Our Oregon lawyers have been fielding many questions regarding a recent civil RICO complaint filed in the federal court in Portland, Oregon styled as McCart v. Beddow et al. This case was filed on the heels of the Safe Streets decision out of Colorado that we discussed recently, and was clearly heavily influenced by that decision. You will recall that in Safe Streets, the Tenth Circuit allowed a private civil RICO action by a neighbor of a cannabis grow operation to survive a motion to dismiss.

As a reminder, RICO is a federal statute that provides for a civil cause of action for acts performed as part of an ongoing criminal organization (in addition to criminal penalties). It has become fashionable for meddlesome neighbors to bring these lawsuits against cannabis operators and their business affiliates. Because RICO complaints sound in federal law and implicate supply chain defendants, these cases differ from your ordinary nuisance-and-tresspass actions, which pursue only the marijuana grower itself, and also have been recently brought against Oregon marijuana growers.

Though McCart shares many similarities to the facts in Safe Streets, it is the differences that make things interesting. These differences let us tease out a couple of lessons for other cannabis companies seeking to avoid a similar lawsuit.

Oregon Cannabis First the similarities: Plaintiffs in both suits are bringing RICO claims against neighboring cannabis grow operations and alleging direct injuries to plaintiffs’ properties in the form of noxious odors that allegedly reduce property values. They also allege the mere presence of a “criminal enterprise” next door decreases property values.

But McCart is not Safe Streets. Taking the McCart complaint on its face, the direct operators of the neighboring grow operation are alleged to have gone out of their way to intentionally provoke the Plaintiffs at every turn. This isn’t just a case about noxious odors and neighboring criminal enterprises (although it is that); rather, the Plaintiffs are asserting this case is the culmination of a bitter dispute between neighbors in which cannabis is more of an extra than a star.

Specifically, the McCart Plaintiffs allege that:

  • The defendant cannabis growers menaced Plaintiffs and “made obscene gestures” and “screamed obscenities” at Plaintiffs;
  • The grow operation increased traffic on a shared driveway by an excessive amount;
  • The Defendants caused direct injuries to the property by leaving tire tracks on Plaintiffs’ property;
  • The Defendants revved their car engines when they saw Plaintiffs outside;
  • The Defendants “discharge firearms for extended periods”;
  • The Defendants frequently “blast the air horn of their dump truck”;
  • The Defendants damaged the shared driveway and at times blocked it; and
  • The Defendants littered on Plaintiffs’ property.

Whether these allegations are true will be Plaintiffs’ burden to prove. However, two immediate lessons come to mind:

Lesson 1: To paraphrase Wil Wheaton: don’t be a jerk. Be a good neighbor. If the McCart allegations are true, the behavior of these growers reflects poorly on the entire industry. If you want to be treated like a serious business, act like one. Recognize the precarious legal situation afforded by inane prohibition policies, and strive to be ideal neighbors.

Lesson 2: Control the odors. The Safe Street court found that the cannabis smell released by the Colorado grow op was enough to assert a claim for RICO damages. You should do everything you can to minimize odors on your businesses.

But what about the other McCart defendants?

Like in Safe Streets, the McCart plaintiffs seem to have sued everyone even tangentially related to their hated neighbors, including cannabis dispensaries that just happened to stock the neighbors’ products. These “Dispensary Defendants” are probably in much better shape than the growers.

A civil RICO claim under 18 U.S.C. Section 1962(c) (at issue in both Safe Streets and McCart) requires a plaintiff prove:

  • The existence of an enterprise affecting interstate or foreign commerce;
  • The specific defendant was employed by or associated with the enterprise;
  • The specific defendant conducted or participated in the conduct of the enterprise’s affairs;
  • The specific defendant’s participation was through a pattern of racketeering activity; and
  • Plaintiff’s business or property was injured by reason of defendant’s conducting or participating in the conduct of the enterprise’s affairs.

In Reves v. Ernst & Young, the US Supreme Court held that the language of 1962(c) requires the defendant have “participated in the operation or management of the enterprise itself.” (page 183). There are a few out of jurisdiction cases that have held that mere business relationships and supplier-purchaser relationships are insufficient to establish RICO liability, even with knowledge of the illegal activity. If you are curious, take a look at In re Mastercard Intl. Inc., (page 487) and Arenson v. Whitehall Convalescent & Nursing Home, Inc. 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.

