• Bigoted Texas Wesleyan Baseball Coach Fired For Cannabis Discrimination
    March 2, 2018 — Texas Wesleyan University in Fort Worth, Texas did the right thing and fired their baseball coach The post Bigoted Texas Wesleyan Baseball Coach Fired For Cannabis Discrimination appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-03-02
  • New Approach Missouri: Working Hard to Bring Medical Cannabis to the Heartland
    By Anthony Johnson Since Missouri is not only my literal birthplace, but also where I started my cannabis law reform The post New Approach Missouri: Working Hard to Bring Medical Cannabis to the Heartland appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-03-01
  • Attendees Laud Wisconsin Rules at Central U.S. Hemp Expo
    From Hemp Today The last hemp factory in the U.S. shuttered its doors in 1958. Rens Hemp Company in Brandon, Wisconsin, had The post Attendees Laud Wisconsin Rules at Central U.S. Hemp Expo appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-28
  • Review: The Locust Solventless Kief Machine
    Oregonian Stacy Page, the mastermind behind the original Grasshopper Extractor, has done it again and on an industrial scale. His The post Review: The Locust Solventless Kief Machine appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-28
  • Breeder’s Corner: Mindful Seed Selection
    The majority of dispensaries today in Oregon consider THC percentages before any other criteria when deciding which products to stock. The post Breeder’s Corner: Mindful Seed Selection appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-27
  • Paying Oregon Cannabis Farm Workers
    Getting the pay right is important– and required. Cannabis producers make up the largest number of Oregon industry licensees. As of the Oregon Liquor Control Commission’s (OLCC) February 15, 2018 report, there are 922 licensed producers and approximately 1100 producer licenses awaiting approval. In comparison, the next largest license category is retail establishments, with a total of 527 approved licenses and approximately 200 awaiting approval. Clearly, licensed marijuana farms are leading the pack. Cannabis farm workers are sometimes subject to additional statutes, rules, and regulations that do not apply to non-farm workers. For this reason, if you are an Oregon marijuana producer, it is important to be familiar with agricultural rules as well as the OLCC marijuana rules. One especially important area to be aware of is hourly payments for cannabis farm workers. Underpaying farm workers can have disastrous consequences, and overpaying workers simply because you do not understand the rules is a poor business model. Certain cannabis farm workers are exempt from overtime payment requirements. For example, employees engaged in agricultural work 100 percent of the workweek are exempt from overtime pay requirements. Agricultural work is broadly defined to include farming in all its branches, including, but not limited to the cultivation and tillage of soil, the production cultivation, growing and harvesting of any agricultural or horticultural commodities and any practices performed by a farm or on a farm as an incident to or in conjunction with farming operations. If an employee handles or otherwise works on tasks that are not associated with farming, that employee must be paid over time for any hours worked in excess of 40. Oregon employers can sometimes also be exempt from paying minimum wage to agriculture employees. Both federal and state laws provide minimum wage exemptions for small farms. A cannabis producer employer must ensure the cannabis farm employee is exempt under both federal and state minimum wage requirements to avoid liability. Under the federal Fair Labor Standards Act, agricultural employers do not have to pay minimum wage to employees if the employer did not employ more than 500 man-days of agricultural labor in any calendar quarter of the preceding year. A “man-day” is defined as any day during which and employee performs agricultural labor for at least one hour. So for example, if you employed two cannabis farm workers on October 20, 2017 to cultivate plants and each worked a total of 4 hours, that is equivalent to two man-days. In Oregon, employers do not have to pay minimum wage to agriculture employees if ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-24
  • Oregon Dispensaries Improve Compliance on Minor Sales But Failures Still High
    The Oregon Liquor Control Commission (OLCC) has done another round of minor stings to see if the states licensed adult-use The post Oregon Dispensaries Improve Compliance on Minor Sales But Failures Still High appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-22
  • Oregon Cannabis: OLCC Systems Audit Gets Mixed Results
    OLCC audit results were nothing to write home about.Earlier this month, the Oregon Secretary of State’s office released a formal audit report (“Report”) of the Oregon Liquor Control Commission’s (OLCC) information technology systems as they relate to Oregon’s recreational cannabis regulatory enforcement. The Report, titled “Oregon Liquor Control Commission: Cannabis Information Systems Properly Functioning but Monitoring and Security Enhancements are Needed“, focused on two separate but related issues: 1) the OLCC’s Marijuana Licensing System (MLS) and Cannabis Tracking System (CTS), and 2) general IT security concerns and disaster recovery procedures. The Report and the OLCC’s formal written response (“Response”) paint a picture of an underfunded agency doing its best to establish appropriate procedures and processes in the face of a unique emerging marketplace, unexpected demand for licenses, strict statutory deadlines, an an ever-changing regulatory framework. It is also apparent that the Secretary of State and the OLCC worked well together during the audit process, as each party complements the other on transparency, professionalism, and common courtesy. The audit was initiated to determine whether: the OLCC has sufficient technical controls in place to ensure that the MLS and CTS are supporting effective regulation of the recreational cannabis industry; and the OLCC has implemented