Sat | Aug 19, 2017

Oregon races to finalise rules for marijuana, issue licences

Published:Friday | June 10, 2016 | 6:00 AM
In this May 25, 2016 photo, Oregon Liquor Control Commission member Marvin Revoal, left, moves an artificial marijuana plant during a hearing at the OLCC in Portland, Oregon. (AP Photo/Andrew Selsky)
In this Wednesday, May 15, 2016 photo, Todd Golden, associate director of metrics, displays a sample tag which can be scanned by radio-frequency identification devices, on an artificial marijuana plant at the Oregon Liquor Commission offices in Portland, Oregon. (AP Photo/Andrew Selsky)
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After months of public hearings with pot growers, lawmen, public health officials and others, an Oregon commission is racing to finalise recreational marijuana regulations and issue licences to hundreds of businesses within a few months.

But those who aim to produce souped-up coffee and other niche products might have to wait a bit longer.

"It's like the circus around here," Oregon Liquor Control Commission (OLCC) Chair Rob Patridge said after a hearing in which a pot advocate and a panel member argued about whether marijuana is safer than alcohol, and an entrepreneur discussed selling marijuana-infused java, eliciting blank looks from commissioners.

The commission has been grappling with its massive task, issues that Colorado and Washington states previously dealt with, including the number of licences initially offered. Besides Oregon, Alaska also legalised pot in 2014.

Oregon decided to do some things differently, including:

- Setting a lower tax rate than Washington's 37 per cent and Colorado's rate of upward of 29 per cent. A pot advocate, who helped write Oregon's legalisation measure, said this allows for the regulated businesses to effectively compete with the illegal market by not driving their prices too high.

- Avoiding caps on the number of licences, so "we can let capitalism work it out, like we do with bars and breweries with no cap," Anthony Johnson said.

The OLCC has had to deal with changes mandated by the legislature and requests from numerous interests as it establishes the regulations.

"We're trying to accommodate everybody, but you've got to realise that people are throwing a new business model at us every day ... like coffee, like ice cream, like yoghurt, like marijuana-tasting bars," Patridge said. At some point, "we have to stop, get the rules in place" and then assess it again.

Patridge is an unlikely champion of making marijuana go mainstream, a trade whose outlaw status used to evoke images of marijuana-laden burros being led down the Sierra Madres and of pilots contour-flying across borders to avoid radar.

Moving forward

A district attorney from a conservative southern Oregon county, Patridge voted against legal pot, and is still against it.

"I'm not going to stand on the air hose of what Oregonians wish to do," he said. "My side lost, and so now we're going to put in the best system that we can put in, to allow these marijuana entrepreneurs to move forward, and allow the public the access that they voted for."

Johnson, a lawyer working full-time on marijuana political reform, was at first wary of Patridge, but the two have formed a bond. Patridge keeps Johnson's mobile number on his own cell phone and calls him "the Godfather of Measure 91".

"I will admit that I had some misgivings that a Republican district attorney was going to be a good steward for the marijuana industry," Johnson said. "But I have been very surprised and pleased with how Rob has handled the job."

Business people have been coming from around the country - lawmakers recently tossed out a residents-only requirement - to try to get a piece of Oregon's cannabis industry that already existed for 18 years with medical marijuana.

The commission said it wants at least part of the supply chain ready by year's end. When complete, it will cover production from seed to store and will allow the tracking of the marijuana with a computer dashboard using data from radio-frequency identification scanners and tags.

"Each plant has a serial number, just like a VIN number on a car," said Scott Denholm, executive director of metrics, which has partnered with the commission to build the tracking system.

The commission issued its first recreational marijuana licences on May 2 to eight businesses, including one called Far Out Farms. It is dealing with more than 1,500 licence applications as of Wednesday, and approved about 50 others.

Each applicant must undergo a criminal background check

and receive land use approval from local authorities. The commission's staff was increased by about 44 to around 260 to handle the extra work, Patridge said.

A big business

Steve Marks, the commission's executive director, said he spends 70 per cent of his time on marijuana issues, which is turning out to be a big business.

Medical marijuana dispensaries, which can sell recreational marijuana until Dec 31, started collecting a 25 per cent tax on those sales in January. Recreational outlets will charge a 17 per cent tax. The state says it processed a whopping US$10.5 million in marijuana tax payments through April 29.

The Legislative Revenue Office in May quadrupled its estimate of net tax revenues, from US$8.4 million to US$35 million, that the state is expected to receive from recreational marijuana through June 30, 2017, according to Malik Mazen, senior economist with the legislature.

A company named Avitas, which is awaiting a licence, began refitting a former cabinet factory in March, located less than a mile from the state capitol in Salem, into a 12,000-square-foot "cannabis production facility" and expects to be done by mid-June.

The facility is expected to produce 160 pounds of pot per month, plus a powerful cannabis oil produced with compressed carbon dioxide.

Avitas General Manager Joe Bergen predicted that the industry will have an enormous effect on the economy, and predicted other states will legalise.

"We believe that the Pacific Northwest will be the epicentre for high-quality cannabis because of the climate and culture here, much like the craft brewery movement," he said.

- AP