Oregon’s New 2018 Cannabis Laws

The Oregon legislature concluded the 2018 session last weekend. As we wrote last month, because 2018 is an even-numbered year, this was a short session lasting just 35 days. We predicted that not all four proposed cannabis bills would pass and that is exactly what happened: the proposed legislation on “special events” for marijuana licensees quickly fell by the wayside. You can be sure someone will push that one again in 2019.

Still, three bills made it through, two of which will impact the Oregon marijuana and hemp industries considerably. These “enrolled” bills have been approved by both legislative houses, and will become law as soon as Governor Brown signs– or within 30 days of passage if she does not. Because these bills passed through two Democrat-controlled chambers, and because Governor Brown is also a Democrat who has never vetoed a cannabis bill, you can be 99.99% sure these bills will soon become law.

Each bill is linked to and summarized below. If you click through, remember that text in bold typeface is proposed new language, and text in [italicized and bracketed] typeface is language that will be removed from existing statutes.

Senate Bill 1544  (Marijuana)

This was the gut-and-stuff bill we discussed last month, which ended up covering a range of issues related to medical and non-medical marijuana, and industrial hemp. Below are the highlights. Note that references to the Oregon Liquor Control Commission (OLCC) concern the adult use program, which nowadays allows recreational operators to serve the medical market. The Oregon Health Authority (OHA) references relate strictly to the medical marijuana program.

Unlike most cannabis legislation passed in Oregon over the past few years, SB 1544 does not carry an “emergency” designation. This means that its provisions are not effective on passage. Instead, the effective date of this bill is June 1, 2018, with some of its provisions operative at designated intervals thereafter.

Below, we have emphasized the big moves in bold and added brief commentary.

• Allows OLCC producer licensees who are registered to grow medical canopies to provide immature plants to OHA program participants.
• Exempts OLCC processors from labeling and packaging requirements and standard when those processors are dealing direct with medical marijuana patients and their caregivers.
• Requires OHA grow sites to include a U.S. Postal Service address in their application, if they have one. If not, the grow site has to cough up an assessor’s map showing the exact location of the grow site, or a tax lot number.
• Caps the amount of immature plants that a person responsible for an OHA grow site (PRMG) can grow, at 12 immature plants that are 24 or more inches high. Requires also that OHA cap the number of immature plants that are less than 24 inches high. This is an effort to curb black market activity.
• Reduces the amount of both mature and immature plants that can exist at an OHA site if a PMRG’s authority is revoked or suspended by OHA.
• Exempts small OHA grow sites with two or fewer cardholders, from tracking and reporting requirements. This is to give the little guy a break.
• Re-jiggers the Department of Revenue distribution protocol for taxes collected from marijuana.
• Clarifies that although OHA grow sites may be subject to certain tracking requirements, they are not “commercial operations” for the purposes of state law.
• Pushes out dates for Oregon Cannabis Commission reporting obligations.
• Grandfathers OLCC and OHA retailers from the school proximity standard, if they were established prior to August 1, 2017 under a city or county ordinance.
• Establishes a tough-sounding “Illegal Marijuana Market Enforcement Grant Program” administered by the Oregon Criminal Justice Commission, and earmarks about $1.25 million in grants to “address and prosecute unlawful marijuana cultivation or distribution operations.” This may be more symbolic than anything: $1.25 million is not a lot of money as far as the state budget goes.
• Requires industrial hemp products sold by OLCC retailers to contain labels that clearly identify whether the products are derived from hemp or marijuana. Think, hemp-derived CBD products.

Senate Bill 1555  (Marijuana)

This simple bill temporarily enables OHA to distribute a portion of marijuana tax revenues to community mental health. This is an emergency bill, effective on passage. It also sunsets on July 1, 2019, at which point things revert to the current scheme.

House Bill 4089  (Industrial Hemp)

House Bill 4089 is a multifaceted bill that was brought by the Oregon Hemp Farers Association. When we first saw this bill last month, we noted that although it was comprehensive in scope, it did not include a provision limiting the ability of hemp growers to sell high THC products, or tracking provisions related to the movement of hemp into OLCC channels. Maybe Salem was listening, because the legislature fixed both issues.

