Category Archive for: Licensing and Compliance

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I’m just an old corporate attorney. At the large firm I worked at for nearly 20 years, “dabbling” into practice areas in which you were not an expert was frowned upon. Become an expert in one or two areas of the law, stick with them, and let the other attorneys at the firm handle the stuff that they know better than you. That was the mantra, and I have found it a convenient philosophy to maintain. And so, for the past few years, I have done everything humanly possible to avoid learning and keeping up with the voluminous and ever-changing marijuana rules and regulations of the Oregon Health Authority and the Oregon Liquor Control Commission. That’s what my (younger) colleagues are for.

However, there are a few OLCC rules that a business attorney practicing in the marijuana industry simply cannot avoid, including the rules governing:

• Who is an “applicant” for purposes of an OLCC application;
• Who has a “financial interest” in a licensed business; and
• What happens if any of these things change.

Business transactions appear to be happening more than ever in the industry, and two of the most common questions we get are:

• Who, exactly, has to be on (or added to) the OLCC application?
• Is this going to slow up the deal?

The OLCC published new rules effective January 1, 2017, which included some changes to the definitions of “applicant” and “financial interest.” The rules cleared up some issues nicely. However, the rules do not provide an obvious answer to every business scenario. For some scenarios, it is necessary to determine the OLCC’s interpretation or policy with respect to a particular rule.

I and others at our firm have had a series of recent discussions with the OLCC on these rules to make sure that our firm’s advice to our clients is consistent with the OLCC’s interpretations and policies.

The following is a summary of the current rules, based on both the text of the rules and the OLCC’s current interpretations and policies of the same.

Applicant

The rules concerning applicants are relatively clear, and can be found at OAR 845-025-1030(3-4) and OAR 845-025-1045.

The following persons are applicants:

1. An individual or legal entity who holds or controls an interest of 10% or more in the licensed business;
2. An individual or legal entity (other than an employee acting under the direction of the owner) that: (i) exercises or is entitled to exercise control over the licensed business; (ii) incurs or is entitled to incur debt or similar obligations on behalf of the licensed business; or (iii) enters into or is entitled to enter into a contract or similar obligations on behalf of the business; and
3. An individual or legal entity identified as the lessee of the licensed premises.
Additionally, if a legal entity is an applicant, the following individuals within the legal entity are also applicants:
4. For a limited partnership, each general partner;
5. For an LLC, each member whose investment commitment or membership interest is 10% or more; and
6. For a corporation: (i) each director who owns or controls 3% or more of the voting stock; (ii) each principal officer; and (iii) each shareholder who owns or controls 10% or more of the voting stock.

Categories 1, 4, 5, and 6 have to do with ownership and the executive management team. These categories are always relevant and we focus on them all of the time.

There are definitely some logical inconsistencies with Categories 4 through 6, and there are a number of instances where different results would occur based solely on the form of the legal entity, even though there would appear to be no substantive differences between certain scenarios. For example, a 15% passive nonvoting member of a parent company LLC would be an applicant, whereas a 15% passive nonvoting shareholder of a parent company corporation would not be an applicant. These inconsistencies rarely “wag the dog” when organizing an entity structure, but they could.

The items in Category 2 do not frequently come into play, but they should never be overlooked. One not-uncommon scenario we have seen is when a licensed business hires a third-party management company that has the authority to enter into certain purchasing or other contracts on behalf of the business. In that case, the management company (and some or all of its owners, depending on the entity type of the management company) would be considered applicants of the licensed business.

Category 3 ideally should never arise because the legal entity that owns the licensed business should always be the lessee or sublessee on the lease. However, again, this item should not be overlooked.

Financial Interest
Here’s where it gets more interesting (which is an attorney’s way of saying less clear).

The term “financial interest” is defined in OAR 845-025-1015(20). The general definition states: “Financial interest” means having an interest in the business such that the performance of the business causes, or is capable of causing, an individual, or a legal entity with which the individual is affiliated, to benefit or suffer financially. The definition then provides a short non-exclusive list of scenarios that constitute a financial interest.

