Josephine County Cannabis
The scales have tipped sharply against legal growers in Josephine County, Oregon.

At the end of September, we discussed the successful efforts of local growers in Josephine County, Oregon, to stop an ordinance that would have effectively banned commercial and medical marijuana on rural residential land in the county. After passionate argument by the growers, the Josephine County Board of Commissioners (“Board”) went back to the drawing board.

And they came back with something arguably worse. For comparison purposes, here is a short summary of the ordinance that almost passed back in September:

  1. Any OLCC licensed site would need a 300-foot setback on all sides. Currently, the code requires a setback of 30 feet in the front, 10 feet on the sides, and 25 feet 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 could not 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 Land Use Compatibility Statement (“LUCS”) from the county planning department 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.” 

And here is a short summary of the ordinance that was officially adopted on December 6, 2017. Any property zoned rural residential with more than 12 mature plants (the ordinance doesn’t seem to distinguish between medical and recreational) must comply with the following requirements:

  1. Cannabis production will be banned outright on all lots or parcels of five acres or less. This provision was included even though Commissioner Dan DeYoung has previously been quoted as saying “The rules should be the same for all rural residential whether it’s one acre, two and a half acres, five, ten, twenty-nine.”
  2. Lots larger than five acres may have up to a 1,250 square foot indoor grow area or a 5,000 square foot outdoor grow area (compared with the 10,000 square foot indoor or 40,000 square foot outdoor maximum per license allowed by OLCC regulations).
  3. The property must have a 100 foot setback on all sides for all structures and grow canopies.
  4. “The person regulated by the State of Oregon must have an interest in the lot or parcel where the marijuana production site is located.” At a minimum, this provision will ban the common practice of landowners leasing a property to third-party cannabis farms. Whether this will affect the practice of a farm owning the land in a separate holding company is a bit less clear. OLCC licensees are almost always companies, so is the company the “person regulated by the State of Oregon”? If so, it seems the licensee company will have to have some direct ownership interest in the separate holding company
  5. All security personnel on the property must obtain and maintain Marijuana Worker Permits from the OLCC. Normally, only workers that physically interact with cannabis must have a permit.
  6. Indoor production must use odor control systems. We believe this just requires what farms should be doing anyway, as we have previously recommended cannabis farms use odor control systems to avoid costly neighbor disputes.
  7. The county will notify all neighbors of any cannabis farm and owners must post notices of cannabis production where their properties meet public streets. Both of these requirements raise safety and security concerns.

Any farm licensed by the OLCC before March 6, 2018, will be considered a “special or unusual circumstance” and may apply for a variance from these regulations.

The group of growers and concerned citizens we discussed in the previous post have formed F.A.R.M.S. (Farming and Agricultural Rights Management Society) and are vowing to challenge this ordinance in court. We will keep you posted.

 

Licensees in the Portland area will have a chance to meet with the OLCC in person to renew applications and perhaps discuss other issues.

Any Portland, Oregon cannabis licensees that have recently received an email from the OLCC about license renewal have a unique opportunity to expedite the renewal process in the next two weeks. The OLCC will be holding renewal clinics at their headquarters on McLoughlin Blvd on December 6-7 and December 14-15. You will have an opportunity to meet with an OLCC representative in person and renew your license and presumably to discuss any other issues facing your business. The OLCC is using the Eventbrite website to manage appointments and you will need to register in advance here.

To renew in person you will need the following, quoting the OLCC’s Eventbrite site:

“What’s Required:

  • A Business Entity Questionnaire and completed and signed Individual Histories for all members and their spouses in the entity to be licensed
  • Current Boundary Sketch
  • Renewal Application Packet
  • Current Premises Floor Plan (with cameras labeled and numbered)

What Might Be Required:

  • Premises access documents (lease, deed) only if there has been a change to it since the previous licensing (examples: change to the lease terms; listed individuals no longer involved with the business)
  • New Land Use Compatibility Statement (LUCS) only if requesting a larger canopy (example: from Tier 1 to Tier 2) or a change in canopy designation (example: currently approved for indoor but want to switch to mixed)”

You should also bring a credit card or cash to pay your renewal fee and any late fees. If you pay by check, or fail to pay on site, then your renewal will be delayed.