Below is everything of note in HB 4089, with comments on the big moves in bold.

• Names the hemp research program operated by the Oregon Department of Agriculture (ODA) the Oregon Industrial Hemp Agricultural Pilot Program.
• Clarifies ODA’s authority to administer the program. Specifies that agricultural hemp seed is agricultural or flower seed for the purposes of statutes regulating labeling, testing, or certifying seeds.
• Directs the Director of Agriculture and Dean of College of Agricultural Sciences of Oregon State University to establish a program for labeling and certifying agricultural hemp seed.
• Provides that an accredited independent testing laboratory that has been approved by OHA or ODA may test industrial hemp and industrial hemp commodities and products produced or processed by a grower, handler, or agricultural hemp seed producer.
• Transfers responsibility from the testing laboratory to the registered grower, handler, or processor, for entering hemp, commodity, or product into the tracking system before the hemp, commodity, or product is transferred to a laboratory for testing.
• Requires the OLCC to track the hemp, commodity, or product when it is transferred, sold, or transported to a licensed premises, or area under the control of the premises licensee. This is an expansion of OLCC’s current obligation to track all cannabis in the state, with the exception of home grow and limited medical grow.
• Specifies that industrial hemp products that contain more than 0.3 percent tetrahydrocannabinol may not be sold to a consumer by a person other than a retailer, and requires that the OLCC adopt rules to ensure compliance. This shores up a huge gap: until now, ODA growers could theoretically sell these products without oversight.
• Authorizes OLCC actions regarding industrial hemp to enforce and ensure compliance with marijuana laws and provisions of industrial hemp laws that incorporate requirements, restrictions, or other provisions of marijuana laws. More oversight for OLCC.
• Specifies that a person may not produce, process, or store homemade industrial hemp extracts. This further curtails ODA growers’ options, which were nearly limitless under state law.
• Changes the description of the limit on production and storage of homegrown cannabis plants.
• Allows ODA to adopt rules establishing a higher average tetrahydrocannabinol concentration limit for industrial hemp if a higher average concentration limit is established by federal law.
• Revises language regarding grower retention of agricultural hemp seed for producing industrial hemp.
• Establishes the Industrial Hemp Fund and appropriates moneys to ODA to implement, administer, and enforce industrial hemp statutes.

Like SB 1555, the hemp bill is “emergency” legislation that is effective on passage. When coupled with the new OLCC rules around industrial hemp passed a few months back, it’s safe to say that the Oregon hemp program is fully formed at last. Like the marijuana programs, Oregon hemp has come a long way.

source https://www.cannalawblog.com/oregons-new-2018-cannabis-laws/

How is Your State on Cannabis? We Asked and You Answered

Crafting laws and regulations is more art than a science. The authors of initiatives, legislators, and administrative agencies who create and implement rules to legalize medical and recreational marijuana are bound to get some things wrong. This may be due to political pressures, competing interests, and the simple fact that marijuana is prohibited under federal law.

Now that so many states have legalized, we figured a good way to determine what was working and what was not, would be to ask individuals those living in those states. So we did just that on our lively Facebook page by asking for our readers’ feedback. The responses were interesting and all over the board.

Many of our readers expressed a concern that California has been over-regulating cannabis since voters approved legalizing recreational marijuana in 2016. (We wrote about this issue recently here.) Complaints were focused on the increased price of cannabis products since legalization went into effect on January 1. There were also complaints about how medical patients no longer had access to products that were available prior to the state’s new and expansive cannabis regulations.

In a similar fashion, many commentators claimed that Washington‘s regulatory framework was overly burdensome, though there were not nearly as many complaints about the price of cannabis which has dropped significantly since Washington retail stores first opened in 2014.  Washingtonians did take issue with the state being the only state that legalized recreational cannabis without allowing for home cultivation. Washington regulators have also faced criticism for the slow implementation of the state’s new traceability system.

Generally, people commented positively on Colorado and Oregon, citing the ability to home grow and good access to dispensaries. Some commentators complained about inconsistent enforcement in certain counties, claiming that police in some areas seemed to continually take issue with marijuana despite legalization. Hopefully, this issue subsides.

