- Vinnie Neuberg
Dear Cannabis Lawyer—What’s going on with recreational pot sales in Portland? Why is there an “early sales” program and when does it actually start? Signed, V. Silvestri
We are less than six weeks away from the start of recreational marijuana sales in Oregon. On October 1, medical marijuana dispensaries can begin limited pot sales to over-21 adults, thanks to the recently enacted Senate Bill 460. All adults will be able to purchase seeds, non-flowering plants, and up to a quarter ounce of dried leaves and flowers, per day. No edibles for a while.
The reason you won’t be able to buy edibles, and the reason you and your healthy friends must go to a medical dispensary to buy pot, is because marijuana in Oregon will be sold for quite a while under a temporary “early sales” program. That program is a statutory stopgap while the Oregon Liquor Control Commission (OLCC) gets its formal recreational program up and running. And that will take another year or so.
It is no secret that stiff competition from both regulated and black-market competitors has made life tough for medical dispensary operators of late. I have seen some clients fare well, while others barely hang on in hopes of a revenue bump from the early sales program. Because the early sales program does not tax products until January 4, 2016, that bump could be substantial.
After January 4, the tax holiday ends and a stout 25 percent sales tax will ensue. Interestingly, the 25 percent impost constitutes the largest sales tax in Oregon, which is just one of just five states to have no general sales tax. Will there be stockpiling of tax-free marijuana in the weeks leading up to January 4? Most definitely.
The early sales program ends December 31, 2016. By then, the OLCC will have issued licenses for recreational dispensaries (along with producers, processors and wholesalers) and OLCC supervised sales will also be underway (taxed between 17 and 20 percent under House Bill 2041). In theory, none of you should ever have to drive to Vancouver again.
So what is next? SB 460 allows local cities and counties to prohibit early sales. A few of them will do so, but Portland should be safe. Also, the Oregon Health Authority (OHA), which runs Oregon’s existing Medical Marijuana Dispensary Program, revealed rules on Wednesday to implement the early sales program (these rules also amend the medical program, which we can cover some other time). The new recreational rules are pretty interesting.
OHA will require each dispensary that wishes to sell recreational marijuana to first notify the agency (five days in advance). All dispensaries, even those not selling to recreational customers, must post a very big sign “in bold, 80 point Times New Roman font” advising consumers whether the dispensary serves the recreational or medical market, or both.
Interestingly, OHA is not only keen on who is selling recreational marijuana, but it wants information on who is buying it, exactly how much and the sale price. Dispensaries are thus required to check identification and record the birthdates of customers (but not their names). Almost no one will like this. Dispensaries and customers may like the fact, however, that nothing in the rules prevents a customer from purchasing the maximum quantity of seeds/plants/flowers allowed, time and again, at multiple dispensaries in any given day (Oregon’s generous possession laws of course would still apply).
Finally, dispensary staff must distribute a state-issued information card about marijuana to each customer at each transaction. OHA also will require shops to hang state-issued posters related to poison prevention and pregnancy warnings, as well as one for the state’s stately “Educate Before You Recreate” campaign. But that is pretty standard fare.
I have had clients complain that Measure 91 was passed in November of 2014, but a temporary program is just now coming online and recreational shops are probably another year out. I usually advise that the state is trying to get this thing right. In addition to federal scrutiny, there are challenges to implementing a recreational program alongside a 17-year medical program and a thriving black market economy. Even if Oregon does everything correctly, there will surely be a few surprises.
For now, recreational marijuana sales will be happening in Oregon and that is quite exciting. If you live in Portland, or work in the industry here, things look good. We launch in six short weeks.
Vince Sliwoski is a business, cannabis, and entertainment attorney with Harris Moure. He works with Oregon marijuana businesses of all sizes on licensing, corporate formation, contracts, commercial litigation, and intellectual property. He is a contributing writer to the Canna Law Blog and plans to answer questions here regularly. Send yours to vince@harrismoure.com.