sufficient security procedures to protect against known technical and physical threats. Today we will focus only on issues raised relating to the MLS and CTS. Marijuana Licensing System (MLS) and Cannabis Tracking System (CTS) The Report and the Response provide an interesting look at how these two independent but related systems came to exist. When Oregon passed Measure 91 and then HB 3400 (2015), the OLCC was charged with creating and enforcing a regulatory framework for an entirely new industry with tight deadlines and insufficient resources. The OLCC reasonably decided that the only practical solution was to hire third-party contractors to provide Software as a Service (SaaS) solutions. The OLCC hired the company that created Colorado’s seed-to-sale tracking system to customize Colorado’s system to serve Oregon’s needs, resulting in the CTS, an online portal that allows OLCC licensees to input data about harvests, sales, etc. The OLCC hired a separate company to create its license application and renewal software, the MLS. After hiring these vendors, OLCC was forced to repeatedly overhaul these systems in response to extensive legislative rewrites to the recreational program in 2015, 2016, and 2017. In recognition of these difficulties, the OLCC requested funding for a full time Chief Information Officer in the 2017 legislative session, but was denied. The Report and the Response both ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-21
  • Oregon Cannabis: OLCC Clarifies Shared Processing Arrangements
    Licensees and employees only: them’s the rules!Our Oregon marijuana processor clients often approach us with requests to draft agreements that will allow third-parties to process cannabis in the client’s licensed premises. Typically, the processor is not operating at capacity and would like to supplement income by charging fees to keep the premises open around the clock. Previously, we have explained that this arrangement only really works if the third-party is also a licensed OLCC processor, pursuant to Oregon’s new alternating proprietor rules (OAR 845-025-3255). However, we are most often approached with proposals to have non-licensee third-parties enter the kitchen and physically create cannabis products that will be owned and sold by the licensee. Here is a more concrete example: Kelly’s Kitchen is an Oregon Liquor Control Commission (OLCC) licensed processor. Kelly meets Cindy, who has developed a recipe, labels, and packaging. Cindy doesn’t want to go through the OLCC application process, she just wants to make her Bud Brownies. Kelly invites Cindy to personally make her brownies on Kelly’s property, and Kelly agrees pay Cindy for each unit sold. The prevalence of these arrangements suggests that the industry has been treating this as a grey area. However, we recently reached out to the OLCC and received confirmation that this is black and white: The OLCC will view Cindy as illegally processing cannabis without a license, even if Kelly always retains ownership of the cannabis and resulting product. This arrangement can also put Kelly’s license at risk. No arrangement that allows non-licensees to personally process cannabis within a licensed premises is allowed under the rules. The OLCC’s view should not come as a surprise when you consider the significant restrictions in the new alternating proprietor rule that allows multiple OLCC licensed processors to share kitchen space: The kitchen must have a pre-approved schedule posted on its front door showing when each processor will be using the kitchen. The kitchen must have a separate secure area for each processor to store its cannabis products. Any concentrates produced under an alternating proprietor arrangement can only be used within that processor’s edibles or topicals. In effect, Cindy and Kelly are trying to bypass these restrictions, and the processor licensing regime as a whole. The only viable alternative to alternating licensed proprietors appears to be a standard intellectual property licensing agreement, whereby Cindy would license her recipe, branding, and packaging to Kelly as co-packer. Kelly or her employees then process the brownies and sell them retailers or wholesalers without Cindy’s involvement. Cindy will likely expect ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-15
  • Be Like Dennis
    By John Sajo Dennis Peron, the father of medical marijuana, died on January 27, 2018, in San Francisco. Dennis Peron The post Be Like Dennis appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-12
  • Much Ado About RICO and Cannabis, Part 4
    This is not the racketeer you’re looking for.In this series (Part 1, Part 2, and Part 3) we have been looking at two RICO cases filed in District Court in Oregon against cannabis producers. The first, McCart v. Beddow, appears to have settled pursuant to a confidential settlement agreement. The second, Ainsworth et. al. v. Owenby et. al., is just getting started. The common thread here is that the pro se (self-represented) plaintiff in McCart v. Beddow, is an attorney who is now representing the plaintiffs in Ainsworth. Due to this common thread, we think we can draw some likely conclusions about the contents of the confidential McCart settlement from the issues raised in the Ainsworth complaintNote that the Ainsworth complaint was filed just about two months after the McCart defendants filed their motions to dismiss. As discussed below, it is clear that the Ainsworth complaint learned some valuable lessons from the motions to dismiss. Let’s engage in a bit of idle speculation: Dispensaries can breathe a sigh of relief. The McCart lawsuit named each and every OLCC licensed retailer that purchased the defendant farm’s product. In sharp contrast, the Ainsworth complaint doesn’t name any such “dispensary defendants.” Given that one of the goals of these RICO cases is to get a windfall under RICO’s treble damages clause, it is probably safe to assume that the McCart dispensary defendants didn’t end up being a pot of gold at the end of the RICO rainbow. Perhaps the attorney now agrees with our initial assessment: “It seems unlikely the Dispensary Defendants in this case had anything to do with operating or managing the enterprise. They appear to have merely been customers, in which case they shouldn’t have liability here.” This suggests that dispensaries are unlikely to be targets of future RICO suits based on the conduct of their suppliers. The protections of ORS 30.936 (Right to Farm Act) played an important role in the McCart settlement negotiations. As we explained in a previous entry in this series: “ORS 30.936(1) . . . provides farmers in farming areas with immunity from suit for any trespass or nuisance claims, defined elsewhere as claims ‘based on noise, vibration, odors, smoke, dust, mist from irrigation, use of pesticides and use of crop production substances.’ Since RICO case law suggests that harms to property interests should be determined by state law, plaintiffs’ diminution of value claims are likely dead on arrival.” The Ainsworth complaint takes pains to avoid the protections of 30.936. For example, paragraph 91 reads: “Defendants are not entitled to ‘right to farm’ immunity pursuant to ORS 30.936 because Defendants’ use of the [Defendant] Property does not comply with applicable ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-09
  • What if You Break the Rules? Cannabis Administrative Litigation in Oregon
    Follow the rules or risk having to close your doors–permanently.Recreational cannabis is highly regulated. In Oregon, the Oregon Liquor Control Commission (OLCC) is the agency tasked with implementing and enforcing the recreational cannabis rules. The rules are complex and frequently change (see posts on that here, here, here, and here) meaning compliance can be difficult even with the best of intentions. For that reason, marijuana businesses should set up a comprehensive compliance plan to avoid violating OLCC rules. But what happens when a rule is violated? When the OLCC determines a cannabis business or its employee has violated a rule, it issues what is known as a “charging document.” The charging document will list what rule has been violated and the penalty the OLCC plans to assess. The rules identify six categories of violations. The categories identify different levels of egregiousness and the OLCC, while not required to assess a penalty, has adopted guidelines for the kinds of penalties cannabis businesses can expect: Category I: These are considered the most egregious violation and can result in license revocation. These violations include things like failure to verify the age of a minor, intentional false statements made to the OLCC, or intentional destruction or concealment of evidence Category II: These are violations that create a present threat to public health or safety and include things such as being under the influence of intoxicants while on duty or failure to permit a premises inspection. These violations can result in a 30 day suspicion of a license or up to $4950 penalty. Category II(b): This is a special category reserved for the unintentional sale of marijuana to a minor. It results in either a 30 day license suspension or up to $4950 penalty. Category III: These violations create a potential threat to public health or safety and include things such as allowing a minor to enter a prohibited area or permitting sales by an employee without a marijuana workers’ permit. Category III Violations can result in a 10 day suspension or a $1650 fine. Category IV: These violations create a climate conducive to abuses associated with the sale or manufacture of marijuana items and include operating a business after lawful hours for the sale of marijuana or removal of required signs and notices. These violations can result in a 7 day suspension or a $1115 penalty. Category V: These are the least egregious violations and include things such as permitting marijuana items to be given as a prize or failure to notify the commissions ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-08
  • Oregon Cannabis Laws: The 2018 Draft Bills Are Here
    Just the facts on pending Oregon cannabis laws.The Oregon legislative session began on Monday. Because 2018 is an even-numbered calendar year, this session is a short session, lasting just 35 days. That fact hasn’t stopped Oregon democrats from targeting ambitious policy objectives like cap-and-trade, along with a host of other items that will likely not get done. As to cannabis, there won’t be much movement, despite persistent rumors and calls for a limitation on license issuances, and the calls for an uptick in enforcement dollars. Last year, Oregon kicked off the legislative session with 30 or so draft cannabis bills. This year, we have four. Two of them are likely to go nowhere and two may pass if things go well, but with significant modifications. The aptly named Joint Committee on Marijuana Regulation dissolved last session, which means that cannabis will get even less attention than before. Still, its former co-chair and Senate Majority Leader Ginny Burdick presides over the rules committee, and for that reason alone, we expect these bills get some play. Below is the 2018 list, including links to each bill. As a reminder, text in bold typeface is proposed new language, and text in [italicized and bracketed] typeface is language that would be removed from existing statutes. Senate Bill 1544 This bill would remove the 24-inch height limitation on immature plants produced for medical purposes. (Today, medical growers can theoretically have infinite starts.) It would also change the possession limit on immature marijuana plants for registered medical growers and for those responsible for medical grow sites. Finally, the bill proposes to exempt processors from testing requirements in the limited context of processing for a medical marijuana cardholder or that cardholder’s caregiver. Will this bill pass? It’s possible, but if it does, it will probably look a lot different than it does today. SB 1544 is the “gut and stuff bill” we previously anticipated: it is rife for amending and may look different a few weeks from today. The changes related to medical starts are likely to stay, because this is something the feds are said to have noted as missing from the medical program. We may also see clean-up of language clarifying whether a person can be a designated grower for his or her own home grow under Oregon Health Authority (OHA) rules, and other minor issues. But the chance of consensus on multiple, high-impact issues is small. Senate Bill 1555 This one has been moving along, with a few amendments already made. It will not impact ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-08
