Oregon Cannabis Law Overview

Oregon has long been a leader in cannabis reform It was the first state to decriminalize the possession of small amounts of cannabis way back in 1973. In 1998, Ballot Measure 67, passed in 1998 by the voters of Oregon, led to the Oregon Medical Marijuana Act. Oregon’s medical cannabis program slowly grew from there, and in 2013, the state legislature legalized medical dispensaries.

In 2014, Oregon voters approved Measure 91, which legalized non-medical adult use cannabis, and in 2015, medical dispensaries were permitted (subject to local approval) to sell a limited number of recreational cannabis products until the end of 2016. The Oregon Liquor Control Commission (the “OLCC”) regulates retail cannabis businesses, but other agencies have authority as well. For example, the Oregon Health Authority oversees the medical marijuanaOregon Liquor Control Commission cardholder registry and regulates medical dispensaries, processors, and grow sites, and is responsible for regulating product testing, concentration limits, and labeling. The Oregon Department of Agriculture regulates pesticides and food safety. Oregon’s adult use cannabis program has four types of licenses: production, processing (i.e., concentrates and edibles), wholesale and retail.

On April 29, 2016, the OLCC issued its first recreational producer licenses and on October 1, 2016, the first recreational stores opened. As in other states, Oregon permits cities and counties to prohibit medical and recreational cannabis in their jurisdictions. In those jurisdictions that permit cannabis businesses, an applicant for a OLCC license must submit a Land Use Compatibility Statement showing local approval.

 

In 2016, the Oregon legislature opened ownership of licensed cannabis businesses (retail and medical) to out of state residents, including non-U.S. citizens. Medical card holders must be Oregon residents. The legislature under HB 4014 also allows Oregon taxpayers filing state tax returns to deduct business expenses that are not allowable under Section 280 of the Internal Revenue Code.

In 2017 the medical regime will revert back to the patient-caregiver relationships, but recreational producers will be permitted to cultivate and process, and stores will be permitted to sell, medical grade cannabis.

Oregon places no limits on the number of licenses owners may hold, nor does the state have onerous capitalization requirements or demand vertical integration of producers and retailers. The system is designed to promote small business, and for the time being it seems unlikely that Oregon will have any dominant or even semi-dominant players in the industry. Unfortunately, Oregon businesses have been recently hampered by a backlogged testing program that officials and businesses have had trouble fixing.

Dan Garfield is licensed to practice law in Oregon and travels to Oregon on a regular basis to keep up with industry trends and changing laws.