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Oregon Medical Marijuana Processors: Licensed and Legit

Of all the Oregon marijuana activities, medical processing always seemed strangest from a rules point of view. Until recently, there was virtually no mention of pot processing in ORS Chapter 475 (the cannabis regulation statutes) nor in the related Oregon Health Authority’s (OHA) administrative rules. Although those rules made little sense from a business perspective, they did appear designed to insulate program participants from criminal liability, and processors have always participated in the program — even before dispensaries came online back in 2013. More than anybody else, processors have always operated in gray and dark gray markets.

Last summer, HB 3400 finally required OHA to establish a processing site registration system and to “track and regulate the processing of marijuana by a person responsible for a marijuana processing site.” That was the first step in transitioning the old card-juggling regime to an inventory reporting system, where the inventory is both carefully tracked and heavily regulated. Going forward, Oregon cannabis processors must comply with a thicket of administrative rules touching on all aspects of operation. The only exception is for those working on a very small scale and not selling through to dispensaries. Really, things couldn’t be more different.

Because Oregon’s medical processor application came online last Friday, we have been busy shepherding clients through the process, which is a multi-step endeavor full of timing pitfalls. The online portion can be completed immediately, but a bevy of forms must be submitted within 5 days, other forms must be submitted within 30 days, and then an approval and another form, and finally an inspection. It’s quite a process! The good news is that a processor with a pending application may legally operate throughout the application period, despite a recent scare, and even if that processor is making extracts.

Like the recreational cannabis processor application, the medical processor application is expensive ($4,000 with $500 non-refundable) and there are various requirements for various endorsements, from edibles to extracts. Applicants who already have applied for an Oregon recreational processor license will find much of this duplicative, right down to the land use statement and security requirements. The situation feels goofier still because recently passed Senate Bill 1511 actually allows recreational processors to register and process for the medical market. With that said, (1) it will be a while before the Oregon Liquor Control Commission (OLCC) writes rules around that, (2) nobody really knows what those rules will look like, and (3) very few recreational processors will be licensed this month, anyway. But yes, we hear you.

The OHA application is important for Oregon processors already up and running in the medical market because it allows them to keep doing what they were doing. The application also will allow processors to begin selling through to the recreational market sooner than previously expected (but only until the end of this year) under the “early start” provisions of SB 1511. For new applicants, when and whether to apply will come down to how quickly the applicant can ramp up and become operational, what products they wish to manufacture, and ultimately, in which market or markets they want to exist. Suddenly, there are so many options.

Vince Sliwoski

Vince manages Harris Bricken’s Portland office and is a professor of Cannabis Law and Policy at Lewis & Clark Law School. He is a well-rounded attorney with expertise in a wide range of transactional law.

Oregon Medical Marijuana Processors: Licensed and Legit Of all the Oregon marijuana activities, medical processing always seemed strangest from a rules point of view. Until recently, there was

How to Obtain an OLCC Marijuana License in Oregon

A legal overview of the four types businesses can apply for

By Super Lawyers staff on September 6, 2019

In 2014, Oregon voters went to the polls and approved Measure 91—a bill that put the state on the path to legalizing marijuana for recreational use. Among other things, Measure 91 gave the Oregon Liquor Control Commission (OLCC) the legal authority to regulate and tax the recreational marijuana industry starting in 2016. Any Oregon company seeking to do business in the marijuana industry must obtain the appropriate license from the OLCC.

In Oregon, there are four different general types of marijuana licenses available:

  1. Recreational Producer License: Designed for growers and cultivators of cannabis, businesses with a recreational producer license are permitted to sell their finished products to processors, wholesalers, and retailers.
  2. Recreational Processor License: After purchasing products from a recreational producer, licensed recreational processors in Oregon are allowed to make marijuana concentrates, edibles, and extracts. These products can be sold to wholesalers or retailers.
  3. Recreational Wholesaler License: In Oregon, a licensed marijuana wholesaler can purchase marijuana products from other licensed marijuana businesses and sell marijuana products to other licensed businesses.
  4. Recreational Retailer License: Finally, an OLCC licensed recreational retailer is permitted to sell marijuana products to consumers. To be clear, only businesses with this type of license are allowed to sell recreational marijuana products to the general public.

“Then there’s a lab license for testing, because you’re required to test for THC, CBD, mold, mildew, water content, and then a whole slate of different pesticides,” says Andrew C. DeWeese, an attorney with Green Light Law Group in Portland. “There’s also something known as a research certificate, which is a special license that allows you to perform approved research using cannabis procured from other licensees.”

Under those broad categories there are also sub-categories under the producer and processor licenses. For production, it is separated into four tiers that refer to the size of the canopy in which you’re allowed to grow and if it’s indoors or out. “In the micro-tiers, the sizes are much smaller,” DeWeese says. “Those are designed to enable smaller family farms to get into the business. Those micro-tiers also have fewer restrictions on where they can be, and also they can also engage in some limited processing.

“When you apply for your license, and you tell them what your canopy area is going to be, that can’t change until you either renew or you apply for a change. So you can’t be an outdoor grower in the summer and then change,” he adds.

For processing licenses, there are four different endorsements you can seek. DeWeese summarizes them as follows:

  1. Concentrates endorsements, which means you can make cannabis products such as hash or rosin out of cannabis made using only a physical separation process or a non-hydrocarbon-based pressure or high-pressure CO2 extraction process.
  2. Extract endorsements, which is the typical CO2 extract that you see made using self-critical or supercritical CO2 extraction under high pressure, or butane honey oil that people like to dab. It’s purged in a vacuum oven so the butane doesn’t stay in the product. This is a bit harder to get than the other endorsements because of the nature of what you’re making.
  3. Processor endorsements, which is the edible endorsement.
  4. Topical endorsements, which enables you to make products which are for use on the body rather than ingested

An Oregon Cannabis Lawyer Can Help

The application is fairly straightforward, DeWeese says, and you may not need a lawyer for it. Actually getting a license, however, is another matter.

“The first thing I tell them is, ‘You better be prepared to wait two years or longer because there’s simply so many out there,’” says DeWeese.

“What we’re seeing a lot more is mergers and acquisitions of licenses. It’s hard to get a new license, so if you want to get into the game, you have to buy somebody’s license. That is really a situation where you need a cannabis lawyer because that has to be handled in exactly the right way. The OLCC really cares about knowing everybody involved in the operation—especially those with a financial interest. If you have somebody who is a silent partner and who’s not disclosed to the OLCC, they’ll take your license away. Most people have partners or get loans or things like that, and those have to be disclosed properly. So that’s something you might need an attorney for.”

Obtaining a Land Use Compatibility Statement (LUCS) is another important piece an attorney can help with, along with several other business matters. “Getting a license is one thing, but setting up your business is another, and is extremely important. Even if you don’t have partners, having your corporation set up in the right way to maintain that corporate veil is also vital,” DeWeese says.

“When my clients have found it useful to have an attorney involved is for preventions. The consequences of not following the regulations in practice can be extremely severe. So, for example, one of the requirements is that a marijuana licensee has to have an offsite backup for their video surveillance and they have to have at least 90 days. We’ve seen the OLCC come in and say, ‘Hey, you’ve only got 75 days of backup. So we’re taking your license away.’”

How to Obtain an OLCC Marijuana License in Oregon – an article appearing in Super Lawyers Magazine August 2019