  • New Oregon Cannabis Rules: Part 4 – Industrial Hemp
    In the three previous entires to this series (here, here, and here), we have discussed the major changes in the packet of rules amendments that the OLCC adopted at the end of 2017. Those changes cover promotional events, lender disclosures, and canopy size changes for marijuana grows. Today, we want to talk about the new rules for industrial hemp. Industrial hemp regulation has been going through a series of rapid shifts since 2016, when the Oregon legislature adopted a two-tier system that allowed for the registration of industrial hemp growers (producers) and handlers (processors). At the time, only hemp handlers could sell industrial hemp products. This changed last year, when Governor Kate Brown signed into law SB 1015, which allows industrial hemp to enter into the recreational cannabis supply line. Just before the new year, the OLCC adopted amendments to its administrative rules on cannabis that implemented SB 1015, providing much needed guidance on the new hemp regime. First and foremost, the term “industrial hemp” refers to any cannabis plants with a THC concentration below 0.3 percent, mirroring the definition under federal law. Hemp growers and handlers can apply to the OLCC for an industrial hemp certificate ($500 per year, plus a $250 application fee) to transfer hemp to recreational processors, and handlers can also receive a certificate to transfer their hemp concentrates and hemp extracts to recreational processors. In turn, recreational processors can apply for a special “endorsement” that will allow them to accept hemp and hemp products from the handlers and growers, create hemp concentrates or extracts with a THC concentration below 5 percent, incorporate hemp concentrates or extracts into “marijuana items,” and sell those products to other OLCC processors, wholesalers, and retailers. OLCC retailers can then turn around and sell these hemp-based products to Oregon consumers. None of this answers the question that we receive most often from industrial hemp producers: “Can I sell my industrial hemp products outside of Oregon?” It goes without saying that OLCC retailers must sell locally, so any hemp products transferred into the recreational supply chain can only be sold in Oregon. Hemp outside of the recreational chain is regulated by the Oregon Department of Agriculture (ODA). The ODA’s rules are surprisingly wide open when it comes to the sale of industrial hemp products. Under OAR 603-048-0100, a hemp handler can sell hemp products “to any person.” The ODA’s rules make no reference to whether that sale must occur in Oregon. While interstate sales of hemp products may be legal in Oregon ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-01
  • The Southern Oregon Marijuana Initiative
    Local grower tax: good idea?The regulation of state-legal cannabis differs from any other commodity. One of the more interesting and consequential differences is the degree of autonomy and control that states tend to give local jurisdictions (cities and counties) with respect to commercial cannabis activity. Local jurisdictions are often allowed to tax cannabis sales, for example; to license marijuana businesses; and to opt out of marijuana activity altogether. This is different than what is allowed or accepted with standard commodities (think: apples, flowers or chewing gum), or even with restricted commodities (alcohol, tobacco or lottery tickets). The reason that local jurisdictions have such wide latitude regarding marijuana is simple: federal prohibition. Along these lines, the Association of Oregon Counties (AOC) recently offered an unusual proposal for the local regulation of cannabis. The proposal is called the “Southern Oregon Marijuana Initiative” (the “Initiative”) and it would amend Oregon statutes to allow the five most economically distressed Oregon counties to impose a marijuana production tax on licensed growers, in order to fund law enforcement efforts vis-à-vis the local black market. (For some background on the Oregon cannabis black market, and Oregon’s cannabis oversupply issue, see our coverage here). The Initiative follows an attractive logic model. It observes that the counties at issue have suffered tremendous fiscal hardship since the local timber industry faltered. The counties also comprise a banana belt for cannabis, with perfect soil and climate, and an established and pervasive culture of illegal cannabis farming. The Initiative thus observes that: “the marijuana industry has largely replaced the timber industry as the natural resources economic engine in Southern Oregon. However, unlike the timber industry, the marijuana industry does not substantially contribute to public services in Southern Oregon, including, but not limited to, the very law enforcement and code enforcement services needed to help the industry survive and thrive….” It is indisputable that the counties cited by AOC suffer from a lack of public services, from law enforcement to libraries. This problematic reality, along with the following factors, conspire to make the AOC pitch all the more timely: 1) recent pressure on state-legal marijuana from the federal Department of Justice; 2) Oregon U.S. Attorney Billy Williams’ stated concern with overproduction and black market production; and 3) the lack of state budget allocation for increased enforcement against illegal cannabis operators. Against this challenging backdrop, local actors like AOC are proposing creative local regulation, in an attempt to fill the void. Whether the Initiative has any chance of finding its way into law is ... read more
    Source: Canna Law Blog – OregonPublished on 2018-01-25
 
  • Bigoted Texas Wesleyan Baseball Coach Fired For Cannabis Discrimination
