hearings on final rules 2 nd Quarter 2016 Commission adopts final rules - June 28, 2016 Retail store licensing 3rd Quarter 2016 Licensed retail stores begin operating 4th Quarter 2016 For more information:

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