The OLCC has already held renewal clinics in southern and eastern Oregon in an effort to mitigate the application backlog we discussed previously. The idea appears to be that once the OLCC clears out the pending renewals, it can turn its focus back to addressing the current applications. This seems like a smart move by an agency that simply hasn’t been provided with the funding necessary to meet demand.

We recommend you take advantage of these clinics if you can get your paperwork in order in time. And if you have any pending changes to push through, such as ownership changes, floor plan changes, or canopy changes, it is likely worth contacting the OLCC to see if it is something you can resolve through the clinic process. But move fast, the clinic spots are likely to go quickly.

Cannabis delivery
Cannabis home delivery continues to expand in Oregon.

Recreational legal states are divided on whether to allow cannabis home delivery and just how to regulate it. For example, though cannabis delivery is legal in Oregon, it is still being debated in the Washington State legislature. And even though home delivery is legal in Oregon, that doesn’t necessarily mean it’s legal in every city. Portland, Oregon only lifted its ban on recreational cannabis delivery last December, and it has taken a while for the first delivery companies to obtain their state and city licenses, and to begin operating.

Considering that cannabis home deliveries are still prohibited in Washington, it may come as a surprise that home delivery has been a part of Oregon’s recreational cannabis regime since its inception. Section 27 of Measure 91 provided that licensed retailers would be able to make deliveries to “consumers pursuant to bona fide orders received on the licensed premises prior to delivery.” This language was adopted in HB 3400 without much change, and without any attempt to clarify the definition of a “bona fide order.” But home delivery was put on hold while the Oregon Liquor Control Commission (OLCC) worked out the details.

In 2015, the OLCC issued temporary rules to govern home delivery, and it has been tweaking those rules ever since. However, it wasn’t until February of this year that the OLCC finished working out the kinks and opened up delivery statewide.

Currently, Oregon Administrative Rule 845-025-2880 provides that a retailer may deliver cannabis directly to residential homes or apartments, but cannot deliver to hotels or other similar businesses. Any particular individual or address can only receive one delivery per day.

For the driver’s safety, each delivery vehicle must be equipped with an internal lock-box to store the cannabis during transport and each driver can carry no more than $3,000 worth of cannabis products at a time. Though not strictly required by the rules, a smart delivery company will use nondescript vehicles to further deter theft.

Assuming you are over 21 and you are not visibly intoxicated, you can receive deliveries of cannabis to your home or apartment as late as 9 pm, so long as you place an order by 8 pm. You will be asked to provide your name, date of birth, address, and the specific products you want to purchase. The delivery driver will arrive at your home, check your ID, and ask you to sign a delivery receipt so the retailer can fill out its delivery manifest.

These delivery manifests were the primary cause of the delay in bringing home delivery to the masses, as the OLCC needed to determine how to fit home delivery into Oregon’s seed-to-sale tracking system. Fortunately, the system is now up and running, and home delivery may already be available in your city.

As more states legalize cannabis in 2018, Oregon’s experience with home delivery will no doubt provide a valuable guide. In fact, if you are lucky, you may soon be enjoying commercials like this one.

 

Portions of this post were first published in the Portland Mercury and are republished with permission.

 

Oregon cannabis employeesWant to know what a competing Oregon cannabis business is paying its employees? Don’t ask job applicants.

Oregon passed expansive equal pay legislation in 2017 and a key provision banning employers from asking applicants about past salary and compensation went into effect this month. The Oregon Equal Pay Act makes it an unlawful employment practice for an employer to seek the pay history of an applicant. Similar to the “ban the box” legislation (discussed here), Oregon employers can inquire about past compensation only after making a job offer that includes an offer of compensation. Employers are also banned from seeking compensation history from an applicant’s past and current employers and from screening applicants based on past salary.

Oregon cannabis companies should review their applications and standard interview questions to remove any questions about past compensation and if you work with a recruiting agency, you should make sure their screening processes comply with the law as well.

The Equal Pay Act also expands Oregon’s equal pay requirements by prohibiting disparate wages for work of a “comparable character” for members of a protected class. Protected classes include persons distinguished by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, or age. Work of a comparable character does not simply mean the same job title or similar duties. Instead, it requires an analysis of the knowledge, skill, effort, responsibility and working conditions the position requires. The law though does allow for unequal pay for the performance of work of comparable character if the pay difference is based on any of the following:

  • A seniority system
  • A merit system
  • A system that measures earnings by quantity or quality of production, including piece-rate work
  • Workplace locations
  • Travel
  • Education
  • Training
  • Experience

The equal pay provision does not go into effect until January 1, 2019. This allows employers time to assess their compensation practices and adjust wages as necessary. Employers are not allowed to reduce the compensation of any employee to comply with the law.

