Current Regulatory Changes in Oregon’s Cannabis and Hemp Markets
Cannabis and hemp were big focus issues in the 2021 Oregon legislative session, with the passage of eight relevant bills (out of more than thirty that had been introduced!).
These bills ranged from simple name updates to sweeping overhauls. While some created emergency rules that made them essentially effective immediately, others are coming into effect through this year and next.
Wondering exactly what these updates mean for consumers, retailers, product makers, and farmers?
Let's delve into some of the most notable changes!
Simple Changes
First, a simple title edit brought the OLCC's official name in line with all of the duties it's been carrying out for several years now. House Bill 2111 formally amended the name “Oregon Liquor Control Commission” to “Oregon Liquor and Cannabis Commission” and went into effect on August 2, 2021. (Handy that we don't have to change the initials OLCC!)
Another relatively straightforward change came through House Bill 2519, which allows home delivery across city and county lines (as long as local authorities approve of it). This bill went into effect on September 27, 2021. While it now requires additional security upgrades for delivery of product, it also increased the amounts allowed in a vehicle during delivery and gives broad discretion for cities and counties to adopt ordinances that allow for delivery.
The legislative updates also made progress in the area of environmental sustainability, with House Bill 2111 requiring the OLCC to study and identify rule changes that would reduce the use of plastics by the cannabis industry and submit its findings to the Legislature. Another excellent change is that dispensaries no longer need to put all purchased cannabis items into plastic child-resistant “exit bags”.
This is a direction that East Fork totally supports – OLCC regulations have long required the use of unnecessary packaging. We look forward to more reforms in this area.
Sweeping Changes
Now we'll get into some larger, more complex pieces of legislation: Senate Bill 408 and House Bill 3000. These two measures enacted numerous changes to Oregon’s hemp and cannabis industries (and addressed a growing blurry overlap between them).
SB 408 was widely seen as “a huge win” for the cannabis industry. Taking effect on June 23, 2021, the bill created new rules and streamlined processes to cut some red tape for Oregon cannabis licenses holders. The updated regulatory approach laid out by SB 408 is also expected to reduce industry violations by eliminating some unnecessarily “nitpicking” kinds of requirements.
Focusing on hemp, HB 3000 was a large omnibus bill, which is a type of proposed law that packages together several measures into one and is accepted in a single vote by a legislature. Even the Oregon Department of Agriculture (ODA) called it a “broad, encompassing bill”, addressing diverse issues including around sales of hemp-derived products, the regulation of hemp processing, and enforcement to crack down on unlicensed cannabis operations masquerading as hemp fields.
There were months of behind-the-scenes negotiations between hemp industry advocates and Oregon law enforcement leading up to the passage of HB 3000, but things moved quickly after Oregon Governor Kate Brown signed it into law on July 19, 2021.
The bill was effective immediately, and because HB 3000 was declared an emergency, the OLCC was authorized to issue immediate rules to exercise the authority set out in the bill – and they did.
However, these emergency rules were only temporary, and the OLCC put permanent rules into place during a special meeting on December 28, 2021. The permanent rules took effect January 1, 2022.
Effects for Consumers and Retailers
HB 3000 created a new category and definition for “adult use cannabis items” (even if their ingredients were derived from hemp), and established a 21+ age requirement to purchase those items (with an exception for medical marijuana cardholders who are 18 years or older).
A big part of defining adult use cannabis items was a focus on their composition.
CBD consumers have likely noticed new restrictions on the maximum amount – not just percentage – of THC allowed in hemp-derived products. Following the passage of HB 3000, OLCC's temporary emergency rules declared that an industrial hemp product is considered an adult-use cannabis item if it contains 0.5 milligrams or more of total THC (including any form of THC), regardless of the total package weight.
However, for the permanent rules, the OLCC set the general market hemp edible product limit to 2 mg of THC in a single serving, and up to 20 mg THC per container of hemp product. That rule will take effect on July 1, 2022.
The shifting rules have been confusing for consumers, and have forced major changes to manufacturing, packaging, and sales processes for retailers and product makers. However, these changes didn't come out of nowhere – regulators were prompted to act by the reckless opportunism of a segment of the “hemp industry”.
Previous to HB 3000's passage, hemp-derived products could legally contain no more than .3% THC by dry weight. That doesn't sound like very much; however, this meant that “bad actors” could use a heavy product weight as a loophole. There was increasing documentation of such companies isolating large amounts of THC (or variations on the THC molecule), allegedly from hemp, and making intoxicating THC-packed products that were being openly sold without restriction to all ages.
In addition, such operations were using a dubious legal argument to sell Delta-8 THC products in an unrestricted manner, including to minors. (Delta-8 THC is a molecular variation on “regular THC” [Delta-9 THC] that is somewhat less intoxicating – but still intoxicating.)
To address these issues, immediately upon the passage of HB 3000 and its emergency proclamation, the OLCC, ODA, and OHA set up a Task Force on Cannabis-Derived Intoxicants to work in collaboration. The task force more thoroughly defined adult-use cannabinoids and set concentration limits for products containing them.
By creating the pioneering overarching classification of Adult Use Cannabinoids and Cannabis Items, HB 3000 left behind the conventional legal classification of cannabis products into either “marijuana” or “hemp”. The new language focuses regulation on chemical compounds and “intoxicating effects” rather than just the THC levels.
Specifically, “adult use cannabinoids” are defined as including, but not limited to, THC acids that are artificially or naturally derived, Delta-8 THC, Delta-9 THC, particular molecular variants of Delta-8 or Delta-9 THC, and “any artificially derived cannabinoid that is reasonably determined to have an intoxicating effect.”
