Oregon Publishes Draft Rules for Recreational Cannabis

The Oregon Liquor Control Commission (OLCC) published its draft rules for the state’s recreational marijuana program earlier this month. No big surprises are to be found among the rules, though the OLCC notes that “draft rule language is subject to change and should NOT be used as basis for making business decisions.”

The Commission will be awarding four types of licenses: for producers, processors, wholesalers, and retailers. You can submit a single application for any or all four of these licenses.

Entities submitting an application must have at least one “legitimate owner”: one or more individuals or legal entities owning at least 51% of the business. Individual applicants must be 21 years or older and have established two years of Oregon residency, although the residency requirement ends in 2020.

Ownership does not necessarily include the following: preferential rights to distributions based on return of capital contribution; options to purchase an ownership interest that may be exercised in the future; convertible promissory notes; or security interests in an ownership interest.

The current rules could make Oregon a hotspot for out-of-state entities looking to get in on the recreational market.

Applying to become a licensed producer or processor is a bit more complicated. Processors must provide (1) one of several endorsements related to the proposed processing activity; (2) a description of the type of products to be processed; and (3) a description of equipment to be used, including any solvents, gases, chemicals or other compounds used to create extracts or concentrates.

Producers, in turn, must provide (1) a report describing the applicant’s estimated electrical and water usage; (2) a description of the growing operation, a description of equipment to be used in the production, and whether production will be indoor, outdoor or both; (3) proof of a water right or a statement that water is supplied from a public water system or from an irrigation district; and (4) the proposed canopy size and tier of their crop with a designation of the canopy area within the licensed premises.

Finalized rules will likely not be published for another month. The full text of the draft rules can be found here.




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