Photo of Will Patterson

Will works out of our Portland office, advising clients on business law, intellectual property, civil litigation, and cannabis law matters.

Cannabis litigation
How to end your cannabis litigation early

Last week we discussed frustrations that arise from the slow and methodical pace of cannabis litigation and the possibility of shortcutting the process through provisional remedies. Though provisional remedies do not directly bring a case to its conclusion, they can often force a quick settlement. This week I will discuss a litigant’s options to bring a quick end to a case via a motion to dismiss or a motion for summary judgment.

These two sorts of motions share many similarities, but this difference is key: motions to dismiss contend that a party’s allegations in its pleadings (complaint or counterclaims) are deficient. A motion for summary judgment requests the court apply the law to the facts a and determine the case is not even worth sending to a jury.

Motions to Dismiss. You can move to dismiss a claim against you for a variety of reasons including that: 1) the court lacks jurisdiction (legal authority to resolve the present dispute), 2) there is already another action between these parties attempting to resolve the present dispute, 3) the claim was brought outside the statute of limitations, or 4) the claimant failed to state facts sufficient to constitute a claim. Jurisdictional questions focus on whether the claim should have been brought in another state or county, or whether the parties complied with any binding dispute resolution clauses in any relevant contracts, such as mandatory arbitration provisions. A party can also move to dismiss on jurisdictional grounds if service was improper.

On a motion to dismiss for failure to state a claim, the question for the court is not whether the actual facts ultimately support a claim, but whether the pleadings as written support a claim. The party that files the motion to dismiss is asking the court to throw out the case as a whole (or at least certain claims) based solely on the face of the complaint or counterclaims. Essentially, by filing a motion to dismiss you are telling the court, “Even if everything my opponent claims is true, I still win so there is no point in our even continuing with this case.”

On a motion to dismiss the court must assume everything your opponent writes in its claims is true and apply your opponent’s ideal set of facts to the law and decide whether any valid claim exists. Any litigant should be mindful that a successful motion to dismiss for failure to state ultimate facts will not necessarily end the case. The court has broad discretion to allow the non-moving party to amend its pleadings to fix any deficiencies.

Motions for Summary Judgment. Though motions to dismiss are limited to the four corners of the pleadings, a motion for summary judgment digs into the underlying facts that exist outside the complaint and other pleadings. Motions to dismiss are usually filed pre-discovery, but since motions for summary judgment examine the underlying facts, they are typically brought after the parties have incurred significant expenses in discovery disputes and depositions. The party seeking summary judgment essentially asks the court to look at the evidence produced through the discovery process and rule that no reasonable jury (or other fact finder) could rule in the opponent’s favor. Both sides will submit sworn statements, called affidavits or declarations, laying out their side of the case, and will also submit documents obtained from discovery and deposition transcripts.

The court will review all of this evidence in the light most favorable to the non-movant. In other words, the court will draw all reasonable inferences in the non-movant’s favor. If the evidence, when viewed as favorably as possible to the non-movant, reveals the fact finder (usually the jury) would essentially have no choice but to rule in the movant’s favor, the trial is unnecessary and the court will enter a summary judgment in the movant’s favor on one or more of claims and defenses at issue. Even if some claims survive summary judgment, the summary judgment process can help narrow the scope of the dispute at trial and thereby save time and costs.

No cannabis business wants to be in litigation; at best it is an expensive distraction and at worst it can destroy a business. Motions to dismiss and motions for summary judgment can be good tools for trying to end the litigation early. In my next post, I will talk about alternative dispute resolution (“ADR”) and why it so often makes sense for cannabis businesses

Last week we expanded our litigation series to focus more broadly on the different kinds of litigation in which your canna-business is likely to become embroiled. For ease of reference, here is the series so far:

Cannabis litigation
Cannabis Litigation: The waiting is the hardest part.

Today we will talk about one of the most vexing aspects of litigation: timing. According to Above the Law, the longest legal case in US history lasted 57 years! Fortunately, your typical state court case will usually be set for trial within one or two years of filing (with exceptions for expedited cases), though some federal cases can take much longer. For example, federal patent litigation cases can take about three years before trial.

Clients almost always have a justifiable sense of urgency when it comes to litigation. It feels like the other side is trampling on their rights, and each passing day brings more legal fees and more damage to the business. Litigation can often make clients feel helpless in the face of a legal system designed to slowly and methodically ferret out the truth.

