Oregon was one of the first states to legalize recreational marijuana in 2014, and the first state to legalize marijuana for medicinal purposes in 1998. While some barriers to licensing still exist, Oregon has taken steps to establish more user-friendly processes and applications to obtain a cannabis license. This article provides information to help navigate through those processes, but it is not a substitute for legal advice. The cannabis industry is highly regulated, with laws that are constantly evolving. For this reason, it is best to speak to an experienced cannabis law attorney prior to entering this emerging market.
Hemp versus Marijuana
In the state of Oregon, there are two primary regulatory agencies that oversee the recreational cannabis industry. The Oregon Liquor Control Commission (OLCC) regulates licensing and compliance for cannabis that contains greater than 0.3% tetrahydrocannabinol concentration (THC). The OLCC along with the Oregon rules and regulations refer to cannabis with this level of THC content as marijuana. The Oregon Department of Agriculture (ODA) regulates cannabis that does not exceed 0.3% THC, referred to as hemp. Although the marijuana industry makes up the vast majority of the cannabis industry, it is helpful to understand the difference between the two agencies and what each one does and does not do.
The Oregon Health Authority (OHA) regulates the Oregon Medical Marijuana Program (OMMP). This article focuses on the recreational side of the cannabis industry. For more information on the OMMP, click here.
The legal recreational marijuana industry surpassed $1 billion in sales in 2020 in Oregon. In order to participate in this industry, however, individuals and businesses must be licensed through the OLCC and fully comply with all state and local laws and regulations. The information below addresses the basic framework for recreational marijuana licensing and registration in Oregon.
What type of license do I need?
There are six types of recreational marijuana licenses offered by the OLCC. Those are:
Producer– Required to plant, cultivate, grow, harvest, and dry marijuana. This license has different tiers depending on the size of an operation, whether the operation is indoor or outdoor, and whether the operation is for mature or immature plants. Size is determined by the size of the canopy. For a mature canopy, this means the surface area which may be utilized to produce mature marijuana plants calculated in square feet and measured using the outside boundaries of any area that includes mature marijuana plants including all of the space within the boundaries. Both immature and mature marijuana plants may be cultivated in this space. Immature Canopy means the area used exclusively to propagate immature marijuana plants calculated in square feet and measured using the outside boundaries of the footprint that includes immature marijuana plants including all of the space within the boundaries.
The different production tiers are as follows:
Mature Canopy Size Limits.
(a) Indoor Production. Unless otherwise provided by these rules, the maximum mature canopy size limits for indoor production are:
(A) Micro tier I: Up to 625 square feet.
(B) Micro tier II: 626 to 1,250 square feet.
(C) Tier I: 1,251 to 5,000 square feet.
(D) Tier II: 5,001 to 10,000 square feet.
(b) Outdoor Production. Unless otherwise provided by these rules, the maximum mature canopy size limits for outdoor production are:
(A) Micro tier I: Up to 2,500 square feet.
(B) Micro tier II: 2,501 to 5000 square feet.
(C) Tier I: 5,001 to 20,000 square feet.
(D) Tier II: 20,001 to 40,000 square feet.
(c) Mixed Production. For a producer engaging in mixed production, the OLCC will use a 4:1 ratio, for outdoor and indoor respectively, to allocate canopy size limits under this section, not to exceed the sum canopy size limits set forth in the mature canopy limits. For example, if a Tier II producer in the first year of licensure has 1,000 square feet of indoor mature canopy area, then the producer may have up to 36,000 square feet of mature outdoor canopy area at the same time.
Immature Canopy Size Limits.
Unless otherwise provided by these rules, the maximum canopy size limits for immature canopy area for licenses issued or renewed after April 1, 2018 shall be:
(a) 625 square feet for Micro tier I producers.
(b) 1,250 square feet for Micro tier II producers.
(c) 5,000 square feet for Tier I producers.
(d) 10,000 square feet for Tier II producers.