Though there is a dispensary defendant in Safe Streets, the Tenth Circuit appears to have found the conduct requirement was met because the Safe Streets defendants admitted they all “‘agreed to grow marijuana for sale’ at the facility adjacent to the [plaintiffs’] property.” The Safe Streets dispensary defendant was directly involved in operating the specific grow operation at issue. This is not the same thing as an innocent dispensary accepting product from a third-party farm.

We will be watching this case and reporting back if anything of importance breaks, but in the meantime, it never hurts to be a good neighbor, and to take steps to minimize odors.

The Darth Vader of CannabisRoger Stone, the infamous conservative strategist and provocateur, seems to want to emerge as an angel on Trump’s shoulder to balance out Attorney General Jeff Sessions when it comes to federal cannabis prohibition. As readers may be aware, Mr. Stone recently announced the launch of his United States Cannabis Coalition, which bills itself as a bipartisan non-profit organization dedicated to protecting the states’ right to choose sensible cannabis policies. Though the goal is noble, Mr. Stone’s involvement will likely attract attention like a lightning rod.

It is understandable that a man with a back tattoo of President Nixon’s face is no stranger to controversy (warning: NSFL). Stone helped re-elect Nixon in 1972 and then served the Nixon administration in the Office of Economic Opportunity. After Nixon’s downfall, Mr. Stone remained with Nixon as an advisor, respecting Nixon’s willingness to go to any lengths to win. So it is unsurprising that Mr. Stone kindled a life-long friendship with President Trump, urging Trump to run for President decades ago and arguably masterminding Trump’s recent rise to power. After a lifetime of toxicity, Stone now wants to leverage his relationship with Trump for good. It can all seem a bit too much like an attempt at Darth Vader’s redemption over Endor, and at least some cannabis activists think Stone should sit this one out.

Cannabis LawAt the start of a video on the United States Cannabis Coalition’s website, Stone says “Richard Nixon is my mentor. Among the biggest mistakes that President Nixon made was the War on Drugs. The War on Drugs has proved to be an expensive, ignominious and racist failure.” Though this is a nice sentiment a half century later, the problem is that Nixon’s administration knew exactly what it was doing. Harper’s Magazine published the highly disturbing details of a decades old interview with Nixon’s domestic policy chief, John Ehrlichman, who made an appalling admission that deserves to be repeated in its entirety:

You want to know what [the drug war] was really all about? The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar left and black people. You understand what I’m saying? We knew we couldn’t make it illegal to be either against the war or black, but by getting the public to associate the hippies with marijuana and blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did.

So though it is certainly tempting to dismiss Stone’s current efforts as more grandstanding, at the same time, any insider ally against Trump’s parade of drug zealots might be critical while we ride this administration out. Despite Stone’s past, I’m tempted to rest a little bit easier knowing at least someone in Trump’s inner orbit is pushing for an end to the cannabis war madness.

Today closes out our five part series on “How to Open an Oregon Recreational Grow Operation” (see parts 1, 2, 3, and 4) with a discussion on canopy sizes and the medical bump-up canopy program. I also touch on Oregon’s marijuana worker permit program and discuss what you can expect after you submit your OLCC (Oregon Liquor Control Commission) license application. Remember that the law in this area has been changing rapidly, so much of what we have discussed so far is potentially subject to change.

Canopy Sizes. Your “canopy” is the part of your licensed premises that can be used to cultivate cannabis plants. In your cannabis license application you must tell the OLCC how much square footage you intend to use for cannabis cultivation, and you must clearly designate canopy areas on your site plan (see here for an example). The larger the total area, the greater your annual license fee:

  • Micro Tier I – $1,000
    • Indoor: Up to 625 sq. ft.
    • Outdoor: Up to 2,500 sq. ft.
  • Micro Tier II – $2,000
    • Indoor: 626 to 1,250 sq. ft.
    • Outdoor: 2,501 to 5,000 sq. ft.
  • Tier I – $3,759
    • Indoor: 1,251 to 5,000 sq. ft.
    • Outdoor: 5,001 to 10,000 sq. ft.
  • Tier II – $5,750
    • Indoor: 5,001 to 10,000 sq. ft.
    • Outdoor: 20,001 to 40,000 sq. ft.

