For in-depth Oregon cannabis business news analysis,Green Light Law Group’s Perry N. Salzhauer shares the latest with TWB readers in this regular column.
As we approach the end of the shortest (and coldest) month of the year, here are four things you might have missed while you were bundled up drinking cocoa by the fire.
Billy Williams Summit
On February 2nd, United States Attorney Billy Williams, the chief prosecutor in Oregon for the United States Department of Justice, held a one day “summit” of law enforcement and other “stakeholders” from across the state and the country to discuss what he believes are some flaws in Oregon’s regulated marijuana market that may be contributing to black-market diversion of marijuana from Oregon. Present at the summit were a host of conservative law enforcement and other anti-cannabis types as well as several pro-cannabis groups, including Chair of the Oregon State Bar Cannabis Law Section. Sadly, only one pro-cannabis group was invited to speak. Needless to say, the meeting was skewed towards the interests of the Jeff Sessions-led Department of Justice and heavily laden with reefer madness rhetoric and inaccurate information. Among the issues that are currently maddening the Justice Department are overproduction and diversion of marijuana in and from Oregon, and failure by licensees to comply with environmental regulations, particularly with respect to water rights. Billy Williams announced that his agency will be focusing on compliance by licensees, particularly in Southern Oregon and suggested that the Oregon Liquor Control Commission consider placing a limit or moratorium on recreational marijuana licenses. At Green Light Law Group, we suggest that current licensees should start to place more focus on documenting compliance and, in particular, hire or appoint a director of compliance and have a written compliance manual. You can read more about that here. We also think that placing a limit or moratorium on licenses at this point would be both fundamentally unfair, bad public policy and detrimental to the cannabis industry in Oregon. You can read more about that here. We will continue to monitor this situation as it develops so keep checking here and our website.
CBD Hemp, METRC & OLCC Regulations
Late last year, the Oregon Liquor Control Commission issued a new set of regulations to implement the 2017 marijuana bills passed by the Oregon State Legislature. Along the way, OLCC decided to make a few changes to the applicant reporting requirements, the most significant of which, was the broadening of the disclosure requirements for persons with a financial interest in a licensed business. The biggest impact from that change is that now, all lenders and anyone else who derives a financial benefit from, or gives money to, a licensed marijuana business is required to be fully vetted, background checked, and approved by OLCC prior to any expenditure of the loaned funds by a licensee. You can read more about that here. In addition, the OLCC made its first attempt to implement the new law allowing an OLCC-licensed processor to process Industrial Hemp from Oregon Department of Agriculture-licensed Industrial Hemp. As anyone who was at the Cannabis Collaborative Conference should be able to tell you, there is clearly a disconnect between the OLCC and ODA as to the what happens to CBD extracts from Industrial Hemp processed by the OLCC-licensed processor. Two big questions remain to be answered: Must it stay in the marijuana METRC system for sale only by OLCC-licensed retail licensees? Can it be transferred out of METRC and sold in at any retail store where CBD products are sold? There doesn’t seem to be a clear consensus answer to that issue right now, but it is our opinion that the idea that it must remain in METRC thwarts the legislative intent of the Oregon State Legislature, which was to support Oregon’s rapidly-growing Industrial Hemp industry, not to hijack and pigeonhole it into the regulated marijuana program. Green Light Law Group is also monitoring this situation and will continue to post updates on our blog.
Power Politics
As also reported here, President Trump’s proposed federal budget includes a provision to sell the Northwest’s publicly-owned power transmission lines and effectively privatize the entire electrical grid in the Pacific Northwest. If you don’t know, the Northwest’s power grid is largely owned by the Bonneville Power Administration, the federal agency created last century in FDR’s New Deal. The BPA is responsible for maintaining the grid and delivering the power generated by the dams along the Columbia River Basin constructed and operated by the US Army Corps of Engineers to the homes and businesses of the Pacific Northwest. The system of publicly owned dams and transmission lines is the reason why we here in the Northwest have some the cheapest power in the United States. As we all know, the cannabis industry is very energy intensive. As a former energy lawyer, I categorically oppose any privatization of the BPA assets, not only because it would raise power prices for the cannabis industry, but for all homeowners and businesses in our region. Moreover, higher power prices will severely damage our regions ability to be a world leader in the cannabis industry in a deregulated cannabis, which I think we all can agree should be the guiding principle of our cannabis policy.
Miticide Madness
In case you missed this one, on Valentine’s Day the ODA issued a statewide detainment, stop sale, and removal order Azamax, a very popular miticide. While Azamax is very effective at preventing spider mites, it is apparently less effective at disclosing all of its active ingredients. Historically, Azamax has been viewed as an effective organic solution to prevent and treat spider mites, particularly in an indoor production environment. Now, however, it’s on the ODA’s list of banned substances in connection with bifenthrin and permethrin which are not listed as active ingredients (organic or not). While I know that many of you out there have moved to a pesticide and chemical free integrated pest management system, i.e. using bugs to kill other bugs, just as many growers still use organic miticides such as Azamax. It is important to know that at this time, you cannot use it because it has been removed from the ODA list of approved pesticides. This means that there is no action level below which its appearance on a lab test will be OK. Quite the opposite, if any bifenthrin and permethrin (the objectionable substances in Azamax) shows up on your lab analysis, you risk your entire crop, not just the test batch, being detained. That means you can’t sell it, you can’t give it away. . . it has to sit there, taking up space in your facility until the ODA decides what to do with it and to a lesser extent, you! For more information about pesticides and ODA compliance you can reach us here.
About Green Light Law Group
With over thirty years combined legal experience and in-depth operational knowledge of Oregon’s marijuana industry, Portland-based Green Light Law Group provides premier legal solutions for the Oregon marketplace and entities working to scale beyond. While helping cannabis businesses understand and navigate the complexities involved in the marijuana industry, Green Light is uniquely positioned to provide legal services and counseling for new entrepreneurs, financiers, and established companies better than the competition. Drawing from more than a decade’s experience providing advice to marijuana industry participants, the Green Light team applies extensive expertise in corporate, securities, real estate, and litigation matters. From the formation of new businesses, investing, financing, and lease negotiations, to licensing and litigation, Green Light Law Group is here to meet the industry head-on and help clients succeed.
About Perry N. Salzhauer, J.D. LL.M. Corporate and Environmental Attorney / Green Light Law Group
Perry is a corporate and environmental attorney who brings over a decade of experience providing strategic and compliance guidance and legal advice to public and private entities. Perry received his J.D. from Vanderbilt University Law School in Nashville, TN, and an LL.M. in Environmental and Natural Resources Law from Lewis & Clark Law School in Portland, OR. He began his legal career in 2002 with the Corporate Securities and Transactions group at Sidley Austin LLP in Washington D.C. and first moved to Oregon in 2005. He has since served as both outside and in-house counsel to a variety of companies, investors, and government agencies throughout the United States, and has helped launch several marijuana industry companies and projects. Salzhauer is an expert in business and environmental sustainability matters, having written extensively on land-use and conservation issues as they relate to project design, siting, and development.