This sense of urgency is particularly acute when the opposing party’s conduct is actively and irreparably harming your business interests. In these cases when patience is not a viable option, your lawyer will likely discuss the possibility of seeking provisional remedies, specifically temporary restraining orders (“TRO”) and preliminary injunctions.

A party seeking provisional remedies is asking the court to halt certain conduct prior to a full determination on the merits. Since it comes before you win your case, this is an extraordinary remedy, and the burden on the movant is high. Additionally, the purpose of provisional remedies is typically to preserve the status quo, for example, to prevent a landlord from wrongfully evicting a tenant.

The law varies by jurisdiction, and for purposes of this post, we will focus on Oregon state law. Under Oregon Rule of Civil Procedure 79 (ORCP 79), a party can obtain provisional remedies in a civil action when it appears the movant is entitled to relief demanded in a complaint and the requested relief involves halting the commission of an act that will cause injury to the movant during the course of the litigation. The movant can ask for a preliminary injunction, or, pursue a TRO if the danger is immediate.

Preliminary Injunctions

A preliminary injunction prohibits the non-movant from taking specific actions that will harm the movant, and the scope of the Court’s authority to craft an appropriate remedy is remarkably broad. A preliminary injunction can even bind non-parties, specifically a party’s “officers, agents, servants, employees, and attorneys and … those persons in active concert or participation with any of them that receive actual notice of the order by personal service or otherwise.”

When considering a preliminary injunction you should be aware of the cost. A hearing on a preliminary injunction is a mini-trial, with both sides presenting witnesses and evidence, and all of the attorney fees and costs that entails. Additionally, even if you prevail you will need to post a bond in an amount set by the Court, based on the Court’s estimate of the potential damages that the injunction will cause to the other party. If you ultimately lose at trial, then the other party will get the full amount of the bond.

Temporary Restraining Orders

In Oregon, you must give the other party at least five days notice of the preliminary injunction hearing, so that the parties can prepare their evidence. If you absolutely cannot wait five days, then you can file a motion for TRO and order to show cause why a preliminary injunction should not enter. Given the emergency nature of this type of pleading, it is typically submitted ex parte: the movant will personally appear at the court and hand deliver the pleading and supporting documents to the clerks and will likely speak directly to a judge on the same day. The Court will typically decide whether to issue the TRO based on the affidavits and evidence submitted by the movant on the same day. The non-movant may appear but likely won’t have much of an opportunity to submit contradictory evidence.

The TRO can only last about ten days, so if the TRO is granted, then the Court will quickly set an evidentiary hearing to determine if the TRO should be converted to a preliminary injunction, as described above. As with the preliminary injunction, you will need to enter a bond with the court before the TRO will go into effect.

Seeking provisional remedies is an extraordinary and expensive step, but may prove vital towards protecting your cannabis businesses. We have seen it be particularly effective in stopping wayward business managers from stealing company assets and other misconduct. The preliminary injunction procedure can prove to be dispositive, as the result will often drive the parties to settle in one or the other party’s favor.

Next week we will continue this series by discussing another method of quickly resolving litigation disputes: dispositive motions.

The recent election bodes well for cannabis.

By now you have probably seen a dozen articles about the blue tidal wave that hit Virginia, New Jersey, and almost everywhere else that held elections on Tuesday, November 7. The consensus seems to be that Democrats, who are usually apathetic about off-year elections, showed up in large numbers to express their displeasure with the Trump administration. But this election was also heavily tinged with green and it bodes well for the prospects of an eventual end to federal cannabis prohibition. It also had some immediate benefits for recreational cannabis in the short term.

We have often written about prominent Democratic presidential hopefuls (i.e. democratic members of Congress) speaking rationally on cannabis (here, here, here, here, and here). These comments dovetail nicely with recent polling showing public support for cannabis legalization is at an all-time high, with 64% of the public in support (71% among Democrats, 62% among independents, and breaching 50% among Republicans for the first time). On November 7, the age-old political rule that the president’s party gets clobbered in mid-terms seems to have held true yet again. We expect that federal prohibition’s time is short, and if Democrats take the Senate and/or the house in 2018, we expect Attorney General Jeff Sessions’ options will be limited when it comes to federal interference with state-level recreational regimes.