It gets a bit more complicated if you have a mixed use site, but generally one foot of indoor area is equivalent to four feet of outdoor area. So, for example, a mixed-use Tier II producer could have all 10,000 indoor, a mix of 5,000 indoor/20,000 outdoor, or all 40,000 outdoor.

Oregon cannabis grow licenses
Your canopy areas do not have a height restriction, so feel free to expand vertically.

When you are deciding on your cannabis canopy limits, keep in mind that the limits apply only to mature plants, not to immature plants. You can grow as many mature plants as you can fit in your canopy areas. As there are no height restrictions, you should be thinking vertically.

Medical Bump-Up Canopy. Oregon’s legislature recently approved the “medical bump-up canopy” program, which allows recreational cannabis producers to set aside a small portion of their premises to cultivate medical cannabis. If you are interested in growing medical cannabis alongside your recreational cannabis, you can enter into a Producer-Patient Medical Canopy Agreement with up to 24 OMMP (Oregon Medical Marijuana Program) cardholding patients. These patients can reimburse you for your reasonable expenses, but you must give these patients their marijuana medicine free of charge.

Nevertheless, a medical canopy is still potentially profitable. Though you can grow up to six plants per patient, you can transfer no more than 3 pounds to a single patient in a year. This means you will likely have a surplus for each patient. The bump-up program allows you to generate some income from your medical marijuana crop by transferring up to 25% of that crop to registered producers and dispensaries.

Marijuana Worker Permit. Each of your employees must have a marijuana worker permit, including seasonal employees. Each permit costs $100 and each applicant must pass an online test and a background check. The OLCC has set up a simple website explaining the process, which includes a link to the study book.

What to Expect when the OLCC Follows Up. Once you submit your cannabis grow license application, the OLCC will conduct a preliminary review. You will likely receive a follow up letter from the OLCC identifying any deficiencies in your application you must resolve before you can obtain your grow license. To minimize delays, make sure your initial application is thorough and correct. The following are examples of issues that have come up:

  • Failing to properly identify the portion of a tax lot that will be leased to your company.
  • Including a residence within your licensed premises boundary.
  • Failing to properly label your site and floor plans, including the location of your cameras.
  • Failing to be consistent in your labels across site and floor plans.
  • Failing to provide dimensions for each structure on your property.
  • Failing to identify the materials that make up your fences/walls.
  • Failing to label each camera with a number on your security plan.

Once you are confident you have met all of your Oregon cannabis grow application requirements and you have the required documents in order, you will be ready to request an inspection. If all goes well, and you have complied with all local requirements, you will soon be a licensed recreational grow operation. Congratulations!

Oregon Cannabis Grow OperationsSo far in this series on how to open a recreational grow operation in Oregon we have discussed the importance of due diligence when locating your grow op, the process for informing the OLCC about your property and the people behind your company, and meeting your security, power, and water requirements. Now it is time to tell the OLCC how you plan to keep the public, and especially minors, away from your product. Then we will discuss the various site maps you will need to include in your application.

Preventing Public Access. You will need a plan to prevent public access to any indoor areas, all outdoor areas used for cultivation, and also any outdoor areas where cannabis may be stored, even on a temporary basis.

The application packet provides two favored options:

  • Enclose all outdoor areas (and exterior paths between indoor areas and greenhouses) in at least a six-foot tall fence or wall; or
  • Enclose all cultivation areas with at least a six-foot tall fence or wall, and ensure cannabis is only outside the enclosed areas while in the possession of one of your representatives for the limited purpose of transportation between enclosed areas.

In either case, any fences should be constructed of “rigid wooden or metal posts securely anchored to the ground and a woven or welded wire mesh such as ‘chain-link’ fencing or by a solid, rigid barrier, such as wooden fencing planks or similar material.”

You also have the option of creating your own plan, but you will need to specifically detail all the actions and methods you will use to prevent public access. This may subject you to delays as the OLCC can reject your plan or request additional information and clarification.

Minor Control Plan. In addition to your public access plan, you will also need to provide a detailed description of your proposed methods for preventing access to your cannabis by minors, such as identification, perimeter security (physical and personnel), employee screening, and what you will do if you find a minor on your premises. The OLCC conveniently provides an example plan in the application packet:

All doors and gates will be locked at all times. Prior to allowing any person access to the property, age will be verified by checking ID. Employee IDs will be checked prior to hiring and no person will be employed who does not have a valid marijuana worker permit. Signs will be clearly posted at all entry points indicating that minors are not permitted on any portion of the premises. If a minor attempts to gain access to the premises, they will be immediately told to leave and if they do not, law enforcement will be contacted.