    March 2, 2018 — Texas Wesleyan University in Fort Worth, Texas did the right thing and fired their baseball coach The post Bigoted Texas Wesleyan Baseball Coach Fired For Cannabis Discrimination appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-03-02
  • New Approach Missouri: Working Hard to Bring Medical Cannabis to the Heartland
    By Anthony Johnson Since Missouri is not only my literal birthplace, but also where I started my cannabis law reform The post New Approach Missouri: Working Hard to Bring Medical Cannabis to the Heartland appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-03-01
  • Attendees Laud Wisconsin Rules at Central U.S. Hemp Expo
    From Hemp Today The last hemp factory in the U.S. shuttered its doors in 1958. Rens Hemp Company in Brandon, Wisconsin, had The post Attendees Laud Wisconsin Rules at Central U.S. Hemp Expo appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-28
  • Review: The Locust Solventless Kief Machine
    Oregonian Stacy Page, the mastermind behind the original Grasshopper Extractor, has done it again and on an industrial scale. His The post Review: The Locust Solventless Kief Machine appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-28
  • Breeder’s Corner: Mindful Seed Selection
    The majority of dispensaries today in Oregon consider THC percentages before any other criteria when deciding which products to stock. The post Breeder’s Corner: Mindful Seed Selection appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-27
  • Paying Oregon Cannabis Farm Workers
    Getting the pay right is important– and required. Cannabis producers make up the largest number of Oregon industry licensees. As of the Oregon Liquor Control Commission’s (OLCC) February 15, 2018 report, there are 922 licensed producers and approximately 1100 producer licenses awaiting approval. In comparison, the next largest license category is retail establishments, with a total of 527 approved licenses and approximately 200 awaiting approval. Clearly, licensed marijuana farms are leading the pack. Cannabis farm workers are sometimes subject to additional statutes, rules, and regulations that do not apply to non-farm workers. For this reason, if you are an Oregon marijuana producer, it is important to be familiar with agricultural rules as well as the OLCC marijuana rules. One especially important area to be aware of is hourly payments for cannabis farm workers. Underpaying farm workers can have disastrous consequences, and overpaying workers simply because you do not understand the rules is a poor business model. Certain cannabis farm workers are exempt from overtime payment requirements. For example, employees engaged in agricultural work 100 percent of the workweek are exempt from overtime pay requirements. Agricultural work is broadly defined to include farming in all its branches, including, but not limited to the cultivation and tillage of soil, the production cultivation, growing and harvesting of any agricultural or horticultural commodities and any practices performed by a farm or on a farm as an incident to or in conjunction with farming operations. If an employee handles or otherwise works on tasks that are not associated with farming, that employee must be paid over time for any hours worked in excess of 40. Oregon employers can sometimes also be exempt from paying minimum wage to agriculture employees. Both federal and state laws provide minimum wage exemptions for small farms. A cannabis producer employer must ensure the cannabis farm employee is exempt under both federal and state minimum wage requirements to avoid liability. Under the federal Fair Labor Standards Act, agricultural employers do not have to pay minimum wage to employees if the employer did not employ more than 500 man-days of agricultural labor in any calendar quarter of the preceding year. A “man-day” is defined as any day during which and employee performs agricultural labor for at least one hour. So for example, if you employed two cannabis farm workers on October 20, 2017 to cultivate plants and each worked a total of 4 hours, that is equivalent to two man-days. In Oregon, employers do not have to pay minimum wage to agriculture employees if ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-24
  • Oregon Dispensaries Improve Compliance on Minor Sales But Failures Still High
    The Oregon Liquor Control Commission (OLCC) has done another round of minor stings to see if the states licensed adult-use The post Oregon Dispensaries Improve Compliance on Minor Sales But Failures Still High appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-22
  • Oregon Cannabis: OLCC Systems Audit Gets Mixed Results
    OLCC audit results were nothing to write home about.Earlier this month, the Oregon Secretary of State’s office released a formal audit report (“Report”) of the Oregon Liquor Control Commission’s (OLCC) information technology systems as they relate to Oregon’s recreational cannabis regulatory enforcement. The Report, titled “Oregon Liquor Control Commission: Cannabis Information Systems Properly Functioning but Monitoring and Security Enhancements are Needed“, focused on two separate but related issues: 1) the OLCC’s Marijuana Licensing System (MLS) and Cannabis Tracking System (CTS), and 2) general IT security concerns and disaster recovery procedures. The Report and the OLCC’s formal written response (“Response”) paint a picture of an underfunded agency doing its best to establish appropriate procedures and processes in the face of a unique emerging marketplace, unexpected demand for licenses, strict statutory deadlines, an an ever-changing regulatory framework. It is also apparent that the Secretary of State and the OLCC worked well together during the audit process, as each party complements the other on transparency, professionalism, and common courtesy. The audit was initiated to determine whether: the OLCC has sufficient technical controls in place to ensure that the MLS and CTS are supporting effective regulation of the recreational cannabis industry; and the OLCC has implemented sufficient security procedures to