Once the law goes into effect, employees can file complaints alleging violations with Oregon Bureau of Labor and Industries and BOLI may award up to two years of lost wages. Beginning January 1, 2024, employees can bring civil actions against their employers. Courts can award lost wages, attorneys’ fees and costs, injunctive relief, compensatory damages (money awarded to a plaintiff to compensate for a loss), and punitive damages (money awarded to a plaintiff to punish the defendant). Employers can avoid compensatory and punitive damages by showing they completed an equal pay analyses within three years before the date the employee filed the action.

If you are an Oregon cannabis business with employees, there is plenty you can and should do now to bring your company in line with existing  laws and to set yourself up for compliance with future laws. First and foremost, evaluate your hiring practices and ensure you are no longer asking your job applicants about their pay history. If you have friends in the cannabis business, limit discussions about what they pay employees. In preparation for enactment of the equal pay provision, analyze your pay practices. Are your employees in comparable positions being paid the same amount? If not, ask yourself whether there is a bona fide reason for the pay disparity and if there is not, consider raising the wages of the person with the lower wages before the law goes into effect.

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.

There many questions you should ask before hiring someone as a budtender, grower, or trimmer for your cannabis business—but Oregon recently passed several laws banning certain questions. Oregon Cannabis employment lawToday’s post will discuss Oregon’s, and specifically, Portland’s, “ban the box” ordinances.

“Ban the box”—named for the box on employment applications asking about criminal history—ordinances became popular in the United States between 2007-2009. In general, ban the box ordinances prohibit employers from asking applicants about their criminal histories before an initial interview. Oregon enacted ban the box legislation in 2016. This means employers cannot ask on a job application whether an applicant has a past conviction, but they are allowed to ask about past convictions during the interview process and to consider that information when making a hiring decision. Certain employers, such as those required by federal, state or local law to consider an applicant’s criminal history, are exempt. If you are not required to conduct a background check, assume you fall under Oregon’s ban the box ordinance.

The city of Portland takes the state ban the box legislation several steps further. The Portland ordinance, effective as of July 1, 2016, applies to any employer with six or more employees and to positions that require work within Portland for more than half of the employee’s time. Portland employers cannot ask an applicant on an application about conviction history and cannot ask about convictions during interviews. A Portland employer may only gain information about an applicant’s criminal history after making a Conditional Offer of Employment (COE). The Portland employer must offer the position to the applicant conditioned solely on the results of an inquiry into the person’s arrest or conviction history. If the inquiry reveals a criminal history, the Portland employer can only rescind the job offer after an “individualized assessment” is done to determine if the prior conviction is “job related to the position in question and consistent with business necessity.” This requires consideration of the nature and gravity of the criminal offense, the time elapsed since the offense took place, and the nature of the employment held or sought. Examples include rescinding a job offer made to an applicant for an auto-dealership who has a prior conviction for auto theft or an applicant who will be in charge of handling money and has a prior conviction for money laundering.

What happens if you decide to rescind the offer after learning about a past conviction? The Portland employer must notify the applicant in writing of its decision and identify the relevant criminal conviction on which the decision is based. The applicant then has the opportunity to file a complaint with the Oregon Bureau of Labor and Industries (BOLI).  If BOLI determines the employer violated the Portland ordinance, it can assess up to a $1,000 fine. The Portland ordinance also allows the city to bring an action against employers that have demonstrated a pattern and practice of violating the ordinance. In such cases, BOLI may assess a penalty of up to $5,000 for each violation.

The ban the box legislation is especially important in the cannabis field. Cannabis was legalized relatively recently and many applicants for positions with cannabis businesses have convictions for past possession, sales, or distribution of marijuana. If you ask about past convictions on the job application or in any way prior to the initial interview you are in violation of the Oregon ordinance. Be careful when requesting background information from applicants—even asking about unexplained employment gaps may be considered requests for conviction history. If you requested conviction information before the initial interview you are in violation of the Oregon ordinance even if the applicant was not offered an initial interview for another reason. If you are a Portland employer, you may only ask about conviction history after a COE is made. Remember—you can only rescind the job offer after an individualized assessment has been completed.

 

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.