Premises Map & Floor Plans. You will need to submit a few maps of your entire cannabis grow property and more detailed floor plans of all structures. The first is sometimes referred to as a Premises Map or Premises Sketch, and the second as the Premises Floor Plan(s).

Premises Map: This map (example here) must include your entire property and must show, at a minimum, the following:

  • The boundaries of your tax lot;
  • The perimeter of the licensed premises (labeled with “Limited Access Area” along the perimeter line);
  • The location of any residences on the property;
  • Dimensions of each structure on the property;
  • Labels showing other activities on the property, such as farming or livestock;
  • Fences and walls;;
  • Labeled compost/waste areas;
  • Labeled canopy areas (cultivation areas); and
  • All entry/exit points for the premises.

You must also include a tax lot map marked to show your premises (which can be obtained from the County Assessor), and an aerial map identifying the area to be licensed (from Google Maps, for example).

Premises Floor Plan(s): You must prepare a separate plan for each structure that includes, at a minimum, the following:

  • A label for the structure;
  • An indication of which floor of the building is shown in the plan (there should be a separate floor plan for each level of each structure);
  • The boundaries of the structure that will be licensed (if you aren’t using the entire structure);
  • All areas where cannabis may be located at any time;
  • All doors, windows, and permanent fixtures;
  • All walls, partitions, counters, and windows;
  • Clear labels for each room, such as “storage area”, “surveillance room”, “trimming”, etc; and
  • All ways in and out of the enclosure.

Make sure your labeling is consistent across your security plan, your premises map, and your floor plans.

At this point you should have everything you need to submit your OLCC application. In part five, we discuss canopy sizes, the new medical bump-up canopy program, and some typical requests for additional information you may receive from the OLCC after you submit your Oregon grow application.

 

Security Requirements

In part 1 and part 2 of this series we discussed how to find the perfect location for your Oregon recreational grow op, and how to let the OLCC know that your property, your company, and your owners are up to par. You now have a perfect location and the local planning department is working towards approving your Land Use Compatibility Statement. Everyone involved with your company has filled out their Information History forms. Next you need to prove to the OLCC that you have adequate security to prevent your crop from joining the illegal market, rights to enough water to nourish your plants, and enough power to operate your lights and fans (you do have adequate around-the-clock ventilation to prevent mold, right?).

The OLCC wants to know some basic details about your business, such as when you will be open, your cultivation process, and your security setup. Fortunately, the OLCC has recently simplified the producer application, so these requirements are all clearly laid out.

Hours of Operation. As part of the producer application packet you will need to provide your hours of operation for each day of the week, as well as any anticipated variations for seasonal or other reasons. This requirement helps OLCC inspectors know whether they can enter your property on a whim (while you are open) or whether they must first have a reason to believe a violation has occurred (while you are closed).

Cultivation Plan. The application has a short essay question where you will need to describe your grow op in depth. The OLCC wants to know your growing medium, the specialized equipment you will be using, and whether your crop will be indoor or outdoor (or both for mixed producers). You will also need to explain whether you will be using seeds, clones, or a mix and detail how you will be handling your immature cannabis plants. Since you will ultimately need to submit a cultivation plan to the OLCC, you should create one as part of your initial business plan. Savvy investors will likely want to know this information anyway.

Electricity & Water Use. When you initially apply for an Oregon cannabis grow license you will need to provide month-by-month electricity and water usage estimates and you will need to prove you have a legal source of sufficient water. This proof can take the form of 1) a copy of a water use authorization, permit, or certificate from the Oregon Water Resources Department, 2) a statement with the name and contact information of a public or private water provider that will be providing water to your site, or 3) a Marijuana Producer Exempt Water Form from the Oregon Water Resources Department showing that your water does not require a water right. You should contact the Water Resources Department to determine which option will work for your site.

