On July 27, 2015, Gov. Kate Brown signed SB 460, a bill that allows adults over the age of 21 to purchase from existing medical marijuana dispensaries, before state or local regulations are in place. This allows sales to begin only three months after Measure 91 legalized recreational marijuana in Oregon, and also three months before recreational dispensaries can apply for licenses to open.
The Oregon Liquor Control Commission, responsible for regulating and monitoring the industry under Measure 91, will begin accepting license applications for the production and sale of recreational marijuana on January 4th, 2016. However, dispensaries exclusively for adult sale are not expected to open doors until the second half of the year as the OLCC sorts out the logistics of the regulations it has been charged with implementing.
Why SB 460?
Don Morse, who has played an important role in negotiating cannabis-related legislation in Oregon, outlined three primary reasons for SB 460 in a recent panel discussion at the Cannabis Creative Conference in Portland. The first major reason is the discrepancy inherent in the passage of Measure 91, which neglected to establish a legal point of sale. Oregonians would be able to use the product on a widespread basis without anywhere to legally purchase it. Secondly, growers in the state were anticipating an outdoor “bumper crop” this season, especially in southern Oregon. They want to capture this especially high yield within the newly established recreational markets. The third reason is to open with a soft start for the new program that would allow some time for the participating governmental agencies to ramp up their efforts to regulate.
SB 460 is seen as a short-term solution that will keep the swaths of Oregonians, Portlanders in particular, from turning to illicit markets or seeking purchase on the other side of the Columbia River. Looking to the process of transitioning into legalization for the adult-use marketplace in Washington, we can see that the limbo period of allowed possession with no legal source to purchase enabled the illicit market to flourish and become stronger during that period. Early sales from dispensaries will likely curtail a boom in the illicit marketplace.
Impact on Current Medical Dispensaries and Patients
Many newcomers to the industry are banking on a return from this new customer base. The Associated Press, with figures from the Oregon Public Health Division, recently reported an uptick in dispensary applications. There have been 411 new applications for medical marijuana dispensary licenses since Measure 91 passed back in November. Fifty-one of these applications were sent in during the first half of July, after recreational use became legalized and SB 460 was passed in the Senate. Will these new dispensaries flood the market during a gray period of legislation? There are already more marijuana shops in the Beaver State than there are McDonalds.
Those able to pay for lobbyists in Salem to build this legislation are those on the business side of the medical marijuana table. As such, it is evident that this bill intends to benefit medical dispensary owners while protecting their interests and profits. Some medical marijuana patients are concerned that the bill has not taken into account the quality of their care. According to one of Portland’s current medical marijuana patients, who requested anonymity to maintain medical privacy, “I’m pretty worried about access. Most dispensaries only allow 2-3 people in the purchase area at a time, and as is, with only medical patients using dispensaries, waits can often be 10 minutes. This is even the case in my neighborhood, where there are three dispensaries within a 10-block radius. With the influx of the public market, waits could easily be hours long.”
Matt Walstatter, owner of Pure Green and founding member of the Oregon Cannabis PAC, is an active participant in the political process. When asked if there has been consideration on how this bill will affect current medical patients and their experience, Walstatter said,
Absolutely, and that’s something that will continue to be dealt with in the regulation process. One of the things that is going to make us different from Washington and Colorado is that we grow on a more consistent basis in Oregon, so we don’t have the same concerns about supply … . Recreational sale will start in October and even if we did get through all of the indoor product we have all of this outdoor product which is going to keep us going through the rest of the year. … . I don’t have the same concerns that I would in a different climate.
With the enactment of SB 460, current compliance measures will allow existing medical dispensaries to sell a quarter ounce per day to adults over 21. Candy and other edibles won’t be available until further regulations are outlined. Once retail shops open, cardholders can purchase their bud tax free. All else will go to the newly established recreational dispensaries where they will pay a 17 percent state tax, as well as local taxes of up to 3 percent.
If Oregon’s legal market can challenge the illicit market, there are great expectations for the market’s size. According to a special report from New Frontier Financials, “New Frontier estimates that Oregon’s legal marijuana market will nearly double in the next five years, growing from $257 million in 2015 to $464 million in 2020.”
With SB 460, the state has already proven eager to begin the buying and selling of cannabis. Prospective business owners who have a head start working in the medical market may have an easier time building trust with regulating agencies, thus opening up earlier in 2016. Oregon will have its growing pains on the transition to full legalization much like the states that have come before it. Looking to the lessons learned from those policy roadmaps, it may be easier in Oregon to establish a more thriving and compliant industry, especially given the state’s fruitful climate.