We did not get much feedback on other adult use states. One Facebook user was happy with Nevada but hoped that the state would have more options with regards to available strains. Alaska‘s program was criticized for problems with lab testing and the unfulfilled expectation that Alaskans would have social use cannabis clubs. One user from Massachusettes complained that legalization was progressing too slowly. And we did not receive any feedback on Maine or Washington D.C., unfortunately.

Some common complaints regarding states that only permitted medical marijuana were that it was too expensive to obtain an authorization card, and that the state burdened patients by the ways which patients could consume cannabis products. For example, New York allows medical cannabis but does not allow for smokeable forms of cannabis. Others argued that the cost of medical marijuana was too high or that states did not have enough products to satisfy the needs of patients.

Finally, in states that have either no legal marijuana program or medical programs that are limited only to CBD, the criticism was fairly straightforward: prohibition is not working! However, many commentators were hopeful that their state would legalize in the near future or that federal cannabis prohibition would end soon. Here’s hoping.

source https://www.cannalawblog.com/how-is-your-state-on-legal-cannabis-we-asked-and-you-answered/

Is CBD Legal? Hemp Industry Case Ruling Due Soon

As noted before in this blog, Hemp Industries Assoc. v. DEA, pending in the U.S. Court of Appeals for the Ninth Circuit, appeals the DEA’s final administrative rule creating a new drug code number for “marihuana [sic] extract,” defined as “containing one or more cannabinoids that has been derived from any plant of the genus Cannabis.”  Petitioners, a cannabis industry trade group and other industry participants, argue that DEA’s rule effectively reschedules CBD as a Schedule 1 drug under the Controlled Substance Act (CSA), in violation of the Farm Act of 2014, which allows the states to set up pilot hemp programs. The DEA counters that this rule does not restrict substances that were not previously controlled, but simply adjusts DEA’s methods for tracking substances that Congress put in Schedule 1.

On February 15, 2018, a Ninth Circuit panel of three judges heard oral argument. You can watch the argument here. Because federal appellate courts never issue decisions at oral argument, we won’t know how the court decides for several months. But watching the argument gives some clues to how the judges are thinking about this case.

Before you watch, consider first that this case is a challenge to a rule made by the DEA, a federal administrative agency exercising rule-making power expressly delegated to it by Congress. Under established law, the court must defer to the DEA’s exercise of this power. The court may set aside DEA’s rule only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The court’s review is narrow: it must simply determine whether the DEA articulated a rational connection between the facts found and the choice made. As long as the DEA’s decision was “based on a consideration of relevant factors and there is no clear error of judgment,” the agency’s action is not arbitrary and capricious.

Second, consider that there are many administrative procedures that must be followed before a petitioner can even ask for review of an agency rule. All rulemaking is open to public comment by any interested party. If you fail to weigh in at the rulemaking procedure, you may not get to complain in court. Also, the petitioner has to show particular identified harm that it will suffer because of the rule.

Third, keep in mind that lower appellate courts such as the Ninth Circuit will often (though not always) try to decide a case on the narrowest grounds possible. This means that these judges may choose to decide on a technicality or procedural issue, rather than reaching the merits of the claim. That could very well happen here.

Keeping these points in mind, observe that the judges ask the lawyers: isn’t this rule just a change in the numbering system used by DEA made in order to facilitate record-keeping and reporting activities? Of course, the DEA lawyer agrees, while the cannabis industry lawyer strongly disagrees. Also notice that the judges continue to press the cannabis lawyer about whether evidence supporting harm claimed to be suffered is found “in the record.” This is an important point, because courts of appeal are not allowed to refer to facts that were not brought up in the original proceeding– in this case, the rulemaking process. Finally, there is no discussion about whether de-scheduling CBDs is a good or a bad policy. That is not an issue raised by this case, and the panel will almost certainly not address this in its opinion.