But no doubt before the results of this last election impact federal cannabis, they will more likely impact cannabis on the state level. For instance, the election of Phil Murphy (D) as the next Governor of New Jersey all but guarantees the Garden State will legalize cannabis soon. Shortly after the election, we reached out to our Garden State legal colleague, Paul Strauchler, an attorney at Post, Polak Goodsell and Strauchler and one of the leaders of the firm’s Hospitality, Alcoholic Beverages, and Cannabis Group, to get an on the ground view on what the transition from cannabis-hating Chris Christie to Phil Murphy will mean for New Jersey. Paul is optimistic about the results: “Since Phil Murphy’s very entry into New Jersey public life, he has been an advocate for the legalization of cannabis: for its medicinal value and potential; for its commercial and economic opportunities; and for its remediation of a full spectrum of social justice issues. We look forward to working with Governor-Elect Murphy and the Lt. Governor-Elect and their team as New Jersey prepares for a new era.” In other words, just about everything cannabis just took a sharp upward turn for New Jersey.

Governor-Elect Murphy campaigned on legalization and he has vowed to legalize cannabis in his first 100 days. If he succeeds with this New Jersey will be the first state to legalize cannabis through legislation, rather than via a public ballot initiative.

The hard truth is that your canna-business is going to get embroiled in litigation sooner or later. Whether it is a dispute among partners, a dispute with a supplier or a commercial landlord-tenant dispute, the regulatory framework around cannabis will change how your business approaches litigation. With that in mind, we intend to expand our current series on cannabis IP litigation (here, here, and here) into litigation of all kinds. Today we will begin with a bit of general information about dispute resolution in these Litigious States of America.

Litigation is not a pleasant experience. It is expensive, time-consuming and incredibly invasive. Even the smallest dispute can cost tens of thousands of dollars to resolve. Once you are in a lawsuit, your opponent will have the legal right to demand you turn over all documents, emails, text messages, recordings, and records tangentially related to the legal and factual issues in dispute (usually defined as “reasonably calculated to lead to the discovery of admissible evidence”). Your lawyer will ask you to dig through your old physical records, computer files, emails, and text messages for anything that could be relevant. This will usually lead to every judge’s least favorite part of litigation: discovery disputes.

Once the lawyers finish sparring over what documents will or will not be turned over, you will experience the unique joy of a deposition. In today’s practice, it is a near certainty you will be required to sit in a room for up to seven hours (and in some states, even longer) while your opponent’s attorney questions you under oath, trying to dig out from you every bit of information you may have and/or to catch you in a lie. You will be asked questions about conversations and documents you haven’t thought about in years, and whatever you say can and will be used against you.

Though most civil disputes end up settling, there is always a chance your case will go all the way to trial. And if you thought your deposition was unpleasant, you will realize that is nothing as compared to the trial. Everyday you will spend hours in a courtroom, only to go back to your lawyer’s office at night to prepare for the next day. And at the end of it all, you will ultimately be subject to the whims of a jury of your peers who can sometimes be more persuaded by emotion than by the facts or the law.

In light of the financial and emotional burden of litigation, it is critical your litigation decisions focus on what is best for your business. Litigants do not benefit by making decisions based on emotion. To help you make those decisions, this series will address some of the common questions and misconceptions our cannabis litigation team sees/hears so often from our own cannabis clients about litigation, and specifically litigation in the cannabis industry.

Check in next week when we discuss one of the biggest areas of potential frustration with litigation: timing.

 

Oregon cannabis taxes
Oregon cannabis taxes

The Oregon Department of Revenue (“DOR”) imposes a point-of-sale tax called the Recreational Marijuana Tax on all Oregon recreational cannabis retailers. The DOR collects 17% of the value of all cannabis sold at each retailer location.

In theory, this tax burden is shared across the entire cannabis production line (producer, processor, distributor, and retailer) by depressing prices. Oregon law also allows cities and counties to impose up to an additional 3% point-of-sale tax, but this additional tax can only be implemented after a vote of approval from local residents. Local jurisdictions can opt to enter into an agreement with the DOR that allows the DOR to collect the tax their behalf, and most jurisdictions that have passed a 3% tax have elected to do so. In these jurisdictions, the DOR will collect a full 20%, and distribute the 3% to the local governments.