This comprehensive regulation creates a much more tightly governed marketplace for hemp products made or sold in Oregon, and the language will likely be mirrored by other states.
Meanwhile, on the cannabis regulation side of things, SB 408 eased restrictions significantly, doubling possession limits on most cannabis products (excluding seeds and immature plants), and increasing the concentration limits in edibles. The increase aligns Oregon with other legal adult-use cannabis states, and allows the OLCC to write rules to increase the purchase limits as well.
Beginning on January 1, 2022, dispensary customers have been able to purchase two ounces of usable cannabis per adult per day instead of one ounce. And starting on April 1, 2022, permissible edible concentration limits increased from 50 mg THC to 100 mg per package. Within the package, edibles need to be divided or scored into segments containing no more than 10 mg THC, to make the single serving portion sizes clear.
Effects for Farmers and Product Makers
Some of key pieces of HB 3000 and the temporary rules that followed included:
Bringing the ODA Hemp Program into compliance with 2018 Farm Bill and USDA Final Rules, giving ODA the tools needed to submit Oregon's state hemp plan to the USDA;
Amending the Import/Export criminal penalty threshold from 0.3% to 1%;
Establishing new procedures for obtaining a hemp grower’s license (previously called a registration) that mirror many aspects of the requirements for cannabis producer licenses;
Creating protection for work-in-process hemp (that may temporarily exceed legal THC limits) being transported within Oregon; and
Transferring some oversight and regulatory authority of hemp crops from the ODA to the OLCC.
For product makers, another rule change requires that non-intoxicating artificially derived cannabinoids go through the standard regulatory review process required for ingredients in dietary supplements or food products.
For example, for CBN products to be approved by the OLCC in the future, the CBN would need to go through the process for an FDA New Dietary Ingredient (NDI) Notification known as GRAS (Generally Recognized as Safe). However, OLCC licensees will have eighteen months (from January 1, 2022) to bring their current CBN products into compliance.
However, the most visible and newsworthy focus of HB 3000 was to create an effective enforcement pathway for making sure that “hemp” fields are really hemp.
As soon as the measure passed, OLCC announced that they would be working with the ODA and also using law enforcement units to assist with crop sampling – for which they would not be providing farmers any prior notice.
Many legitimate hemp growers were understandably worried about how the details of this testing would play out, as it is common for hemp crops to naturally vary in THC percentage. The legal limit for THC in hemp is 0.3%, but hemp plants can typically range from less than 0.1% to 1% THC due to factors like weather, pest pressure, and even small genetic mutations.
However, the OLCC was quick to reassure “good actors” in the hemp industry that they were not looking for plants that measured just slightly over the limit. The agency released a bulletin quoting then-Executive Director Steve Marks, “We’re really not trying to define what hemp is here: we’re really trying to spot check and take a minimum amount of samples to figure out what is commercial marijuana. This will enable ODA or law enforcement to stop the illegal production of marijuana disguised as hemp production.”
This problem was not news to most farmers around the state, particularly in Southern Oregon. In recent years, our farm's region has been hit hard by the negative impacts of rampant large-scale unlicensed cannabis grows associated with organized criminal activity. The area has seen a huge scale of wrongs such as human trafficking, illegal dumping and toxic pollution, the draining of waterways and aquifers, and more.
OLCC data reflects what residents have been experiencing: as part of “Operation Table Rock,” the agencies visited more than three hundred licensed hemp sites in Southern Oregon – and found a massive 54% of those sites to be illegally growing THC-dominant cannabis instead.
The sampling criteria (set out in OAR 845-026-4100(6)) that determine whether the State considers a crop to be “marijuana” and not hemp is somewhat nuanced. It includes any of the following five scenarios:
For mature plants:
At least half of the composite samples test at or above 5% total delta-9-THC; or
The average total delta-9-THC among the composite samples tests at or above 5%.
For immature plants:
At least half of the composite samples test at or above a 5:1 ratio of total THC to total CBD;
At least half of composite samples test at or above 1% total delta-9-THC; or
The average total delta-9-THC among the composite samples tests at or above 1% total delta-9-THC.
While licensed growers have had to expend time and resources ensuring their compliance with the new rules, most are happy to accept them for the love of our communities.
Meanwhile, on the cannabis-regulation side of things, SB 408 eased several pain points and barriers for licensed OLCC farmers. The updates included:
Producers under common ownership may now transfer product between their licenses, allowing them to make better use of shared resources;
Producers may now receive extract products made from their plant material back from a processor (as long as the product does not include cannabis from another producer); and
Qualified producers may now receive marijuana seeds from any source within Oregon, supporting the genetic diversity of the plant.
Further rule changes reduced the time and cost that it takes OLCC-licensed growers to report cannabis plant tagging and harvests into the state’s official tracking system, and simplified delivery requirements which improves OLCC licensees’ ability to self-distribute their products.
Tracking document requirements now require only proof of the originating cannabis business license (the entity legally responsible for the product), proof that the driver is properly licensed, and an accurate manifest of all the product in the vehicle.
In Summary – Expect More Changes
The licensed cannabis and hemp industries continue to be an evolving and maturing regulatory field. Change is a constant in these industries, and companies need to anticipate it and make contingency plans in order to stay in business.
As agencies continue to learn about our industries and have begun to treat us more like regular businesses, it is our hope that regulations will continue to become smarter, more nuanced, and more effective for the real issues that we face.
Although our businesses still bear a regulatory and tax burden that is disproportionate to the plant we grow, overall it feels as though we continue to inch in the direction of progress.
