My columns with the fewest number of “likes” are ones that deal with cannabis policy. However, the least sexy topics—like the wonkery surrounding the bills that pertain to how we produce, sell, and consume cannabis in Oregon—are of far greater importance than my hot take on the new OG Purple Ghost Rider Cookie Kush. (“It tasted of pot, and I felt high.”)
With that in mind, let’s talk about two bills in the current Oregon legislature: Senate Bill 1057, which just became law, and House Bill 2198, which is under consideration as of this writing and will most likely pass. These bills could mean some big changes, good and bad. HB 2198’s primary function, for example, would be to change the official name of the Oregon Liquor Control Commission to the Oregon Liquor and Cannabis Commission.
SB 1057 specifies, among other things, that an Oregon Medical Marijuana Program (OMMP) cardholder can have six medical cannabis plants as permitted by OMMP rules, in addition to the four additional plants allowed under Measure 91, the 2014 ballot measure that legalized cannabis in the state. This is progress, because some medical patients use FECO (full extract cannabis oil) daily, and growing what’s needed to produce a year’s supply is more than most can harvest from six plants.
SB 1057 also allots certain OLCC-licensed growers to tack on an additional 10 percent of their existing canopy square footage to produce cannabis for medical use, as long as they donate 75 percent of the crop for free. I know recreational growers who would love to grow for medical patients, and this will allow them to do so at no cost to the patient. So far, so good.
But then there’s an amendment that allows select medical growers, if they meet certain requirements as laid out in House Bill 2198, to transfer up to 20 pounds of their crop to a recreational wholesaler or processor. Does that sound fair? It’s not.
Recreational growers pay staggering number of fees to produce and sell cannabis solely within the recreational adult-use marketplace. That’s where the majority of sales occur in Oregon, and all taxes are collected from those consumers, as OMMP cardholders are exempt from the recreational sales tax (17 to 20 percent, depending on location).
As of October 2015, there were 48,699 registered OMMP growers. If only 25 percent of that number transferred those 20 pounds to the recreational market, that’s more than 240,000 pounds of cannabis entering a marketplace that last year sold approximately 44,000 pounds of flower. More crop was used for edibles, extracts, and topicals, of course, but this is still a significant and potentially disruptive amount of product that could enter the marketplace from medical growers—who are exempt from the rules, fees, and permits required of recreational growers. These medical growers aren’t even required to register as a business.
I’ve talked to some who think this provision may be a reaction by the legislature to the Cole memorandum, the Obama-era document that left room for states to undertake a recreational cannabis program if they follow several basic rules, one being that cannabis can’t leave the state in which it was produced. Now that Attorney General Jeff Sessions is making noise about cracking down on state recreational programs, any actions taken by Oregon to demonstrate efforts to curb product leaving our borders may take the heat off. And allowing the surplus to be sold in this manner could be viewed as proactive by some.
However, it may well have the exact opposite effect. I spoke with Meghan Walstatter of Northeast Sandy’s Pure Green dispensary, which she owns with her husband, Matt. “Medical grows have lower overhead than recreational grows,” she said, “and they will be allowed to ignore many of the expensive regulations that OLCC licensees must follow, bringing their costs down even further. This will allow them to sell their product at a lower price than OLCC licensees who have played by the rules.
“Dispensaries would then sell this product at a lower price, reducing the taxes seen by the state and the local governments who have opted in to the local tax program,” Walstatter continued. “Because medical growers are subject to substantially less scrutiny than OLCC licensees, and because the market will be flooded with inexpensive, medically grown product, it creates conditions ripe for diversion into the illegal market. This is a major concern for the state, and we will be exacerbating any existing issues in this area.”
Even if all this cheap weed does cut down illegal out-of-state sales, at what cost? Decimating the efforts of fee-paying recreational growers to save our adult-use program is not a good plan. Let’s hope the cure doesn’t kill the patient.
Ummm no! It is totally fair to allow medical growers to sell up to 20lbs. A lot of recreational grows have little concern about the quality of their cannabis and only care about high yeilds.
That is ridiculous! Quit whining about the awesome medical marijuana excess and allow it in! You say its not fair, but forget all the crap that has been heaped upon patients and medical growers.
Was it fair to allow out-of-state investors in to blow up the market? Was it fair for the Joint Committee to destroy the OMMP program? Was it fair for the legislature to and OHA to change the rules repeatedly?
They want to stop diversion, they damn well better make an allowance for medical growers’ excess to get into the market. And they think the stupid METRC system will stop recreational diversion…what a joke!
Josh Jardine, are you also one of the extremists that thinks excess medical marijuana that exceeds the patient limits should be destroyed?
Or, are your advertisers from the Oregon cannabis Business Council which would like nothing more than to force all medical patients to purchase from one of their association dispensaries…and purchase pesticide tainted products too, since they wanted to stop testing concentrates for pesticides even though 26% officially and likely 50% in reality, of the medical grade concentrates were failing the tests! PURE GREED!
The Portland Mercury should be ashamed of themselves for supporting the rec industry at the expense of medical growers and patients, and the OMMP system, too.