The DOR maintains a record of local jurisdictions that have implemented the 3% tax, as well the list of jurisdictions that have entered into a collection agreement with the DOR. In most cases, any local tax issues will be handled on your state tax filings (discussed below), but if you are located in one of the following jurisdictions you will need to contact the local government directly to arrange for payment:

  • Brookings
  • Columbia County
  • Coos County
  • Cornelius
  • Dundee
  • Dunes City
  • Gilliam County
  • Gold Hill
  • Gresham
  • Hines
  • Jackson County
  • Josephine County
  • La Pine
  • Lafayette
  • Rainer
  • Rockaway Beach
  • Sheridan
  • Tillamook (the city)
  • Tualatin
  • Veneta
  • Westfir
  • Wheeler
  • Yachats

At the state level, each month every retail location must submit an Oregon Marijuana Tax Monthly Payment Voucher along with payment for the prior month’s tax. The tax can be paid online through the DOR’s Revenue Online website or can be paid by check, money order, or by cash in Salem — with all of the various problems that arise from transporting large quantities of cash. Remember that you will need to submit a separate voucher and payment for each location, so if you have multiple retail cannabis locations you need to track sales separately for each location. In addition to the monthly vouchers, you also need to submit a quarterly return.

What does the State of Oregon do with your hard earned taxes? By law, the DOR distributes the state marijuana tax as follows (taken from the DOR’s Marijuana Fact Sheet):

  • 40 percent for education.
  • 20 percent for purposes for which money in the Mental Health Alcoholism and Drug Services Account may be used.
  • 15 percent for state law enforcement.
  • 10 percent to cities, based on population and number of licensees.
  • 10 percent to counties, based on total available grow canopy size and number of licensees.
  • 5 percent for alcohol and drug abuse prevention, early intervention, and treatment services.

Remember that cannabis businesses are still subject to any other general business taxes imposed by the state or local jurisdiction, and of course federal taxes as well (which you can read more about here, here, here, and here). Oregon’s Recreational Marijuana Tax should, therefore, be only one small part of your tax planning.

Defendants describe the lawsuit as an “attempt to put some shiny federal lipstick on an otherwise quite beleaguered pig of a state-law nuisance claim.”

We’ve previously discussed a RICO case that is slowly worming its way through federal court in Portland, Oregon. Styled as McCart v. Beddow et al., the case was filed by an attorney who is fed up with two neighboring cannabis grow operations next to her rural home. But rather than focusing solely on the allegedly troublesome cannabis producers, the McCart plaintiffs have filed suit against anyone even tangentially related to the producers’ business, including many dispensaries (“Dispensary Defendants”) that only purchased their product. We counted over 70 named defendants!

In our previous discussion, we suggested that the plaintiffs’ case against the Dispensary Defendants is fairly weak and our opinion hasn’t changed. Since we last checked in, the plaintiffs have filed a substantially expanded amended complaint, and numerous defendants have filed motions to dismiss. Although the Court won’t consider the motions to dismiss until January, it is worth checking in on the parties’ current positions. We are going to continue to focus on the Dispensary Defendants because there could be serious repercussions in the industry if the Dispensary Defendants are found liable even though they apparently didn’t have anything to do with the grow operation.

The Law

RICO law is complex, but as a general matter the RICO statutes allow a plaintiff to recover treble damages in a civil claim if the plaintiff can prove the following:

  • 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.

Of course, the devil is in the details, as the Dispensary Defendants point out in their motion to dismiss.

The Amended Complaint

The plaintiffs filed their amended complaint on September 1, which added 95 paragraphs onto their hefty original complaint. The amended complaint adds many new defendants, including employees at the farms and it alleges that nearly all of the defendants were exporting product out of Oregon.

In broad terms, the plaintiffs’ claims against the Dispensary Defendants have not changed in that they still allege the following:

  1. The cannabis grow operation (“Marijuana Operation”) is an enterprise affecting interstate commerce, as defined in the RICO statutes;
  2. All of the defendants were associated with and conducted the Marijuana Operation’s affairs through racketeering activity;
  3. Plaintiffs suffered a variety of kinds of harm as a result of the Marijuana Operation:
    1. Physical Injury to Real Property: littering, driveway damage, tire tracks, damage to some trail cameras, and unreasonable use of easements.
    2. Diminution of Property Value: noise pollution, light pollution, vibration, odors, exhaust fumes.
    3. Personal Injuries: harassment and damage to plaintiffs’ use and quiet enjoyment of their property.