It is also worth reading a brief filed not by the parties to this case, but by several members of Congress who are appearing as amici, that is, friends of the court, Their brief supports the cannabis industry group, broadly arguing that DEA had no authority to issue its rule. The amicus brief also broadly urges that the Farm Act of 2014 allows states to effectively legalize CBD sales. Although many of the amici were among those who voted for the Farm Act, this brief is unlikely to sway the judges, who will likely say nothing about what the Farm Act does or doesn’t cover.

Check back in a few months, when we will discuss the opinion of the panel. My guess is that the opinion will narrowly decide the case, perhaps on procedural grounds, but that there will be no controlling ruling on scheduling of CBDs, keeping this area of law as confusing as ever. Stay tuned.

source https://www.cannalawblog.com/are-cbds-legal-hemp-industry-case-ruling-due-soon/

Oregon Cannabis: Josephine County Growers Get Their Day in Court

Spot Zoning Initiatives, or, How Not to Structure a Local Cannabis Ordinance

California Cannabis Countdown: Cotati

A Big Win for the LGBT Community and Why it Matters to Cannabis Companies

The Trump administration is known for its hostility to marijuana. It’s also known for its hostility to the LGBT community. In a huge blow to the Trump administration, the Second Circuit Court of Appeals ruled last Monday that employers cannot discriminate against employees based on sexual orientation.  Many states, including Oregon, Washington, and California have statutes explicitly prohibiting employers from discriminating against employees based on sexual orientation. The Federal Civil Rights Act (“the Act”) does not explicitly protect employees based on sexual orientation: instead, it only protects employees based on sex. Circuit courts across the country are taking up the issue of whether employees should be protected based on sexual orientation, and reaching different conclusions.

In 2010, Donald Zarda sued his employer, Altitude Express, Inc. alleging they had terminated him because he was gay. The federal district court ruled in favor of the employer, holding the Act did not protect employees based on sexual orientation. The case pitted the federal Equal Employment Opportunity Commission (EEOC) against the federal department of justice. The EEOC submitted a brief in support of Mr. Zarda, arguing the Act protects employees based on sexual orientation. The Federal Department of Justice (headed by our good friend, Mr. Sessions) submitted a brief supporting the employer, and arguing the Act did not extend to sexual orientation.

The Second Circuit overruled the lower court. Siding with Mr. Zarda in a lengthy, 69-page opinion, with multiple concurrences and 80 pages of dissents, it ultimately held that “sexual orientation is doubly delineated by sex because it is a function of both a person’s sex and the sex of those to whom he or she is attracted. Logically because sexual orientation is a function of sex and sex is a protected characteristic under [the Act] it follows that sexual orientation is also protected.” Makes sense to us.

Two other federal appeals courts recently have heard similar cases. The Seventh circuit determined discrimination based on sexual orientation was discrimination based on sex under the Act, while the Eleventh Circuit held the Act’s reference to sex did not encompass discrimination based on sexual orientation. The Supreme Court declined to hear the Seventh Circuit’s case, but now, with multiple circuits offering opinions on the issue, the Supreme Court may be persuaded to hear the Second Circuit’s case. If they do, let’s hope they get it right.

So why does this matter to cannabis businesses? Cannabis businesses are subject to both state and federal employment laws. If a cannabis business discriminates against an employee because of sexual orientation, the business could be in violation of both state and federal law. As we all know, Attorney General Sessions ripped up the Cole memorandum earlier this year. Without the memorandum, there is little guidance about when and where federal district attorneys will choose to enforce the Controlled Substance Act (CSA) against cannabis companies. Thus, compliance with state and federal regulations is more important than ever during this time. It is best to stay under the radar rather than drawing federal attention to your business by arguably violating federal laws—other than the CSA that is.

If you ever have questions about terminating an employee it is always best to consult an employment law expert first to ensure all basis are covered and no violations arise from the termination. If your company is not terminating an employee on the basis of sexual orientation, but you believe that the employee could make such a claim, it is crucial to consider and attempt to mitigate possible claims. Both state and federal laws tend to be very detailed when it comes to protection of employees. In unsettled areas of law, such as the employees and sexual orientation, prudence is advised.

source https://www.cannalawblog.com/a-big-win-for-the-lgbt-community-and-why-it-matters-to-cannabis-companies/