Medical growers founded the industry they should not be barred from it by out of state interests. If the system is unfair, it is because the people making the rules are deliberately trying to strangle the industry. All Oregonians should be able to benefit from cannabis, even sick people who don’t have million’s to compete with big industry. ALL of the product the first year and a half came from medical: it is inexcusable to have priced those players out of the industry by passing onerous regulations. If the problem is that the rec gardens pay too much and feel they can’t compete with the poor, then maybe the solution is to reduce the fees and let us all play.
Money Trumps Medicine in Oregon’s marijuana world again.
Letting the smallest farmers, the one’s who provide for patients for free, continue to sell into the regulated market is a loophole?
Really? Let me get this straight. A medical grow which is limited to 48 mature plants is going to be able to produce marijuana cheaper than a rec farm which can grow 48,000 plants? (And there really is no limit on rec farms since an owner can obtain multiple licenses.)
The OLCC farm can sell every gram they produce, for profit. The medical farm has to first supply all the patients they grow for. I give away over $50,000 worth of medicine to patients every year, for free. We deliver flower, oil and shatter, free to patients. We often provide oil to cancer patients that we are not growing for, for free.
The author of the article likes SB 1057 because it allows rec growers to add 10% to their canopy if they give 75% of that extra away to patients. Hey all you OLCC growers out there, you don’t need the Legislature to pass a law giving you a bonus for helping poor patients that can’t afford marijuana, you can just do it because it is the right thing to do. Soon enough, many OLCC producers will be sitting on inventory that is moving so slowly it is going to deteriorate. Hunter Neubauer, another OLCC producer afraid of medical growers threatening his market share, suggested excess marijuana be destroyed in his testimony to the Joint Committee. I suggest instead that OLCC growers donate medicine to patients who can’t afford to buy it. Oregon now has a carefully tracked inventory of excess marijuana. If we do not ensure that every patient that could benefit gets all the medicine they need then we have missed an opportunity to be compassionate and to allow the benefits of medical cannabis to be realized.
The picture the article paints of medical growers being somehow exempt from expensive regulation is a big lie. Fake news. Whatever you want to call it. SB 1057, which has already passed the Legislature and became law, now requires medical growers to do seed to sale tracking, and be subject to inspection by OLCC, just like rec growers. Here is a breakdown of some of the annual expenses a medical grower faces in my county:
Conditional use permit: $3400
Planning dept. medical grow inspection fee : $825
Other planning department fees: $?
Increased OMMP grower fees: $1600
Seed to sale tracking system fee: $ to be determined
Seed to sale monthly software license: $500
I could go on, but you get the idea. Medical growers have not been exempted from expensive over regulation.
The author’s main point is that allowing medical growers to sell 20 pounds will overwhelm the market. He projects that 12,000 medical growers selling twenty pounds would total 240,000 pounds. The author says that is more than the 44,000 pounds sold in the regulated market last year. There are several problems with these projections. First, according to an OHA report on sales, OMMP Dispensary Sales Report 2016, dispensaries purchased 102,525 pounds of usable marijuana in 2016. I don’t know where the authors 44,000 pounds number comes from. Second, the same report details the number of medical growers selling to stores, which dropped from 1712 in June to 660 in December. The numbers likely dropped as medical growers transitioned into OLCC licensing. 600X20 =12,000 pounds, a pretty small fraction of the OLCC market, is a better projection. And the numbers may drop further. For a tiny medical farm, it looks like selling 20 pounds may not even cover the costs of being regulated to sell that 20 pounds.
The Legislature has enacted lots of new laws and rules that encourage people to seek OLCC licenses. But they have also allowed local governments to opt out or zone out. Lots of people growing for patients out of compassion are unwilling or unable to deal with all the over regulation, mounting expenses, and inspections by multiple agencies so they are dropping out of the program. Because of this, thousands of patients are losing their supply of free medicine. The remaining medical growers who want in to the OLCC are prevented by this over regulation. That is what is unfair.
Oh did I mention that the medical growers were here first but now are being pushed out by people who made a lot of campaign contributions and lobbied for rules to push out the competition?
The article dabbles with the issue of oversupply but begs the most important question, isn’t the entire OLCC system headed for over-supply? Not because of 600 medical growers, limited to 48 plants, but because of 1500 OLCC producers who can grow tens of thousands of plants? What if they each produce 1000 pounds? What if next year there are 2500 OLCC producers? A tier 2 farm should do much better than 1000 pounds anyway. How is oversupply not inevitable?
Could someone explain to me why some OLCC growers are so worried about the remaining medical farms that are the source of medicine for thousands of patients but they are not worried about the next 12 OLCC farms that get licensed, which may produce as much competition as all the tiny medical growers?
What is going to happen when the OLCC tracking system shows that the system has 20 times more marijuana in inventory (carefully tracked of course) than state demand can absorb in a year?
Dealing with the inevitable over supply of marijuana in Oregon will be challenging. The solution should not be to sacrifice the patients.
John Sajo, Director Umpqua Cannabis Association
This is propaganda and is one sided reporting. Enjoy rubbing elbows with the new Oregon Cannabis Cartels. Sellout