Laboratory – Licensed laboratories must also be accredited by the Oregon Environmental Laboratory Accreditation Program (ORELAP) in addition to the OLCC. Licensed laboratories are responsible for testing cannabis and its derivative products for pesticides, solvents or residual solvents, tetrahydrocannabinol and cannabidiol concentration, and for microbiological or other contaminants.
Research – This is a certificate that allows the holder to research marijuana for the purpose of benefiting the state’s marijuana industry, medical research, or public health and safety.
Processor – Required to process, compound, or convert marijuana or hemp into cannabinoid products (including edibles, vape cartridges, tinctures, etc.), concentrates, and/or extracts. Most processors also must obtain a commercial food kitchen license from the ODA as part of their OLCC license.
Wholesaler – Required to purchase quantities of marijuana in any form from other OLCC licensed growers and processors and sell the products to licensed retailers, processors, producers, other wholesalers, or research certificate holders. This license also provides the ability to purchase hemp from licensed processors and sell hemp items to licensed retailers, processors, and other wholesalers.
NOTE: Not all marijuana items can be sold or transferred to producers. A wholesaler license permits a licensee to sell, transfer, deliver, or transport only immature plants or seeds to a producer.
Retailer – Required to sell or deliver marijuana or hemp items directly to consumers.
In addition to these licenses, the OLCC requires worker permits. Any employee who works on the licensed premises of an OLCC licensed producer, processor, wholesaler, or retailer and who handles marijuana as part of their job duties must possess a marijuana worker permit. The fee for this is $100 and is only due once a worker permit application has been approved. Employees must be at least 21 years of age to be eligible for a worker permit. To apply, there is both a test and an online application that must be completed through the OLCC website, which includes a background check.
How much does a license cost?
With the exception of the worker permits, the initial application for all licenses at the state level is $250.00, which is non-refundable and paid at the time of application submission. Once you have your license, there are additional annual fees depending on the type of license and size of the operation. Annual fees are to be submitted with renewal applications. These additional fees range as follows:
- a) Producers:
(A) Micro Tier I $1,000.
(B) Micro Tier II $2,000.
(C) Tier I $3,750.
(D) Tier II $5,750.
(E) Medical Canopy $100.
(b) Processors: $4,750.
(c) Wholesalers: $4,750.
(d) Micro Wholesalers: $1,000.
(e) Retailers: $4,750.
(f) Laboratories: $4,750.
(g) Sampling Laboratory: $2,250.
NOTE: There may be additional license fees required by the specific municipality in which you want to operate. As will be discussed further below, it is important to contact the municipality in which you are seeking to obtain a license for additional information.
How do I obtain a license?
Some states have implemented caps on the total number of licenses. Though Oregon does not have a formal cap on the number of licenses issued, on June 15, 2018, the OLCC formally paused all new producer licensing. The pause is intended to allow the OLCC to work through a backlog of pending licenses, though no end date for the pause has been provided as of the date of this post. However, new producers may enter the Oregon market by “purchasing” an existing license from a current license holder. In order to do so, the “seller,” (original licensee) must submit a change of ownership application simultaneously with the “buyer” (future licensee) submitting a new license application. Often times the change of ownership is also processed with a change of location, to allow the license to transfer entirely to the new owner.
Despite the very commonplace nature of such transactions, the OLCC does not consider an OLCC license an asset that can be purchased or transferred in the manner in which other assets such as real property are bought and transferred. Instead, the OLCC simply sees the “buyer” as a new applicant, but allows expedited processing relative to the new license queue. It is important to understand that even this “expedited” process can take months to complete. Because this process can be complicated and time consuming, anyone interested in selling or buying an existing license should speak with a legal professional.
NOTE: The regulatory pause applies only to producer licenses. All other prospective licensees may apply online via the OLCC website.
Can I get a license anywhere in Oregon?
Unfortunately, the answer to this question is no. While licenses are permitted in the vast majority of the state, Oregon law allows cities and counties the opportunity to prohibit marijuana producers, processors, wholesalers, and/or retailers in their jurisdiction by way of a specific process that must go to a vote in a general election. As a result of this, there are certain local jurisdictions in which licenses are prohibited.