The definition does not specifically address many common business scenarios that we have encountered. And so, rather than take a guess at things, we felt the best move was to contact the OLCC to determine their current interpretations and policies regarding those scenarios.

We have learned that the following persons have a financial interest in a licensed business:

A. A direct or indirect equity owner of the licensed business (with one exception specified below);
B. An employee or agent who receives out-of-the-ordinary compensation;
C. A lender who lends money or property to an applicant or the licensed business for use in the business at a commercially unreasonable rate;
D. A person who gifts money or property to an applicant or the licensed business for use in the business;
E. The spouse of an applicant;
F. A person who receives out-of-the-ordinary consideration as a result of any commercial transaction;
G. A person who is entitled to receive any payment based on a percentage of profits, sales, or other performance metric of the licensed business;
H. The holder of an option or warrant to purchase a direct or indirect equity interest;
I. An employee or other service provider who is granted an option to acquire a direct or indirect equity interest;
J. The holder of a convertible promissory note;
K. A person who is granted a security interest in the assets or a direct or indirect equity interest; and
L. A person who has any right or potential right (based on any potential future contingencies) to acquire the assets or a direct or indirect equity interest.

Overall, this is a rather broad interpretation of the rule. Categories A through F are clear from (or are clearly implied by) the text of OAR 845-025-1015(20). For Category G, receiving a percentage of profits from a licensed business is also clearly implied by the text of the rule. However, receiving a percentage of sales or other performance metric is not. Likewise, the OLCC easily could have interpreted OAR 845-025-1015(20) differently with respect to Categories H through L. Still, this is the OLCC’s current interpretation.

And so what scenarios are we left with that do not constitute a financial interest?

In short: (a) ordinary and fair market value compensation and consideration; (b) unsecured loans at a commercially reasonable fixed interest rate; (c) fixed dollar payments (rather than percentages); (d) the absence of collateral having anything to do with the business; and (e) the absence of contingencies that could result in a person acquiring the assets or any direct or indirect equity interest in the business.

Additionally, the rules expressly provide for one specific exception to the general rule that every direct or indirect equity owner of a licensed business holds a financial interest. OAR 845-025-1015(20)(b) provides that a financial interest does not include any investment that the investor does not control in nature, amount or timing. While this language is not absolutely clear on its face, the OLCC’s interpretation is that this exempts persons who have invested in a company or financial fund that, in turn, invests in a specific licensed business (assuming that the exempt person is passive in nature and would not otherwise be considered an applicant). For example, if an individual buys shares in a public company and the public company, in turn, invests or has invested in one or more licensed businesses, then the individual investor would not be deemed to have a financial interest in the licensed businesses.

Of course, no list of all conceivable scenarios could ever be complete, and there are certainly scenarios that will arise that do not fit neatly into the text of the rules or the OLCC’s interpretations or policies regarding the same. Similarly, the OLCC could change its interpretations and policies at any time.

Consequently, before applying for or renewing any OLCC license, and before entering into any new business transaction that could potentially affect who may have a financial interest in a licensed business, it is always advisable to speak with an attorney (or, at a minimum, with the OLCC itself).

Distinction #1 – Criminal Background Checks

Based on the text of the rules, there is only one distinction between an applicant and the holder of a financial interest. The OLCC is required by statute to conduct a criminal background check on each applicant who is an individual. Applicants must submit fingerprints and other information to the OLCC. See OAR 845-025-1030(6)(a) and OAR 845-025-1080. The OLCC may require each individual who holds a financial interest to submit the information necessary for a criminal background check, but they are not required to do so by statute. See OAR 845-025-1030(7).

Distinction #2 – Changes

There is one other significant distinction between an applicant and the holder of a financial interest that is not in the text of the rules, but is instead based on the OLCC’s current policy position. OAR 845-025-1160(4) provides that a licensed business must obtain the OLCC’s preapproval before changing who has a financial interest in the business. Here is a link to the form that must be submitted to the OLCC if there is a change in financial interest or business structure: http://www.oregon.gov/olcc/marijuana/Documents/Licensing_Forms/mj_change_financial_fillable.pdf.