protect against known technical and physical threats. Today we will focus only on issues raised relating to the MLS and CTS. Marijuana Licensing System (MLS) and Cannabis Tracking System (CTS) The Report and the Response provide an interesting look at how these two independent but related systems came to exist. When Oregon passed Measure 91 and then HB 3400 (2015), the OLCC was charged with creating and enforcing a regulatory framework for an entirely new industry with tight deadlines and insufficient resources. The OLCC reasonably decided that the only practical solution was to hire third-party contractors to provide Software as a Service (SaaS) solutions. The OLCC hired the company that created Colorado’s seed-to-sale tracking system to customize Colorado’s system to serve Oregon’s needs, resulting in the CTS, an online portal that allows OLCC licensees to input data about harvests, sales, etc. The OLCC hired a separate company to create its license application and renewal software, the MLS. After hiring these vendors, OLCC was forced to repeatedly overhaul these systems in response to extensive legislative rewrites to the recreational program in 2015, 2016, and 2017. In recognition of these difficulties, the OLCC requested funding for a full time Chief Information Officer in the 2017 legislative session, but was denied. The Report and the Response both ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-21
  • Oregon Cannabis: OLCC Clarifies Shared Processing Arrangements
    Licensees and employees only: them’s the rules!Our Oregon marijuana processor clients often approach us with requests to draft agreements that will allow third-parties to process cannabis in the client’s licensed premises. Typically, the processor is not operating at capacity and would like to supplement income by charging fees to keep the premises open around the clock. Previously, we have explained that this arrangement only really works if the third-party is also a licensed OLCC processor, pursuant to Oregon’s new alternating proprietor rules (OAR 845-025-3255). However, we are most often approached with proposals to have non-licensee third-parties enter the kitchen and physically create cannabis products that will be owned and sold by the licensee. Here is a more concrete example: Kelly’s Kitchen is an Oregon Liquor Control Commission (OLCC) licensed processor. Kelly meets Cindy, who has developed a recipe, labels, and packaging. Cindy doesn’t want to go through the OLCC application process, she just wants to make her Bud Brownies. Kelly invites Cindy to personally make her brownies on Kelly’s property, and Kelly agrees pay Cindy for each unit sold. The prevalence of these arrangements suggests that the industry has been treating this as a grey area. However, we recently reached out to the OLCC and received confirmation that this is black and white: The OLCC will view Cindy as illegally processing cannabis without a license, even if Kelly always retains ownership of the cannabis and resulting product. This arrangement can also put Kelly’s license at risk. No arrangement that allows non-licensees to personally process cannabis within a licensed premises is allowed under the rules. The OLCC’s view should not come as a surprise when you consider the significant restrictions in the new alternating proprietor rule that allows multiple OLCC licensed processors to share kitchen space: The kitchen must have a pre-approved schedule posted on its front door showing when each processor will be using the kitchen. The kitchen must have a separate secure area for each processor to store its cannabis products. Any concentrates produced under an alternating proprietor arrangement can only be used within that processor’s edibles or topicals. In effect, Cindy and Kelly are trying to bypass these restrictions, and the processor licensing regime as a whole. The only viable alternative to alternating licensed proprietors appears to be a standard intellectual property licensing agreement, whereby Cindy would license her recipe, branding, and packaging to Kelly as co-packer. Kelly or her employees then process the brownies and sell them retailers or wholesalers without Cindy’s involvement. Cindy will likely expect ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-15
  • Be Like Dennis
    By John Sajo Dennis Peron, the father of medical marijuana, died on January 27, 2018, in San Francisco. Dennis Peron The post Be Like Dennis appeared first on Oregon Cannabis Connection. ... read more
    Source: Oregon Cannabis ConnectionPublished on 2018-02-12
  • Much Ado About RICO and Cannabis, Part 4
    This is not the racketeer you’re looking for.In this series (Part 1, Part 2, and Part 3) we have been looking at two RICO cases filed in District Court in Oregon against cannabis producers. The first, McCart v. Beddow, appears to have settled pursuant to a confidential settlement agreement. The second, Ainsworth et. al. v. Owenby et. al., is just getting started. The common thread here is that the pro se (self-represented) plaintiff in McCart v. Beddow, is an attorney who is now representing the plaintiffs in Ainsworth. Due to this common thread, we think we can draw some likely conclusions about the contents of the confidential McCart settlement from the issues raised in the Ainsworth complaintNote that the Ainsworth complaint was filed just about two months after the McCart defendants filed their motions to dismiss. As discussed below, it is clear that the Ainsworth complaint learned some valuable lessons from the motions to dismiss. Let’s engage in a bit of idle speculation: Dispensaries can breathe a sigh of relief. The McCart lawsuit named each and every OLCC licensed retailer that purchased the defendant farm’s product. In sharp contrast, the Ainsworth complaint doesn’t name any such “dispensary defendants.” Given that one of the goals of these RICO cases is to get a windfall under RICO’s treble damages clause, it is probably safe to assume that the McCart dispensary defendants didn’t end up being a pot of gold at the end of the RICO rainbow. Perhaps the attorney now agrees with our initial assessment: “It seems unlikely the Dispensary Defendants in this case had anything to do with operating or managing the enterprise. They appear to have merely been customers, in which case they shouldn’t have liability here.” This suggests that dispensaries are unlikely to be targets of future RICO suits based on the conduct of their suppliers. The protections of ORS 30.936 (Right to Farm Act) played an important role in the McCart settlement negotiations. As we explained in a previous entry in this series: “ORS 30.936(1) . . . provides farmers in farming areas with immunity from suit for any trespass or nuisance claims, defined elsewhere as claims ‘based on noise, vibration, odors, smoke, dust, mist from irrigation, use of pesticides and use of crop production substances.’ Since RICO case law suggests that harms to property interests should be determined by state law, plaintiffs’ diminution of value claims are likely dead on arrival.” The Ainsworth complaint takes pains to avoid the protections of 30.936. For example, paragraph 91 reads: “Defendants are not entitled to ‘right to farm’ immunity pursuant to ORS 30.936 because Defendants’ use of the [Defendant] Property does not comply with applicable ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-09
  • What if You Break the Rules? Cannabis Administrative Litigation in Oregon
    Follow the rules or risk having to close your doors–permanently.Recreational cannabis is highly regulated. In Oregon, the Oregon Liquor Control Commission (OLCC) is the agency tasked with implementing and enforcing the recreational cannabis rules. The rules are complex and frequently change (see posts on that here, here, here, and here) meaning compliance can be difficult even with the best of intentions. For that reason, marijuana businesses should set up a comprehensive compliance plan to avoid violating OLCC rules. But what happens when a rule is violated? When the OLCC determines a cannabis business or its employee has violated a rule, it issues what is known as a “charging document.” The charging document will list what rule has been violated and the penalty the OLCC plans to assess. The rules identify six categories of violations. The categories identify different levels of egregiousness and the OLCC, while not required to assess a penalty, has adopted guidelines for the kinds of penalties cannabis businesses can expect: Category I: These are considered the most egregious violation and can result in license revocation. These violations include things like failure to verify the age of a minor, intentional false statements made to the OLCC, or intentional destruction or concealment of evidence Category II: These are violations that create a present threat to public health or safety and include things such as being under the influence of intoxicants while on duty or failure to permit a premises inspection. These violations can result in a 30 day suspicion of a license or up to $4950 penalty. Category II(b): This is a special category reserved for the unintentional sale of marijuana to a minor. It results in either a 30 day license suspension or up to $4950 penalty. Category III: These violations create a potential threat to public health or safety and include things such as allowing a minor to enter a prohibited area or permitting sales by an employee without a marijuana workers’ permit. Category III Violations can result in a 10 day suspension or a $1650 fine. Category IV: These violations create a climate conducive to abuses associated with the sale or manufacture of marijuana items and include operating a business after lawful hours for the sale of marijuana or removal of required signs and notices. These violations can result in a 7 day suspension or a $1115 penalty. Category V: These are the least egregious violations and include things such as permitting marijuana items to be given as a prize or failure to notify the commissions ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-08
  • Oregon Cannabis Laws: The 2018 Draft Bills Are Here
    Just the facts on pending Oregon cannabis laws.The Oregon legislative session began on Monday. Because 2018 is an even-numbered calendar year, this session is a short session, lasting just 35 days. That fact hasn’t stopped Oregon democrats from targeting ambitious policy objectives like cap-and-trade, along with a host of other items that will likely not get done. As to cannabis, there won’t be much movement, despite persistent rumors and calls for a limitation on license issuances, and the calls for an uptick in enforcement dollars. Last year, Oregon kicked off the legislative session with 30 or so draft cannabis bills. This year, we have four. Two of them are likely to go nowhere and two may pass if things go well, but with significant modifications. The aptly named Joint Committee on Marijuana Regulation dissolved last session, which means that cannabis will get even less attention than before. Still, its former co-chair and Senate Majority Leader Ginny Burdick presides over the rules committee, and for that reason alone, we expect these bills get some play. Below is the 2018 list, including links to each bill. As a reminder, text in bold typeface is proposed new language, and text in [italicized and bracketed] typeface is language that would be removed from existing statutes. Senate Bill 1544 This bill would remove the 24-inch height limitation on immature plants produced for medical purposes. (Today, medical growers can theoretically have infinite starts.) It would also change the possession limit on immature marijuana plants for registered medical growers and for those responsible for medical grow sites. Finally, the bill proposes to exempt processors from testing requirements in the limited context of processing for a medical marijuana cardholder or that cardholder’s caregiver. Will this bill pass? It’s possible, but if it does, it will probably look a lot different than it does today. SB 1544 is the “gut and stuff bill” we previously anticipated: it is rife for amending and may look different a few weeks from today. The changes related to medical starts are likely to stay, because this is something the feds are said to have noted as missing from the medical program. We may also see clean-up of language clarifying whether a person can be a designated grower for his or her own home grow under Oregon Health Authority (OHA) rules, and other minor issues. But the chance of consensus on multiple, high-impact issues is small. Senate Bill 1555 This one has been moving along, with a few amendments already made. It will not impact ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-08