Prior to December 27, 2015, there was another process by which local jurisdictions could “opt out,” resulting in several municipalities falling under a ban via this earlier rendition of the law. A list of cities and counties with current bans can be found here. This is one of many examples of how the legal landscape of the cannabis industry is constantly evolving and why it is important to speak with a legal professional.
Additionally, within each locality, there are various zoning laws that might either prohibit certain marijuana-related land uses, or impose certain restrictions or conditions on marijuana businesses of any kind. To complete the license application process, applicants will need to obtain a formal Land Use Certificate (LUC) from the county or city in which the property resides before the OLCC will treat the application as complete. Getting an official LUC from the county requires proof of legal access to the real property, either in the form of a signed written lease or a deed. It is important to note that licenses are tied to particular properties and cannot be moved to other locations without OLCC approval.
The various bans, prohibitions, restrictions, and conditions can be complicated to navigate. In addition to speaking with an experienced legal professional, you should contact the specific municipality in which you are seeking to be licensed and obtain an LUC prior to moving forward with any license transaction.
Will my criminal record affect my license application?
The OLCC may not deny a recreational license solely on the basis of a criminal conviction on an applicant’s record. However, the agency may request a background check, and may consider the facts of a conviction in determining the fitness of the applicant to receive or hold the license. Note that separate rules apply to the medical marijuana industry, in which certain convictions may be a basis for denial.
Hemp refers to all non-seed parts and varieties of the cannabis plant, whether growing or not, that contain an average tetrahydrocannabinol concentration that does not exceed 0.3 percent on a dry weight basis.
The Oregon Department of Agriculture (ODA) developed the Hemp Program within its department to oversee and regulate the hemp industry in Oregon.
What type of registration do I need?
Unlike the marijuana industry, for the hemp industry the ODA issues registrations rather than licenses. Registrations expire December 31 of each year, so if you wish to enter into the hemp industry, you must apply for a new registration annually. You may apply for a registration any time of the year, but the cost of the registration will not be pro-rated if you register closer to the end of the year. Because registrations are required annually, the process has much quicker turnaround than the marijuana application process. In general, hemp registrations usually take about 2 to 4 weeks.
There are different registrations depending on your needs. These registrations are as follows:
Hemp Grower Registration – Required if you plan to grow, harvest, and/or dry hemp. Each property requires a separate registration, and therefore a separate application. Each production area is required to be tested for THC potency prior to harvest. To do so, the registered grower must have pre-harvest sampling and testing completed by a licensed and accredited laboratory.
Hemp Handler – Required if you process hemp into sellable items or products, including smokable hemp. This does not include hemp seed (see agricultural hemp seed below). Hemp may only be handled at handling sites registered with the ODA. A handling registration applies only to one handling site. Someone with a handler registration must obtain a separate registration for each handling site. However, there is a process under which a marijuana processor who is licensed with a hemp endorsement may be registered as a hemp handler by reciprocity.
Agricultural Hemp Seed Producers– Required if you are planning to produce or process hemp seed to sell to others. Anyone with a seed registration must also possess a hemp grower registration and a hemp handler registration.
How much does a hemp registration cost?
This depends on which type of registration you need as follows:
Grower: $250 plus $500 per grow site.
Agricultural Hemp Seed: $500 (as an add on only to the other registrations).
How do I obtain a hemp registration?
You cannot grow or handle hemp, including transportation, until you have a growing or handling permit. Applications can be found on the Oregon Department of Agricultures’ Hemp Program website. As discussed above, the process for obtaining a hemp registration generally takes 2 to 4 weeks.
Will I need any other licenses or permits?
If your hemp will eventually be used as an ingredient in food and beverages, a food safety license is required by the Food Safety Program. The specific food license you need will depend on what types of foods or beverages will include the hemp as an ingredient. You will likely need at least one, if not all, of the following food license if your hemp will be used as a food or beverage ingredient: Food Processing, Bakery, Warehouse, or Retail license. Food licenses are also issued by the ODA.
If you need additional information or want to discuss your particular needs in obtaining a license you can email any of the legal professionals at Cultiva Law, PLLC, including emailing me directly at [email protected].