Although OAR 845-025-1160(4) and the OLCC’s change form apply to all financial interests, the OLCC’s current policy is that only the addition of a new applicant requires the preapproval of the OLCC. If a licensed business is adding a person that merely holds a financial interest (and who is not an applicant), then the licensed business can finalize the transaction first, and then notify the OLCC after the fact.

This is a significant benefit for businesses who are adding only financial interest holders and who do not want to delay the closing of the transaction.

Conclusion

The OLCC’s rules governing applicants, financial interest holders, and changes to the same are a bit complicated and are not always clear from the text of the rules themselves. Compliance is always important naturally, but these days perhaps it is more important than ever.

Before applying for or renewing any OLCC marijuana license, and before entering into any new business transaction that could potentially affect who may have a financial interest in a licensed business, it is advisable to speak with an attorney.

Finally, if you currently have an OLCC license and are uncertain whether you have disclosed to the OLCC all applicants and financial interest holders, you also should speak with an attorney. The OLCC considers violations of the applicant and financial interest rules to be serious Category I or Category II violations, depending on intent. Correcting an omission is certainly possible, but it should be undertaken with legal advice.

If you have any questions or issues, please contact any of our business attorneys or compliance and licensing attorneys.

We will update this blog if and when we become aware of any change in the OLCC’s interpretations or policies on this issue.

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On September 30, we blogged about the OLCC and OHA’s emergency rulemaking in the face of the October 1 labeling, packaging, and testing deadline. One of the rule changes reduced the OLCC’s requirement for pesticide testing for usable marijuana.  The new rule calls for OLCC staff to assess pesticide testing capacity for the limited number of licensed labs approved for such testing.  After making the assessment, the rule requires the OLCC to issue an order dictating the percentage of usable marijuana a producer must test for pesticides.  Last week, the OLCC issued its first order.  The order states that each producer must submit 33% of its harvest lot batches to pesticide testing.  The entire text of the order can be found here.

The OLCC will most likely issue future orders which increase the percentage of pesticide testing required. We will post future blog entries as each order is published.

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sadness

Unfortunately the hope that the October 1, 2016 deadlines would be pushed back did not occur.  The Oregon Health Authority (OHA) and Oregon Liquor Control Commission (OLCC) both adopted emergency temporary rules today.  However, the changes appear to provide very limited relief for Oregon cannabis businesses.

Labeling and Packaging

Inventory taken in prior to October 1, 2016 must be sold with labels and packaging that meet the new standards, but are not required to have gone through the OLCC pre-approval process.  Inventory taken in by a dispensary on and after October 1, 2016 must have pre-approved labels and packaging.

The text of OHA’s temporary rules can be found here.

Testing

There is a reduced requirement for testing of pesticides on usable marijuana only.  Prior to September 30, 2016 changes, the rule was that every batch of usable marijuana in a harvest lot had to be tested for pesticides.  Under the temporary rule, only a percentage of batches in a harvest lot will need to be tested for pesticides.  The OLCC will issue an order periodically dictating the percentages of batches requiring testing.  At the special Commission meeting today, Steve Marks indicated that 33% of batches in each harvest lot would be the initial testing percentage.  These percentages will likely be increased.  This reduced testing would only be permitted until March 1, 2017.

We will post a follow-up blog with more details.  Please feel free to contact us to discuss how this may impact your particular situation.

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October1

The Oregon Health Authority (OHA) has announced that it will engage in temporary emergency rulemaking this week to address two key issues which may affect current medical marijuana businesses preparing for October 1, 2016.

1. Pending OHA Processor Registrations

The OHA has confirmed that it intends to adopt a temporary emergency rule that would allow applicants who have applied for a medical marijuana processor registration to continue operating without interruption under a pending registration status.  The expectation is that OHA dispensaries will be able to accept products from processors that are included on the list of Pending Processor Applications.  Under current rules, processors are required to complete their registration on or before October 1, which involves an OHA readiness inspection.  However, with less than a month until October 1, no processors have yet completed a full registration.

