Residency Requirement Considered For Oregon Marijuana Business Investors

Jacob Redmond

Well-Known Member
Oregon lawmakers are about to address the question of whether to allow out-of-state businesses to participate in the state's new legal pot marketplace.

Recreational marijuana stores will not open until 2016 because the state still has to set up a licensing system, but adults age 21 and older can legally possess pot starting July 1 thanks to Measure 91 that voters approved in November.

A legislative committee working to implement legal pot added language to a bill this week to place residency requirements on the state's medical marijuana program, and committee members acknowledged they are thinking about similar requirements for the recreational system.

"There have recently been a lot of questions about the residency requirement, and whether we're on strong legal ground with our residency requirement," committee co-chair Sen. Ginny Burdick, D-Portland, said on Wednesday. "And that's contemplated for the future recreational bill that will be coming."

People who already grow marijuana in Oregon, whether for the black market or legally under the state's medical marijuana program, have an interest in preventing competition from out-of-state companies and investors.

At least one private equity firm wants to get involved in Oregon's new legal pot market.

Republican lawmakers on the committee sought an opinion from a lawyer for the Legislature regarding whether Oregon can prohibit out-of-state investors and businesses from participating in Oregon, or prohibit Oregon businesses from investing their proceeds outside the state. Legislative Counsel Dexter Johnson responded that would violate the commerce clause and privileges and immunities clause of the U.S. Constitution.

However, Burdick received a different response Wednesday night when she asked Deputy Legislative Counsel Mark Mayer - who works specifically on marijuana legal issues for the committee - whether Oregon can impose residency requirements on the marijuana industry. Mayer said that because marijuana remains illegal at the federal level and there is not yet large-scale interstate commerce in marijuana - at least, not legally - Oregon would have a strong case for residency requirements if they were challenged in court.

"When marijuana becomes de-scheduled and it becomes an interstate commerce activity, then yes, you have to revisit some of these ideas you're thinking about and you have to re-do the analysis at that point," Mayer said.

The committee is scheduled to continue its discussion of policy around the implementation of Measure 91 on Monday, after an expected vote on whether to move a bill out of committee that would more tightly regulate medical marijuana in Oregon. The bill covers a broad range of issues, including some to help the state set up its regulated legal pot system. In addition to limiting the size of medical marijuana grows, here is what Senate Bill 844 would do:

- The bill, as amended Wednesday, calls for the Oregon Health Authority to create a registry for patients, growers, processors and dispensaries. The bill does not address additional licensing for medical pot businesses, except to require processors who make edible pot products to be licensed by the Oregon Department of Agriculture.

- Building upon the registry, the bill calls for the Oregon Health Authority to set up a system to track the path of medical cannabis from gardens to consumers. Andy Smith, a lobbyist for the city of Portland, said tracking might stop some of the illegal operations currently using the medical marijuana program as cover and possibly prevent tragedies such as the triple shooting in southeast Portland in April that left two people dead and a third severely wounded. Smith, who answered questions from lawmakers Wednesday, said the medical marijuana growers who were shot had more plants than allowed under the medical marijuana program. The suspect in the shooting had been traveling from Texas to Portland to purchase marijuana, and paid approximately $1,000 per pound for pot he could sell in Texas at $7,000 per pound.

- The bill expressly allows patients and growers to enter into agreements for the patient to transfer ownership of marijuana grown for him or her. Currently, under Oregon's cardholder system, marijuana grown for a patient is the property of that person. Patients have already entered into agreements with growers to receive free marijuana up front, if they sign over their rights to future marijuana grown by their designated grower. Brokering these agreements has turned into a business for some people, including Anthony Johnson, chief petitioner and co-author of Measure 91, who operates Duff Johnson Consulting.

- The bill would allow the Oregon Health Authority to inspect medical cannabis businesses for compliance. An amendment passed Wednesday night specifies patients only growing marijuana for personal use would not be subject to inspections.

- The bill would require the Oregon Health Authority to set rules to license and accredit marijuana testing labs. It would also require OHA to set health and safety standards for edible cannabis products, concentrates and standards.

- It requires OHA, in cooperation with the Oregon Liquor Control Commission and Oregon Department of Agriculture, to set packaging and labeling standards for all marijuana items.

- The legislation would allow the OHA, OLCC and ODA to possess, seize or dispose of marijuana when necessary as part of the agencies' enforcement duties.

- One of the amendments passed Wednesday would allow processing of medical marijuana in residential areas, which could be a source of tension as cities and counties hear from residents complaining of processors causing nuisances in neighborhoods.

- The legislation prohibits local governments from taxing marijuana and allows them to enact only "reasonable" regulations on medical grow sites, processing facilities and dispensaries.

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Full Article: Residency requirement considered for Oregon pot business investors - The Daily Astorian
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