The Motions to Dismiss

Eighteen Dispensary Defendants joined together in a single motion asking the Court to throw out plaintiff’s entire case against them. Their motion is well worth the read, not least for its colorful language, such as the lipstick-on-a-pig quote below the pig picture above. The arguments in this motion fit into two general categories:

The Dispensary Defendants are not part of a racketeering enterprise.

To establish an “enterprise” exists for RICO purposes, plaintiffs must show there was an ongoing organization with a common purpose. Both of these elements get to the same idea: a criminal enterprise is a group of people all working together to enrich themselves. Courts have found “ongoing organizations” among disparate businesses when there are legitimate interconnections between the entities, such as similar ownership and overlap in personnel. Similarly, courts have found a common purpose where the alleged members are working to promote a single economic interest, and not where they are simply pursuing individual economic interests. There don’t appear to be any of these kinds of links in this case. The Dispensary Defendants appear to be owned, operated, and staffed by distinct individuals working towards their own individual business purposes. This ties back to our initial read of this case: mere supplier-purchaser relationships like these do not rise to the level of RICO enterprises.

In any event, plaintiffs need to establish that the Dispensary Defendants were associated with and conducted or participated in the enterprise. Yet plaintiffs have not alleged that the Dispensary Defendants had any say over the operation of the farms. Their case against the Dispensary Defendants will likely die here.

Plaintiffs’ alleged harms cannot be recovered as a matter of law.

Even assuming plaintiffs can get over the hurdle of establishing that the Dispensary Defendants directed the farms, plaintiffs still must establish that their specific harms are actionable. The Dispensary Defendants also seem to be on the right side of the law here, arguing that the alleged harms and the speculative claim that the value of plaintiffs’ home has decreased cannot form the basis of a RICO claim against any of the defendants and cannot form the basis of a state-law claim nuisance claim against the Dispensary Defendants, in particular.

The plaintiffs face a number of legal obstacles that seem insurmountable. First and foremost, Oregon has long since decided that it is in the best interests of the state to protect farming uses and it has decided to treat cannabis the same as any other farm crop. Accordingly, Oregon’s Right to Farm Act likely bars plaintiffs’ nuisance and trespass claims for damages based on odors, noise pollution, light pollution, vibrations, and smoke fumes. The Dispensary Defendants rely on ORS 30.936(1), which 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.

In any event, plaintiffs’ specific diminution of value claims are likely too speculative. The Dispensary Defendants argue that a RICO plaintiff must plead and prove that plaintiff has suffered a “concrete financial loss” but that plaintiffs’ complaint only contains pure guesswork that the odors, etc. diminished the value of plaintiffs’ property. Even if the plaintiffs could plead a specific dollar amount of diminished value, Oregon law bars claims for diminution of property value if the nuisance can be stopped. In other words, if the harm would disappear if the grow operations shut down, plaintiffs cannot recover damages for loss of value. Instead, plaintiffs should be asking the court to shut down the grow operations, which would have little to no effect on the Dispensary Defendants.

Plaintiffs will also likely fail on their claims for loss of quiet enjoyment and harassment because personal injuries like these are not compensable under RICO.

We will have to wait until next year to find out if the Court agrees with the Dispensary Defendants but we predict vindication for the dispensaries. In fact, we predict the claims against all of the defendants will get tossed, except possibly some small state-law claims. It seems that if you are a good neighbor and you don’t set up your operations next door to property owned by a lawyer, then you’ll likely never be drawn into a mess like this.

Oregon Cannabis Laws
New Oregon recreational cannabis businesses are waiting over five months to get licensed.

It is a daily frustration for our clients in the licensing pipeline in Oregon. Some applicants have been waiting for over five months to have an inspector assigned by the Oregon Liquor Control Commission (“OLCC”). These delays mean lost time and lost profits. Some form of the following conversation can be overheard at our Portland office on an almost daily basis:

Client: How long will the OLCC application process take?

Lawyer: About five to six months, if your first application is perfect.

Client: What can we do to speed that up?

Lawyer: Nothing, really.

Client: Why?

