Pot Rules: Will Oregon Lead Us?
I recently sat on the Oregon Liquor Control Commission (OLCC) Wholesale Advisory Technical Committee to advise the state on recreational cannabis regulations for wholesalers. Oregon is the second state, after Illinois, in which I’ve been involved in cannabis rulemaking, and there are many interesting observations, lessons, and challenges to discuss.
All administrative rulemaking requires public input in some form or another. From the public’s perspective, rulemaking can sometimes feel formal and distant, but rules advisory committees are a refreshingly forward-thinking and transparent way to engage industry stakeholders during the process. In choosing this course, the OLCC brought together a diverse, knowledgeable, and engaged group of people to advise on some very difficult policy choices it currently faces.
Creating a comprehensive regulatory framework for recreational cannabis is no small task. Much of this stems from the fact that two separate agencies—the Oregon Health Authority for medical, OLCC for recreational—will be regulating different facets of essentially the same market. Adding further complexity, a bill signed into law this summer will make the sale of recreational cannabis,starting in October, available temporarily through existing medical dispensaries. These dispensaries may (or may not) obtain an OLCC license once those licenses become available.
The committee I sat on addressed one specific type of license: wholesale. Separate committees were convened for producer, processor and retail licenses. The wholesale committee was unique because stand-alone cannabis wholesale licenses do not exist in any other state. This fact, and the fact that both Measure 91 and HB 3400 contained sparse details on what a wholesale license might look like, put our committee in uncharted territory.
To facilitate the advisory process, each committee member received a certain list of topics to discuss at each meeting, and the OLCC facilitated a roundtable discussion asking us specific questions about those topics. Some questions were as fundamental as “what exactly is a cannabis wholesaler?” Or, “what will a wholesale license require?” More technical questions involved insurance, physical security, inventory management and facility requirements for licensees. But, the most frequent question from OLCC staff was “should this be in rule, or should this be a business decision?”
Framing policy choices along these lines shows that Oregon’s regulators — to some extent — are willing to let market forces, not regulations, determine the shape of Oregon’s recreational cannabis industry. Though it can be tempting to want regulations that contemplate all of the circumstances and situations that could be regulated, it is also important to avoid over-regulating or creating unintended consequences. Having regulatory foresight is one thing; trying to solve problems that don’t yet exist is quite another. The OLCC has thus far demonstrated discipline and restraint in understanding and respecting the difference, and all signs point to the regulations ultimately embracing this philosophy.
Ultimately, Oregon’s recreational regulations need to be administrable, realistic, and flexible. And above all, they must allow Oregon’s nascent cannabis industry to grow and to thrive. In many ways, Oregon’s cannabis market has the potential to become the gold standard and a model for recreational markets around the country. I am looking forward to continuing to work with the OLCC and other Oregon administrators to ensure that happens.
Attorney with Harris Moure