In order to get on the list of Pending Processor Applications, a processor must submit a “complete” application to the OHA.  If the OHA has deemed a processor application “complete,” it will place the applicant on the list. Beginning October 1, OHA dispensaries must only accept edibles, concentrates, and extracts from processors on the list.

In a previous blog post we summarized the processor registration requirements.  The OHA reviews applications for completeness once per week, in the order they are received. To avoid any business interruption, processors should still submit their applications as soon as possible.

2. Extended Deadline for Dispensary ODA Certification

OHA also announced that it intends to push back the date by which registered dispensaries must have a food establishment license from the Oregon Department of Agriculture (ODA), from October 1, 2016 to January 1, 2017.  Stay tuned for an upcoming blog post on working with ODA.  Also, in case you missed it, we posted our Top 5 tips for Oregon dispensaries gearing up for October 1.

We will also continue to publish blog posts to update you on key issues and changes affecting Oregon’s marijuana industry.

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Emerge Law Group is excited to offer the free Employment Law Compliance for Cannabis Employers class on September 28, 2016 in Portland from 9:30 a.m. to 3:00 p.m., with free lunch provided.

Our experts will guide you through the fundamentals that every employer must follow to fully comply with the mountains of Oregon and federal employment laws, including:

  • Employees vs. independent contractors
  • Exempt vs. nonexempt employees
  • Marijuana worker’s permits
  • Forms I-9, W-2, W-4, W-9, 1099, etc.
  • Salary, hourly and piece rate compensation
  • Workweeks, paydays, final paychecks and other payroll fundamentals
  • Workers’ compensation and OHSA compliance
  • Must-have employment policies
  • And much, much more!

You will also have an opportunity to ask the questions that matter most to you. Register online today.

More details can be found here.

Space is limited, so early registration is recommended. We look forward to seeing you!

REGISTER ONLINE at http://emergeclassregistration.eventbrite.com.

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Number-5

There are significant changes to the Oregon Medical Marijuana Program that will take effect on October 1, 2016.  In recent blogs we have covered:  (1) labeling; (2) packaging; and (3) processor registration. What do these changes mean for Oregon dispensaries?  Below are a few tips for dispensaries preparing for the upcoming rule changes.

1. Identify your top-selling products.                      

If you own or run a dispensary, evaluate your sales history and identify your top-selling products. By focusing on your main sources of revenue, you can hopefully prevent significant disruption to your inventory supply and cash flow.

2. Evaluate whether your top-selling products currently comply with October 1 labeling and packaging requirements.

Once you identify your top-selling products, evaluate whether those products meet the new packaging and labeling requirements. The sale of marijuana flowers and other items in exit packaging may not be affected.  However, the sale of concentrates, extracts, edibles, and other infused products that are generally delivered to dispensaries pre-packaged and labeled will most likely be impacted.

Current Inventory

On and after October 1, if a dispensary has a product in inventory that does not meet the new labeling  requirements, under OAR 333-007-0010(5) the dispensary will be required to:

  • transfer/return the non-compliant item; or
  • if the item cannot be returned – for example, if the vendor cannot be located – dispose of the item in a manner specified by the OHA.

Future Inventory

On and after October 1, a dispensary may not accept any products that do not meet the new labeling and packaging requirements. Ask your vendors that supply pre-packaged and labeled products whether their products comply with the new labeling and packaging requirements. The OLCC has told us that relatively few labels have been submitted for pre-approval. With only one exception (which is explained below), all labels must be pre-approved by the OLCC. If you anticipate a potential disruption in inventory supply, try locating vendors who will likely be compliant by October 1.

Generic Labels

A label that provides only the necessary information required by the rules – and no graphics, photographs, or logos – is considered a “generic” label and requires no pre-approval by the OLCC. You are not required to provide notice to OLCC that you will use a generic label. Consider whether use of generic labels could be a temporary solution.