Security. The OLCC is understandably concerned about licensed cannabis flowing into the black market, so all growers must meet strict security requirements. Generally, you will need to do the following:

  • Keep all exterior access points locked with commercial grade locks outside of business hours;
  • Store all usable cannabis, harvested plants, and finished products within a secure, indoor steel-framed room (outside of business hours). This requirement should be on your mind as you search for a location;
  • Have an alarm system that covers all potential entry points, can detect movement within any area housing mature plants or usable product, and automatically notifies authorized personnel in the event of a breach (you can ignore this requirement if you will have at least one person in the premises at all times outside of business hours);
  • Have at least two operational “panic buttons” inside the premises that will immediately notify a security company and law enforcement, or have mobile “panic buttons” carried by all of your employees and representatives, or have a landline telephone present in all limited access areas.

One of your more significant up-front costs will be designing and installing a compliant video surveillance system. Your 24-hour a day system must satisfy the following:

  • Cover all areas where cannabis items or waste will be present or in transit;
  • Cover all areas within 15 feet of all entry points in all directions;
  • Record at a minimum resolution of 1280 x 720 pixels in all lighting conditions;
  • Record at a minimum of 10 frames per second (5 frames per second for exterior non-restricted areas);
  • Be contained in a dedicated room containing a list of all personnel authorized to access the surveillance system;
  • Have a backup battery that can independently power the system for at least an hour;
  • Provide automatic notification in the event of a failure of a security camera or other portion of the system;
  • Include a monitor for viewing video from any camera, a digital archiving system, and a printer; and
  • Maintain recordings for 90 days both on-site and continuously backed up to a secure off-site location.

You will also need to keep a log of all maintenance activity on the system.

Now you have your surveillance and alarm systems set up, you’ve let the OLCC know when and how you will be growing, and you have satisfied the OLCC that you have enough water and power. Check back next week for part 4 where we will discuss your requirements to keep the public, and particularly minors, out of your licensed area as well as the various site diagrams the OLCC will want to see.

 

The OLCC wants to know more about the people behind your company.
The OLCC wants to know about the people behind your company.

Last week I opened part 1 of this series, on finding the perfect location for your recreational grow op. Before moving into part 2, I wanted to take a moment to remind you of recent Oregon legislation that will cut into the profitability of medical grow operations. As we explained in BREAKING NEWS: Oregon Sticks It to the Medical Marijuana Program (Again), you should probably be focusing your efforts towards the recreational program.

By now you have found a perfect site in a cannabis friendly area. Your new location will comply with all state, county, and municipal requirements and regulations. You are certain you will have adequate power and water. You have your letter of intent to either lease or purchase the property. You are now ready to begin the OLCC licensing process. Remember that each local government has its own unique approval process. For example, some jurisdictions require you apply for a separate local business license alongside the Oregon Liquor Control Commission (OLCC) license. You should begin developing a relationship with your local planning department, and should move forward with both the state and local procedures at the same time.

Land Use Compatibility Statement. The OLCC won’t simply take you at your word that your property is compliant. The OLCC application process requires you submit a completed Land Use Compatibility Statement (LUCS) proving your property is eligible for cannabis cultivation. You will submit the LUCS form to your city planning department (or county planning department if your property is outside city boundaries), as well as an application fee. Assuming you have done your due diligence correctly, the planning department will return your LUCS with an all clear.

Ownership and Control Information. As part of the OLCC process, you will need to provide detailed information on your business entities, as well as key owners and officers. Depending on the type of entity, the following individuals must also submit Information History forms:

  • Sole Proprietorship
    • The sole proprietor
  • General Partnership
    • Each general partner
  • Limited Partnership
    • Each general partner and each limited partner owning 10% or more of the partnership
  • Corporation
    • Principal officers, directors owning or controlling at least 3% of stock, natural persons owning or controlling at least 10% of stock
  • Limited Liability Company
    • Members owning at least 10% of LLC and Members committing at least 10% of the total investment in the LLC

Generally, the spouse or domestic partner of anyone required to submit an Information History form must also submit an Information History form. The OLCC Investigator may also require additional forms from anyone with a financial interest in your grow operation, including landlords under profit sharing leases, silent majority investors, and anyone else with ownership or control who doesn’t fit into one of the above categories. The Investigator may also require some or all of these individuals provide fingerprints for background checks.

Now that you have started the LUCS process and have gathered your business entity and individual history information, you can move on to preparing your electricity and water estimates, as well as your operating and security plan. In part 3 of this series, we discuss your security requirements, your cultivation plan, and how to calculate your utility needs.

