September 14, 2016

Oregon Cannabis Industry Facing Regulatory Uncertainty

September 14, 2016
Oregon Cannabis Industry Facing Regulatory Uncertainty

By Cynthia Salarizadeh

The Oregon Cannabis Industry is facing both double regulations, and regulatory Uncertainty. While seed-to-sale regulations are becoming the accepted norm in all states which have decriminalized cannabis, the situation in Oregon presents new challenges for industry dispensaries and growers.

That’s because Oregon is regulated by two separate agencies that have control over seed-to-sale and the traceability and packaging of cannabis: the Oregon Liquor Control Commission (OLCC) that oversees recreational sales and the Oregon Health Authority (OHA) that overseas medicinal products.

The reason for the two oversight agencies has to do with timing: recreation was approved first October 2015 when the Oregon Liquor Control Commission approved a set of extensive regulations designed to create a viable, profitable and accountable recreational marijuana industry. The first licensed recreational dispensaries are expected to open in December 2016, while, medicinal products were approved by the Oregon Medical Marijuana Act in November 1998.

To accommodate both medical and recreational dispensaries, Oregon regulators had to make some innovative changes that allowed licensed medical marijuana stores to continue to sell recreational marijuana products, but only until Dec. 31, 2015. Then, on Jan. 1, 2017, medical stores will no longer be able to conduct recreational sales since the new recreational dispensaries will be open for business.


As part of these new regulations, the OLCC created a comprehensive tracking system that covers the entire cycle of cannabis planting, cultivation, processing and ultimate sale to individuals as part of its seed-to-sale tracking system. This covered every aspect of the industry from laboratories, processors, wholesalers, and retailers. The system became effective in January 2016 to coincide with the acceptance of the first state licenses for licensed dispensaries to sell to cannabis recreation users.

Under Oregon law, medical grow sites started their registration process on March 1, 2016. This process mandated that licensed dispensaries produce monthly reports to the OHA on what is cultivated, possessed and distributed to patients and dispensaries.

In practice, this means that effective in June 2016, dispensaries had to adhere to the Administrative rules (found at Oregon Administrative Rules 333-008-0000), which include the following:

On a monthly basis, and no later than by the 10th day of every month, “a person designated to produce marijuana by a patient must submit the following information to the Authority”:

  • The number of mature marijuana plants and immature marijuana plants, the amount of marijuana leaves and flowers being dried, and the amount of usable marijuana, in the person’s possession;
  • The number of mature marijuana plants and immature marijuana plants, and the amount of usable marijuana transferred to each patient for whom the person produces marijuana, or that patient’s designated primary caregiver during the previous month;
  • The amount of usable marijuana transferred to each marijuana processing site during the previous month;
  • The number of immature marijuana plants, and the amount of usable marijuana transferred to each medical marijuana dispensary during the previous month.

All of this information must then be submitted electronically and “a person designated to produce marijuana by a patient must keep a record of the information for two years after the date on which the person submits the information to the Authority.

Integrated Software Makes Compliance Easier

Depending on the type of dispensary operation (medical or recreation), Oregon cannabis operations are working in a constantly changing regulatory environment.

For example, according to CJ Stechschultes of Growing ReLeaf medical dispensary in Beaverton, Oregon, even though the OLCC has no jurisdiction over its operations, the company has applied for its OLCC license. While Stechschultes said the business is “currently up-to-date with the latest required rules which, luckily, overlap with OHA’s,” seed-to-sale regs are not affecting them for another three months. “However, we are currently taking the necessary steps to be prepared for this in the future by getting familiar with the Cannabis Tracking System (CTS) Metric. Furthermore, we have been working with BioTrackTHC as our POS system, which is known for its tracking abilities.” Stechschultes said “this is a volatile time concerning rules and regulations.”

Another Oregon dispensary, which chose not to use its name, said the regulatory bodies in Oregon that either currently or plan to govern marijuana on a state level (both the OLCC and the OHA) “cannot keep up with their own deadlines and regulations. Specifically with the OHA, they are grossly overworked and understaffed and are not empowered in the proper way to enforce the regulations in a productive or efficient manner. This is a point we have been frustrated with in the past due to competitors knowingly operating outside of these regs and not having any kind of retribution, while we follow all regs and suffer retribution from our customers because of it.”

The Benefit of Good Tracking Software

Companies such as Biotrack THC, based in Ft. Lauderdale, Fla., have developed the software that lets state governments monitor the entire process of legal cannabis production and sales, including its testing, transportation, destruction and sales.

This means states can follow a dispensary’s inventory and the taxable sales in real time and makes for more accurate revenue collections, while making legal cannabis growers and dispensaries accountable for their inventories.

According to Alen Nguyen of MainStem, the Biotrack software helps the OLCC by providing an inventory control system that tracks cannabis cultivation and movement and the cultivation site and accounts for all legal products, while keeping black market products outside of the regulated system. This oversight also applies to packaging. All Oregon cannabis products, including everything manufactured by MainsStem, come in a child resistant package, he said.

This benefits the public since it assures safety standards are met and allows authorities to track any bad product back to its original source. “All Growers really need to take traceability into account within their growing process,” Nguyen said.

Using a very similar system that the company developed first to track pharmaceuticals, the Biotrack software system allows the state of Oregon, for instance, to track each gram of legal cannabis throughout the plant’s entire grow, processing and sales cycle. According to Moe Afaneh, COO of Biotrack THC, the company has successfully integrated its tracking software with recreational and medicinal dispensaries and is working with its several hundred customers in Oregon to make the seamless transition to the two separate regulatory systems.

Oregon’s rigorous standard requires detailed recordkeeping, but new software is helping Oregon dispensaries adhere to these rules. Biotrack software keeps track of everything from inventory management to point-of-sale transactions to individuals to meet both quality assurance and compliance standards.

According to Dan McMahon, Vice President of Government Solutions for Biotrack THC, regulations in Oregon change rapidly, so dispensaries and growers are always being scrutinized. For instance, unlike other perishable commodities, cannabis loses weight and weight as it sits on the shelf. This means dispensaries have to follow the first-in-first-out (FIFO) inventory system because the product is “perishable to the nth degree,” McMahon said. Declining weights also have to be accounted for in the compliance process, he added.

In addition to weight, every batch of the product also has to be tested for pesticides and all products face tough labelling standards.

About the author:

Cynthia Salarizadeh is the Founder and CEO of Salar Communications Group. Her area of expertise centers on public relations and strategic communications. She entered the cannabis industry to solely focus on improving the perception of cannabis for better market conditions through strategic campaigns that sit at the center of the battle for legalization and economic prosperity. Salarizadeh holds a Bachelor’s degree in International Relations with a minor in Modern Middle Eastern Studies and a focus on Strategic Communications from the University of Pennsylvania. She also holds a certificate in Political Journalism with the Fund for American Studies from a program at Georgetown University.


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