3. Talk to your extract, concentrate, and edible suppliers about the status of their OHA registration.

On and after October 1, a registered dispensary may accept only a transfer of edibles, concentrates, or extracts from an OHA-registered medical marijuana processing site. Ask your processor vendors about the status of their OHA registration. You can also continue to check the OHA Pending Processor list.

The rules do not prohibit sales of edibles and concentrates that were taken into inventory from a non-registered processor prior to October 1, or extracts that were taken into inventory from a non-registered processor prior to March 1, 2016. Dispensaries may consider purchasing edibles and concentrates from non-registered processors prior to October 1. In contrast, at this time all extracts must come from processors on the OHA Pending Processor list. Regardless of how this rule affects you, if a product in your inventory does not meet the new labeling and packaging requirements, you may not sell it to a consumer (see above).

4. Testing

Beginning October 1, a dispensary may not accept or sell a marijuana product that has not been tested by a laboratory accredited by ORELAP and licensed by OLCC (with one exception explained below). A list of accredited and licensed laboratories will be made available on the OMMP laboratories web page. Currently, no such labs are listed but the OLCC announced today that the first two labs have been certified and licensed.

With respect to inventory accepted by a dispensary prior to October 1, a dispensary may transfer such marijuana items to a patient or caregiver until January 1, 2017 if the item is labeled with the words “DOES NOT MEET NEW TESTING REQUIREMENTS.” These words must be bold, in all capital letters, and at least 12 point font, and the label must be easily seen by the patient or caregiver. We also read this mean that recreational customers may only be sold items tested under the new rules, but we to confirm this with OHA.

Given the current number of accredited and licensed labs, dispensaries should plan their inventory purchases accordingly.  In addition, we recommend affixing the necessary disclaimer labels well before October 1.

5. Do You Need an ODA License?

On and after October 1, a dispensary that sells or handles edibles must be licensed by the Oregon Department of Agriculture (ODA). Check our blog later this week for more information on the ODA’s licensing process.

If you have any questions or concerns about what to do with marijuana items that do not comply with packaging or labeling requirements or about our tips, please do not hesitate to contact a compliance attorney. We are here to help.

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ORDOJ

We get this question a lot.  Can I have six mature medical plants and four home grow plants?  The answer is YES, (assuming you are over 21 and a patient growing at home).

The Oregon Department of Justice has published an opinion regarding the intersection of the laws that govern Oregon’s medical and recreational marijuana programs.

In summary, an OMMP grow site located at a patient’s residence may have:

  • 6 mature medical marijuana plants (a per-patient limit), and
  • 4 recreational marijuana plants (a per-household limit).

In addition, a patient may possess up to:

  • 24 ounces of usable medical marijuana (a per-patient limit), and
  • 8 ounces of usable recreational marijuana (a per-household limit).

There are different usable marijuana possession limits for growers, depending on whether the grower is producing marijuana at a patient’s residence.

Members of the public may possess only:

  • 4 recreational marijuana plants at his or her household (a per-household limit),
  • 8 ounces of usable recreational marijuana (a per-household limit), and
  • 1 ounce of usable marijuana in a public place.

The opinion also concludes that the limits in the Oregon Controlled Substances Act apply to possession of marijuana concentrates and extracts. Both patients and members of the public must abide by the following possession limits:

  • 16 solid ounces of marijuana products or concentrates,
  • 72 liquid ounces of marijuana products, and
  • 1 ounce of marijuana extract purchased from a licensed retailer or dispensary.

While members of the public may make their own marijuana concentrates, edibles, or other cannabinoid products for personal consumption, it is still illegal to process marijuana extract without a license issued by the Oregon Liquor Control Commission or Oregon Health Authority. The entire opinion is available here: http://www.doj.state.or.us/agoffice/agopinions/op2016-2.pdf.

The information in this blog post is a summary. These laws and rules are nuanced, and are applied differently based on several factors, such as location of possession. Contact a member of our compliance team with any questions.