  • New Oregon Cannabis Rules: Part 4 – Industrial Hemp
    In the three previous entires to this series (here, here, and here), we have discussed the major changes in the packet of rules amendments that the OLCC adopted at the end of 2017. Those changes cover promotional events, lender disclosures, and canopy size changes for marijuana grows. Today, we want to talk about the new rules for industrial hemp. Industrial hemp regulation has been going through a series of rapid shifts since 2016, when the Oregon legislature adopted a two-tier system that allowed for the registration of industrial hemp growers (producers) and handlers (processors). At the time, only hemp handlers could sell industrial hemp products. This changed last year, when Governor Kate Brown signed into law SB 1015, which allows industrial hemp to enter into the recreational cannabis supply line. Just before the new year, the OLCC adopted amendments to its administrative rules on cannabis that implemented SB 1015, providing much needed guidance on the new hemp regime. First and foremost, the term “industrial hemp” refers to any cannabis plants with a THC concentration below 0.3 percent, mirroring the definition under federal law. Hemp growers and handlers can apply to the OLCC for an industrial hemp certificate ($500 per year, plus a $250 application fee) to transfer hemp to recreational processors, and handlers can also receive a certificate to transfer their hemp concentrates and hemp extracts to recreational processors. In turn, recreational processors can apply for a special “endorsement” that will allow them to accept hemp and hemp products from the handlers and growers, create hemp concentrates or extracts with a THC concentration below 5 percent, incorporate hemp concentrates or extracts into “marijuana items,” and sell those products to other OLCC processors, wholesalers, and retailers. OLCC retailers can then turn around and sell these hemp-based products to Oregon consumers. None of this answers the question that we receive most often from industrial hemp producers: “Can I sell my industrial hemp products outside of Oregon?” It goes without saying that OLCC retailers must sell locally, so any hemp products transferred into the recreational supply chain can only be sold in Oregon. Hemp outside of the recreational chain is regulated by the Oregon Department of Agriculture (ODA). The ODA’s rules are surprisingly wide open when it comes to the sale of industrial hemp products. Under OAR 603-048-0100, a hemp handler can sell hemp products “to any person.” The ODA’s rules make no reference to whether that sale must occur in Oregon. While interstate sales of hemp products may be legal in Oregon ... read more
    Source: Canna Law Blog – OregonPublished on 2018-02-01
  • The Southern Oregon Marijuana Initiative
    Local grower tax: good idea?The regulation of state-legal cannabis differs from any other commodity. One of the more interesting and consequential differences is the degree of autonomy and control that states tend to give local jurisdictions (cities and counties) with respect to commercial cannabis activity. Local jurisdictions are often allowed to tax cannabis sales, for example; to license marijuana businesses; and to opt out of marijuana activity altogether. This is different than what is allowed or accepted with standard commodities (think: apples, flowers or chewing gum), or even with restricted commodities (alcohol, tobacco or lottery tickets). The reason that local jurisdictions have such wide latitude regarding marijuana is simple: federal prohibition. Along these lines, the Association of Oregon Counties (AOC) recently offered an unusual proposal for the local regulation of cannabis. The proposal is called the “Southern Oregon Marijuana Initiative” (the “Initiative”) and it would amend Oregon statutes to allow the five most economically distressed Oregon counties to impose a marijuana production tax on licensed growers, in order to fund law enforcement efforts vis-à-vis the local black market. (For some background on the Oregon cannabis black market, and Oregon’s cannabis oversupply issue, see our coverage here). The Initiative follows an attractive logic model. It observes that the counties at issue have suffered tremendous fiscal hardship since the local timber industry faltered. The counties also comprise a banana belt for cannabis, with perfect soil and climate, and an established and pervasive culture of illegal cannabis farming. The Initiative thus observes that: “the marijuana industry has largely replaced the timber industry as the natural resources economic engine in Southern Oregon. However, unlike the timber industry, the marijuana industry does not substantially contribute to public services in Southern Oregon, including, but not limited to, the very law enforcement and code enforcement services needed to help the industry survive and thrive….” It is indisputable that the counties cited by AOC suffer from a lack of public services, from law enforcement to libraries. This problematic reality, along with the following factors, conspire to make the AOC pitch all the more timely: 1) recent pressure on state-legal marijuana from the federal Department of Justice; 2) Oregon U.S. Attorney Billy Williams’ stated concern with overproduction and black market production; and 3) the lack of state budget allocation for increased enforcement against illegal cannabis operators. Against this challenging backdrop, local actors like AOC are proposing creative local regulation, in an attempt to fill the void. Whether the Initiative has any chance of finding its way into law is ... read more
    Source: Canna Law Blog – OregonPublished on 2018-01-25