During Oregon’s 2021 legislative session, a new bill was passed that completely shifts how the state regulates the hemp industry. While the intent of House Bill 3000 (“HB 3000”) was to remove and deter “bad actors” that have invaded Oregon’s hemp industry in the last several years, the new regulatory framework established by HB 3000 could have dire consequences on the hemp industry as businesses scramble to ensure they are in compliance with the myriad of new regulations. HB 3000’s reach extends so far that even the Oregon Department of Agriculture (“ODA”) acknowledged that it was a “broad, encompassing bill,” that invades various aspects of the industry that have operated untouched for years.
HB 3000 and the temporary rules that followed place additional requirements and burdens on growers and retailers alike, with oversight and regulatory authority largely transferring from the Oregon Department of Agriculture to the newly-renamed Oregon Liquor and Cannabis Commission (“OLCC”). With hemp now under the OLCC’s microscope, despite federal law loosening its grip on marijuana and heading in the direction of removing marijuana as a Schedule 1 drug under the Controlled Substances Act, the hemp industry is becoming more and more tightly regulated.
Exacerbating the shock of the broad reach and regulatory shift contained within HB 3000 is the inconsistency in the messaging between the ODA and the OLCC. According to the ODA’s bulletin, they will be working with the OLCC to “take samples and conduct the analysis of the hemp.” This collaboration seems reasonable, but the OLCC took it one step further – in their July 20, 2021 news release, they announced that not only would the OLCC be working with the ODA, but they would also be utilizing law enforcement to assist with the sampling, for which no prior notice will be provided. This tactic will most certainly have a chilling effect in the industry and fails to take into consideration alternative options to ensuring compliance.
To understand how Oregon got here, it is important to understand what HB 3000 actually authorized, and the rules that were developed concurrently with the passage of this legislation.
HB 3000 was signed by Governor Kate Brown on July 19, 2021 and was effective immediately. The bill included a number of amendments to existing law including:
- Redefining “adult use cannabis item” to include industrial hemp commodity or product that exceeds a concentration of cannabinoids, which now includes both Delta-8 tetrahydrocannbinols (“THC”) and Delta-9 THC, the exact amount to be determined by the OLCC (Section X);
- Authorizing the OLCC to adopt rules establishing the maximum concentration of adult use cannabinoid, including Delta-8 THC, that is permitted in a single serving of a cannabinoid product, concentrate, or extract (Section X);
- Authorizing the Oregon Health Authority, the OLCC, and the ODA to take any immediate action that it deems necessary to enable the respective authority, agency, or department to exercise all of its duties, functions, and powers (Section 12(2)).
- Establishing new procedures for obtaining a hemp grower’s license (previously called a registration) that mirror many aspects of the requirements for marijuana producer licenses (Sections 14 through 16).
- Authorizing the OLCC, in consultation with the ODA, to adopt rules establishing the maximum concentration of any form of THC permitted in a single serving of an industrial hemp product, the maximum concentration of any other cannabinoid permitted in a single serving of an industrial hemp product, and the maximum number of servings permitted in a package (Section 17).
- Declared an emergency to exist for the preservation of the public peace, health and safety (Section 51).
Because HB 3000 explicitly declared an emergency, the OLCC was authorized to issue immediate emergency rules to exercise the authority set out in the bill. Indeed, the OLCC was well-prepared, implementing its already-drafted emergency rules, effective July 16, 2021, a full three days prior to the signing of the bill. Most notably, the OLCC’s emergency rules established the following:
- Oregon Administrative Rule (OAR) 845-026-0300(2)(a)(A) – An industrial hemp product is considered an adult use cannabis item if it contains 0.5 milligrams or more of THC, including Delta-8;
- OAR 845-026-0300(3) – Prohibits adult use cannabis items from being sold or delivered to a person under 21 years of age (the exception is to persons 18 years or older who are medical marijuana cardholders);
- OAR 845-026-4100(5) – Sets out procedures for the OLCC to conduct sampling and presumptive testing which allows the OLCC to collect a minimum of three samples from either mature plants or immature plants. Subsection (c) of this rule explicitly states that “Sampling is not required to be representative of the crop, grow site, or production area.”
- OAR 845-026-4100(6) – Provides the criteria for which sampling will lead to a presumptive determination that a crop is considered to be marijuana (as opposed to hemp). This criteria is as follows:
(a) At least fifty percent of composite samples taken from mature plants test at or above five percent total delta-9-THC;
(b) The average total delta-9-THC among the composite samples taken from mature plants tests at or above five percent;
(c) At least fifty percent of composite samples taken from immature plants test at or above a 5:1 ratio of total THC to total CBD;
(d) At least fifty percent of composite samples taken from immature plants test at or above one percent total delta-9-THC; or
(e) The average total delta-9-THC among the composite samples taken from immature plants tests at or above one percent total delta-9-THC.
These emergency rules provide little guidance as to the logistics of the sampling and testing, which is outlined in the OLCC’s July 20, 2021 news release. Though the news release still provides little information in terms of specifics that growers should be aware of, OLCC Executive Director Steve Marks is quoted in the bulletin as follows: “We’re really not trying to define what hemp is here: we’re really trying to spot check and take a minimum amount of samples to figure out what is commercial marijuana. This will enable ODA or law enforcement to stop the illegal production of marijuana disguised as hemp production.”
In the meantime, legitimate growers will have to prepare to expend time and resources to comply with these new rules. Further, now that the definition of “adult use cannabis products” includes a maximum limit of 0.5 milligrams of Delta-8 THC irrespective of the total package weight, the hemp industry will have to adapt how it prepares product for consumers or risk the consequences of being non-compliant – which could include destruction of product.
It is important to remember that the emergency rules are only temporary, and we anticipate permanent to be drafted and take effect on or before January 1, 2022. At a recent event attended by ODA representatives specifically addressing the changes brought about by HB 3000, the ODA representatives made statements that HB 3000 is not intended to impact this 2021 harvest season. However, as with many of the issues surrounding HB 3000 and its implementation, these statements are not reflected in formal press releases, emergency rules, or bill legislation, and thus do not provide growers and handlers with much guidance. The laws that govern the cannabis industry, including the hemp industry, are constantly and quickly evolving. For this reason, it is important to speak with an attorney in your jurisdiction to provide appropriate legal advice for your specific situation.