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On March 18, 2016, the Oregon Health Authority (OHA) released Information Bulletin 2016-05 announcing that the unregistered manufacture of cannabinoid extracts is illegal and a Class B felony.  Read our blog post about this bulletin here

 

As an update, OHA released Information Bulletin 2016-06 on March 23, 2016.  This new bulletin announces that the registration process for medical marijuana processing sites will open on April 1, 2016, and that a medical marijuana processing site that has submitted a complete application for registration with the OHA is exempt from criminal liability for marijuana related crimes. 

 

We are continuing to review and analyze Information Bulletin 2016-06 and the additional information referenced in it, and we are communicating with the OHA to obtain as much clarity as possible with respect to the application process and the ability of participants in the Oregon Medical Marijuana Program to produce and sell extracts. 

 

Stay tuned to this blog and please contact your attorney if you have any questions.

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How many mature marijuana plants can I grow/posses?  That is a question we get a lot from Oregon growers.  The answer is not so simple.

What you need to know is that action may need to be taken before April 1, 2016 in order to keep growing certain plant numbers.

The number of plants allowed at a grow site depends on where it is located.  It also depends on if you wish to remain in the Oregon Medical Marijuana Program (OMMP), or want to produce under the Oregon Liquor Control Commission (OLCC) recreational program.

Currently in Oregon, growing marijuana remains entirely governed by the OMMP.  That is until OLCC begins issuing production licenses and with the exception of small home grows allowed under Measure 91.  Here is a summary of the current framework:

1.  Old OMMP.  Before March 1, 2016, a grower could produce for up to four patients and up to six mature plants per patient (24 mature plants total).  There was no limit on the number of growers allowed at an address.  Therefore, a grow site “stacked” with multiple growers could grow a number of mature plants.  This was the standard in Oregon for many years.

2. HB 3400.  On the heels of Measure 91, last year the Oregon legislature passed HB 3400 which changed parts of the Oregon Medical Marijuana Act.  Part of HB 3400 imposed plant limits at grow sites.  Plant limits went into effect March 1, 2016.  The number of mature marijuana plants allowed at a grow site depends on the location of the grow site.

  • City-Residential Plant Limits – If a grow site is located within city limits and in an area zoned for residential use, no more than 12 mature marijuana plants may be produced at the site, unless the site is grandfathered.
  • All Other Plant Limits – If a grow site located outside city limits or within city limits in an area not zoned for residential use, no more than 48 mature marijuana plants may be produced at the site, unless a site is grandfathered.

Contact the OHA or an attorney to determine what the plant limits for your particular location are, or whether you are grandfathered.

3.  SB 1511.  Fast forward to 2016.  The Oregon legislature passed SB 1511 last month.  The bill intended to amend HB 3400 by pushing the start of the plant limits from March 1, 2016 to April 1, 2016.  The rub is that SB 1511 was not signed before March 1, 2016 and is still awaiting Governor Brown’s signature.

Because SB 1511 is not yet effective, the plant limits began on March 1, 2016 under HB 3400.

There is also a chance that the Governor could veto the bill.  Otherwise, SB 1511 will become law when the Governor signs, or automatically if not signed within 30 days.  We’re coming up on the 30-day mark very soon.

4.  Stay for Persons Applying with OLCC

SB 1511 would provide a way for a grow site to exceed applicable plant limits, even beyond any caps in HB 3400, if a grower is waiting to be licensed by the OLCC and certain requirements are met.  A grower would need to complete the following:

a. OLCC Application – An OLCC application is filed on or before April 1, 2016.  For grow sites in jurisdictions with a moratorium, a land use compatibility statement would not be required for purposes of staying plant limits.

 b. OHA Notice – A notice is filed with the OHA, which would require:

  • the name and signature of each grower located at the grow site;
  • the name of each patient associated with the grow site; and
  • proof that a notice has been sent to each patient associated with the grow site by certified mail.

The notice would need to contain specific information required by the OHA.  Contact the OHA or an attorney to verify that your patient notice meets the requirements.

If an applicant meets the above requirement, the growers at a grow site would be able to continue producing the number of mature plants that were being produced at the location as of the effective date of SB 1511.

Stay tuned to our blog, as we will post any updated stay information when we receive it.

