Oregon Cannabis License Moratorium: Almost There

It looks like a permanent Oregon cannabis license moratorium will finally take effect. I say “looks like” because key contingencies are still in play and, although things look promising, it could also get dicey as of March 31st— or even sooner.

In this post, I’ll explain what’s going on with House Bill 4121, which is certainly more than advertised, both in content and in progress. And I’ll explain what it all means for the Oregon cannabis industry.

HB 4121 and the cannabis license moratorium

On February 6th, 2024, I ran our annual legislative forecast and report on the proposed Oregon cannabis laws. We only had one significant cannabis bill in play, which made the 2024 session different than any year going back to 2015. The bill at issue for 2024 is HB 4121.

The enrolled version of HB 4121 is not significantly different than the introduced version previewed in my February 6th blog post. I’ll therefore dispense with another fulsome commentary, except to note that HB 4121 is generally sold as a pro-industry moratorium bill. HB 4121 is much more than that, however– especially when it comes to two big topics: law enforcement and hemp products.

HB 4121 highlights

Law enforcement; inspections

  • Authorizes collaborative mapping of cannabis grow sites, to inform law enforcement where licensed (and therefore, unlicensed) grows are located
  • Requires the Oregon Liquor and Cannabis Commission (OLCC) to work with the Oregon Department of Agriculture (ODA) to develop testing methodology to distinguish marijuana and hemp plants
  • Gives ODA power to require destruction of marijuana plants by hemp growers
  • Allows ODA and OLCC to enter into agreements to allow OLCC to inspect hemp crops
  • Requires ODA to adopt rules to allow law enforcement to accompany ODA on-site inspections
  • Authorized the Governor to call in the National Guard to help ODA and law enforcement with hemp site visits

Hemp product registration

  • Requires OLCC and ODA to establish a registration program for hemp products intended for human or animal consumption or use
  • Requires in- and out-of-state hemp manufacturers, packagers and distributors to pay fees, register in Oregon, submit a boatload of information, and comply with many rules

Marijuana license caps and moratorium

  • Prohibits OLCC from accepting new license applications pretty much forever, due to restrictive, ratio-based formulas tied to population
  • Contains an exception for producers looking to change canopy size, and for research labs
  • Contains an exception for the renewal or “transfer” of an existing license

Minor decoy operations

  • Requires OLCC to develop uniform standards for minor decoy operations
  • Requires OLCC standards to conform to law enforcement standards for minor decoy stings

Temporary permits

  • Requires OLCC to develop a process for applicants to work at a licensed business until they receive a marijuana worker permit, or a denial
  • Allows OLCC to revoke or suspend a permit for actions an individual took while in temporary permit status

Is HB 4121 going to pass? Does it matter if or when the Governor signs?

The bill is probably going to pass, but it matters very much when the Governor signs.

It was a relief to see the OLIS website updated on March 13th, three days after the session ended, showing that the Speaker of the House signed the bill. The Senate President, Rob Wagner, needs to sign next, and then Governor Tina Kotek. At this point, OLIS would normally show that the bill is awaiting signature by Wagner. For whatever reason the website doesn’t reflect this status, as it normally would; but I’m told by drafters of the bill that it’s headed to Wagner’s desk, and then Kotek’s. Both are expected to sign.

If the Governor signs HB 4121, it will become law immediately, based on its text. If the Governor vetoes HB 4121, it will not become law. And if she neither signs nor vetoes, HB 4121 will become law 30 days after its passage, which would be April 12 or thereabouts. That last scenario presents a problem for OLCC and the cannabis industry. This is because the current marijuana license moratorium expires on March 31, 2024.

In a “no sign and no veto” scenario, we could be looking at a gap of 12 days or so when OLCC is forced to take applications. A similar situation occurred back on May 31st, 2018, when OLCC announced a June 15th “pause” of application processing. Over 1,000 new applications flooded the portal in a two-week period. This exacerbated an already significant OLCC bottleneck; and, while many of those applications fell away, others made it through. We had several clients make a pretty penny reselling those landgrab licenses.

On Friday, March 15th, I was told by HB 4121 architects that OLCC has alerted the Governor’s staff to the timing exigency. This informs my comments up top that “things look promising.” If and when HB 4121 passes, though, please remember that we are in for more than a license moratorium. The law enforcement component of this bill is prominent. Further, Oregon is set to move ahead with a restrictive, outlying regime for hemp and hemp-derived products.

UPDATE 03/20/24: Governor Kotek signed HB 4121 on March 20, 2024 and the law took effect on that date.

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Hemp/CBD, Licensing, Oregon