Though the process can be incredibly frustrating, it is important to keep in mind that the fault rarely lies with the employees at the OLCC. The OLCC has simply been overwhelmed by the number of cannabis license applications. At a speech earlier this year, the OLCC’s Administrative Policy & Process Director, Jesse Sweet, said the OLCC has received twice the number of applications as budgeted for. The OLCC is short staffed and no matter how frustrated you might become, it will never hurt to be kind to your overworked OLCC contact.

The OLCC maintains up to date records of cannabis applications granted and received in Oregon, and the statistics are alarming. As of this week, the OLCC has 1,536 active cannabis licenses and 1,390 pending applications. In other words, the OLCC is currently processing nearly as many applications as the number of licenses it has issued since the beginning of Oregon’s recreational cannabis program! In fact, there are more producers currently waiting for their licenses than there are existing licensed cannabis growers.

There is a bit of good news/bad news in all of this though. Yes, things are taking a long time, but a large reason for the massive number of cannabis license applications is because Oregon is a very good state in which to start up and operate a cannabis business. The applications are relatively cheap and easy and Oregon remains one of the few states that are open to licensing out-of-state individuals and companies, including individuals and companies located outside the United States. It was no accident that after analyzing all 50 states last year (and the beginning of this year) we chose Oregon as the best for cannabis.

There isn’t much that can be done, except to be patient. However, if you really want to get involved, the OLCC recently announced it is looking to fill a management position to oversee licensee activities in the Portland Metropolitan area. The OLCC is accepting applications through October 10, so there is still time.

On September 20, the Josephine County Board of Commissions held a public hearing on proposed zoning amendments that meant life or death for many small cannabis farmers.

At the end of last year, we discussed the successful efforts of Jackson County, Oregon to remove cannabis production as an allowed use in its rural residential zones. This led to an uproar among some growers, and a failed appeal before the Oregon Land Use Board of Appeals (LUBA).

For the past several months, Josephine County has been following suit, moving full steam ahead towards severely curtailing cannabis cultivation as an allowed use in residential rural zones throughout the county. This spring, the Board of Josephine County Commissioners (“Board”) placed Measure 17-81 on the Josephine County 2017 Special Election ballot, which asked voters to provide a non-binding advisory opinion: “In your opinion, should Josephine County prohibit the production of commercial, recreational marijuana in all rural residential zones?” Approximately 64% of voters said yes.

The Board listened, and in July 2017, the Board authorized the Josephine County Planning Director to invite applications for proposed language for amendments to the Josephine County zoning codes. The Rural Planning Commission held a public hearing at the end of August and issued draft language for the amendment. The language appeared designed to outright ban medical grow sites, and while it did not outright prohibit recreational cannabis cultivation, it did place severe restrictions that seemed to be written with the hope that no one would ever be able to comply.

Fortunately, over the weekend the Board threw out the planned draft language, thanks to the combined efforts of several licensed farms in the area, including East Fork Cultivars and Medicinal Roots, with the support of the Craft Cannabis Alliance.  (Full disclosure: Harris Bricken is a founding member of the Craft Cannabis Alliance).

This team utilized a savvy media strategy focused on educating Board members and the public. One lesson to be learned from this effort is the importance of engaging respectfully and eloquently at public hearings on any proposed cannabis regulations. For example, at the September 20, 2017 public hearing on these proposed amendments, Yusef Guient, of Medicinal Roots, spoke passionately about the effect the amendment would have had on his small family farm:

As family farmers, local business owners, neighbors and community members, we respectfully urge the commissioners to reject the proposed ordinance. The proposed amendments miss the mark by harming local family farms that are fully licensed and compliant and have invested tremendous resources in order to meet strict state regulations, as well as undermining the efforts of medical farms that are currently preparing to adapt to much higher levels of regulation and scrutiny. Further, the changes as written would expose the county to potential litigation costs without solving the issues raised by community members. Instead, we request that the county allow time for legislative changes to take effect, and to continue to bring community members together through the advisory committee process that is just now getting underway. We can create reasonable regulations that protect livability and public safety while supporting family farms, creating local jobs, and creating a lasting economic opportunity for Josephine County.

It appears the Board was swayed, at least in part, by these and other cogent arguments that the State legislature is aware of the prevalence of black market farming in southern Oregon and is taking appropriate steps. The team argued successfully that the recent changes set forth in SB 1057, including seed-to-sale tracking for medical operations, should be given time to work. However, the team and the Board still recognize the need for more precise regulations that target bad actors in Josephine County, and the Commissioners are going back to the drawing board.