 

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The Oregon Health Authority (OHA) released Information Bulletin 2016-05 in an attempt to clarify many questions surrounding the legality of marijuana extraction under the Oregon Medical Marijuana Program (OMMP).

Below are commonly asked questions we have been receiving and our responses based on the OHA’s most recent bulletin.  This information is general in nature, and subject to change.  The Oregon Health Authority, Governor’s office, Attorney General’s office and state legislators are currently evaluating the situation.

If you have any questions about your specific facts and circumstances, we recommend contacting an attorney.

1.  Is processing marijuana extracts illegal?

If you are not registered with the OHA, the state considers the processing of marijuana extracts to be a Class B Felony.  All marijuana extraction activities should cease immediately.

2.  When can a processor become registered or licensed? 

The OHA will begin accepting processor registrations on April 1, 2016.  It is currently unknown how long it will take the OHA to process applications for registration.

The Oregon Liquor Control Commission (OLCC) began accepting applications on January 4, 2016.  Processor licenses are expected to be issued in third quarter 2016.  Any processors who have submitted an OLCC processor application are not permitted to make extracts until a license is issued.

3.  What is the difference between a marijuana extract v. concentrate?  

Extracts are generally considered more dangerous to create than concentrates.  Although extracts are often thought of as items made with high heat or high pressure, that is not always the case.  The full definitions of extracts and concentrates are below.  See also ORS 475B.015 and OAR 333-008-0010.

Extracts

“Cannabinoid extract” means a substance obtained by separating cannabinoids from marijuana by:
(a) A chemical extraction process using a hydrocarbon-based solvent, such as butane, hexane or propane; or
(b) A chemical extraction process using the hydrocarbon-based solvent carbon dioxide, if the process uses high heat or pressure. 

Common Examples:
– CO2 oil (made with high heat or pressure)
– All BHO oil

Concentrates

“Cannabinoid concentrate” means a substance obtained by separating cannabinoids from marijuana by:
(a) A mechanical extraction process;
(b) A chemical extraction process using a nonhydrocarbon-based solvent, such as vegetable glycerin, vegetable oils, animal fats, isopropyl alcohol or ethanol;
(c) A chemical extraction process using the hydrocarbon-based solvent carbon dioxide, provided that the process does not involve the use of high heat or pressure; or
(d) Any other process authorized in these rules.

Common Examples:
– Bubble Hash
– Rosin (if solventless or using nonhydrocarbon-based solvents)
– RSO (if not made with butane, hexane, or propane)

Whether a product is an extract or concentrate depends entirely on the method of separating cannabinoids from marijuana.  If you have any questions about how processing methods categorizes a product, you should consult with an attorney to make a determination.

4.  Can dispensaries intake or sell marijuana extracts? 

Dispensaries may not accept transfers of marijuana extracts from unregistered processors or transfers of edibles containing extracts made by unregistered processors.  Dispensaries may currently only sell sell extracts or edibles containing extracts that were in stock as of March 1, 2016.

Dispensaries may continue to accept concentrates from unregistered processors and sell concentrates to OMMP patients.  On and after October 1, 2016, dispensaries may only accept concentrates from registered processors.  

5.  Is making and transferring edibles allowed?    

Making edibles with concentrates is allowed and such edibles may be transferred by the edible maker to patients and dispensaries.

Edibles infused with an extract made by an unregistered extractor may only be sold by the edible maker to OMMP patients.  

6.  Do I need to destroy marijuana extracts in my possession?  

Currently, only the unlicensed manufacturing of marijuana extracts is considered illegal.  As long as you are within appropriate possession limits under the OMMP, you do not need to destroy extracts on hand.

7.  Will extracts, or edibles infused with extracts, that were extracted before March 1, 2016 be able to be transferred to dispensaries after the processor registers with the OHA?

It is currently unclear whether extracts created prior to March 1, 2016 will be allowed back into the OMMP system if/when the maker of the extract subsequently registers with the OHA.  We are hopeful that such products will be able to resume moving through the OMMP system in a responsible and safe manner.

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