Cannabis Production

So you’ve set your sights on joining the next generation of Oregon cannabis producers. Congratulations! You’ve identified talented growers, you’ve resolved the intractable indoor vs. outdoor cannabis growing dilemma, you’ve saved up some money, and now you are eager to get your cannabis operation up and running.

But what’s next? Your first question is a classic: Where will I grow?

When you apply for an Oregon Liquor Control Commission license, you will need to prove you have a deed or lease to an eligible property. A letter of intent to lease or to purchase will also suffice, but the OLCC will not actually issue the license until you close the lease or sale. You should work with a realtor with experience in the cannabis industry to identify a few possible locations. As you begin your search, remember the following:

Not all counties and cities are alikeOn the most basic level, you need to be aware of the various cities or counties that have banned recreational producers outright. The OLCC maintains a list of these hostile local governments and you may be sad to hear that Grass Valley, Oregon is still off-limits!

Even the cannabis friendly local governments vary significantly in their local requirements, with some counties going to great efforts to be cannabis friendly, and others putting up an unfortunate amount of red tape. An exhaustive county-by-county or city-by-city analysis is beyond the scope of this post and we recommend you speak with cannabis entrepreneurs and professionals who have worked with your top choices for county or city to get a sense of potential local government roadblocks.

Distribution Channels. Though rural land is likely cheaper, your best markets will likely be in the cities. It is never too early to begin cultivating relationships with wholesalers, processors and even retailers to help bridge this gap. Proximity to testing labs is also a plus.

Perform Your Due DiligenceOnce you find a location in a friendly area with room for your operation, you need to ensure that the property complies with all state, county, and municipal requirements and regulations. This can be done by thoroughly reviewing county codes, city comprehensive plans, land use regulations, relevant zoning ordinances, and CC&Rs and, in some cases, talking with the appropriate government officials. You also need to be sure your property has access to adequate water as you will be required to show proof of “water rights,” and adequate power.

Failing to do due diligence on a property can have disastrous consequences. We recently had a cannabis client come to my law firm ready to close on a perfect piece of real estate in a location with a cannabis-friendly local government. This company had even paid for certain improvements to the property, and it was just days away from closing on the property transaction. Fortunately, as soon as we were provided the counties’ records on the property, we noted a provision from the 1980s that prohibited their business. We identified this issue just in time to prevent the purchase and free up our client to move on to greener pastures.

Once you’ve acquired rights to your perfect cannabis property, you are ready to apply for a Land Use Compatibility Statement (LUCS) from the local jurisdiction and to begin preparing the property for the OLCC licensing/inspection process. Part 2 of this series can be found here.

I recently had the pleasure of attending the Cultivation Classic 2017, the “world’s only cannabis competition exclusively for ethically-grown product free of pesticides, defining craft and celebrating community.” Producers from around Oregon, including several of our clients, came together in a friendly competition to celebrate Oregon’s unique cannabis culture and ethos. Alongside the competition, the organizers put together a series of panels discussing a range of social, political, and legal issues facing the Oregon cannabis industry. The first panel featured the launch of a new industry group devoted to defining and supporting Oregon’s craft cannabis community.

This Craft Cannabis Alliance is an association of cannabis and cannabis-related businesses dedicated to creating an Oregon craft cannabis industry to rival Oregon’s renowned craft beer industry. Alliance Executive Director Adam Smith, a founder of Students for Sensible Drug Policy, took the stage to explain what “craft” means to these industry leaders:

Pictured left to right: Adam Smith, Cannabis Craft Alliance; Ashley Preece, Ethical Cannabis Alliance; Jodi Haines, Alter Farms
Pictured left to right: Adam Smith, Craft Cannabis Alliance; Ashley Preece, Ethical Cannabis Alliance; Jodi Haines, Alter Farms

These industry leaders are working to ensure that sustainable, ethical craft cannabis growers retain a seat at the table as Oregon’s cannabis industry matures. Gabriel Cross, CEO of Odyssey Distribution, LLC, expressed a sentiment shared by many of his fellow founding members.

“As a values-driven company, how we do things is as important to us as the bottom line. The CCA shares many of our values, and more importantly will bring together values-driven cannabis companies under one roof. We have a rare opportunity right now to define how an entire industry operates.”