Josephine County will not be the last county to attempt to reign in cannabis production with an axe instead of a scalpel, and the battle for common sense regulations in Josephine County is far from over. With that in mind, it is worth looking at the draconian draft zoning changes that almost became the law of the land. Under the draft amendment as previously proposed:

  1. Any OLCC licensed site would need a 300 ft setback on all sides. Currently the code requires a setback of 30ft in the front, 10ft on the sides, and 25ft in the rear.
  2. The property would need to be owned directly by the OLCC licensee. This would be problematic because many licensees lease land, or hold the land in a separate holding company for liability purposes.
  3. No OLCC site could be serviced by private road, easement, or owner maintained public right-of-way unless the OLCC producer owns all of the land adjacent to the right of way.

Any farm that couldn’t meet these requirements would have had thirty days from the date the ordinance went into effect to request a Determination of Non-conforming Use. To qualify for a non-conforming use determination, a recreational site needed to:

  1. Be in full compliance with the county codes as they existed prior to the amendments; and
  2. Either have obtained a LUCS prior to the adoption of the new ordinance amendment, or have applied for a LUCS prior to the adoption of the amendment that is being “actively processed by [the] OLCC with the intent to issue a license.”

The Board has recognized these kinds of broad brush regulations would do more harm than good, and are not appropriately focused on the few bad actors that are negatively affecting the community. Responsible cannabis cultivation can be a huge boon to local economies, but it always requires a genuine commitment to community engagement, like that on display down in Josephine County over the past few weeks.

Will the (former) Senator yield?

The Oregonian, Willamette Week, and KGW, to name a few, are reporting that US Attorney General Jeffrey Sessions is visiting Portland today to meet with federal and local law enforcement. These reports suggest Mr. Sessions is in town primarily to discuss immigration, sanctuary cities, and his unconscionable position on the Deferred Action for Childhood Arrivals program (“DACA”).

Given the recent exchange of letters between Oregon Governor Brown and the Attorney General, it seems likely Mr. Sessions has also come to Oregon to discuss and criticize Oregon’s medical and recreational cannabis programs. We’ve recently discussed how this exchange of letters demonstrates how Oregon sits uncomfortably within Mr. Sessions’ crosshairs. Governor Brown eviscerated Mr. Sessions’ reliance on a leaked, incomplete, and misleading draft of a report prepared by the Oregon State Police on cannabis in Oregon. Our money says Mr. Sessions is also here on a fact-finding mission, to see if he can drum up some better (or any?) sources for his claims that Oregon has so far failed to comply with Cole Memorandum guidelines.

Anyone in the cannabis industry here in Oregon knows Oregon treats these guidelines with the utmost respect and importance. Heck, if they didn’t, our Oregon cannabis business lawyers would not all be putting in 12 hour days! The Governor, the legislature, and Oregon’s relevant regulatory agencies, including the Oregon Liquor Control Commission and Oregon Health Authority, have been working tirelessly to improve their policies and procedures to ensure that Oregon’s recreational and medical cannabis programs protect public safety and prevent illegal activity.

Hopefully, Mr. Sessions’ visit will change his heart, but I wouldn’t count on it.

At the beginning of this month, Oregon implemented a critical change to its cannabis pesticide testing regulations: As of August 30, 2017, every batch of cannabis produced in Oregon must be tested for pesticides prior to transfer or sale. This simply wasn’t possible a year ago, when the Oregon Liquor Control Commission (“OLCC”) issued a finding that there were not enough accredited labs available to allow for universal pesticide testing. As a stop-gap measure, the OLCC limited testing to one-third of all batches from each harvest. According to the OLCC, the situation on the ground has changed substantially. There are now twice as many accredited labs and the Oregon Health Authority (“OHA”) has recently increased testing batch sizes. The net result is that the OLCC believes there is now capacity to ensure universal pesticide testing.

We’ve written quite a bit about how Oregon is slowly shifting responsibility for medical cannabis from the OHA to the OLCC, but product testing remains an outlier. The OHA retains responsibility for issuing cannabis testing rules for both the medical and recreational program, and has issued some of the strictest pesticide testing requirements in the nation. With this recent change, all Oregon cannabis, recreational and medical, will be tested for pesticide contamination prior to transfer to retailers and processors, and ultimately to the consumers.