One of the thorniest issues the CCA will face is the task of defining what “local control” means within the context of Oregon’s craft cannabis culture. Long-time readers of this blog will recall that Oregon originally implemented strict and confusing control and ownership residency requirements on recreational cannabis businesses. This created a host of problems, and the Oregon legislature responded by swinging the pendulum in the other direction, opening Oregon’s cannabis industry to unrestricted foreign investment and control. Over the coming months, the CCA will be working to find a balance its members believe will allow Oregonians to share in the profits of the state’s newest state-sanctioned “crop” without choking off the supply of vital capital that residents from other states can bring.

CBD

We previously discussed the two-tier industrial hemp registration system Oregon adopted last year. In brief, the Oregon Department of Agriculture allows registration as either a grower (producer of industrial hemp), or a handler (processor of industrial hemp into commodities, products or agricultural hemp seed). Currently, only registered hemp handlers can process industrial hemp or sell industrial hemp products. However, a bill winding its way through the Oregon legislature could significantly upend the status quo for CBD concentrates and extracts.

Oregon’s hemp advocates should keep a close eye on Senate Bill 1015. When it comes to CBD concentrates and extracts, the bill would open up industrial hemp processing to Oregon Liquor Control Commission (OLCC) licensed recreational marijuana processors. The processed CBD concentrates and extracts could then be delivered to recreational marijuana retailers for sale in OLCC licensed dispensaries.

Of course, the bill places some restrictions on OLCC processors:

  • The recreational processor must be registered with OLCC for the express purpose of processing industrial hemp into CBD concentrates and extracts. Presumably, the OLCC would create a new registration process for this purpose;
  • The grower must provide the recreational processor with all test results on the hemp and the recreational processor must retain the test results in its records; and
  • The industrial hemp must still be tracked as outlined in ORS 475B.150.

The bill would also allow the processed CBD products to be delivered to an industrial hemp handler for resale provided that:

  • The CBD products were produced “independently” of any marijuana products. This might require separate processing facilities to prevent cross-contamination;
  • The products have been properly tested;
  • The products are tracked as required by ORS 475B.150; and
  • The THC concentration in the products are below a threshold to be set by the OLCC (probably .3 percent if the OLCC follows the Department of Agriculture’s lead).

The bill is now before the Joint Committee on Marijuana Regulation, which will hold a public meeting on Senate Bill 1015 today (May 9), at the Oregon Capitol Building. If you want to get involved in the future of Oregon’s hemp industry, arrive at Room HR B before 5:00pm. Also, take note that the Committee will be considering this classic “gut-and-stuff” amendment, so you can safely ignore the text of the bill as originally introduced.

Cannabis scienceLast week we dropped some science about the current state of cannabis research with a focus on a recent study reviewing all research to date on the positive and negative health effects of cannabis. The “overwhelming takeaway” was that additional research was needed.

We wanted to highlight another study from early April that was published in the Journal of Psychopharmacology. The study doubles down on the potential political ramifications of cutting-edge cannabis research. The team, inspired by earlier studies suggesting that medical cannabis leads to a reduction in opioid overdose deaths, decided to determine whether cannabis’ “substitution effect” applies to other medications. Among New England dispensary members, the results of medical cannabis are stark:

  • 76.7% of respondents reported that they reduced their opioid use since starting medical cannabis.
  • 71.8% reported reductions in anti-anxiety medications.
  • 66.7% reported reductions in migraine medications.
  • 65.2% reported reductions in sleep medications.
  • 42% reported reductions in alcohol consumption.
  • 37.6% reported reductions in antidepressants.

These results reconfirm that medical cannabis reduces opioid use, and now we also know that medical cannabis reduces use of alcohol, antidepressants, and a field of other medications. The team is quick to caution that these results were based on self-reporting and then repeated a far too common refrain, “Additional research is needed.”

Perhaps we could expect to see that research soon, if only the current political climate were not so vehemently anti-science. President Trump recently said: “Drug overdoses are now the leading cause of accidental death in our country. And opioid overdose deaths have nearly quadrupled since 1999 . . . Our Attorney General, Jeff Sessions, is working very hard on this problem. It takes a lot of his time, because this causes so much of the problem that you have to solve – that problem.”

Roughly translated, the President and his staff have recognized that opioid abuse has reached epidemic proportions that require immediate action. The science clearly gives us one piece of the solution: decriminalize cannabis. But with an administration willing to make the insultingly anti-scientific claim that cannabis is “only slight less awful” than heroin, we the people (and Trump’s supporters in particular) will likely be left waiting for a rational administration.