Oregon Dispensaries Could Ease Into Recreational Marijuana

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By John Schroyer

Dispensaries in Oregon may not have to jump through many hoops to begin selling recreational cannabis this fall.

The state recently released proposed rules covering the early sale of adult-use marijuana, and it appears existing dispensaries will be able to make a smooth transition into the recreational market.

The draft regulations are fairly lax when it comes to new rules dispensaries will have to follow on top of the ones they’re already required to meet. William Simpson – the founder of Chalice Farms, which runs three dispensaries in Oregon – said most of the proposed regulations are “common-sense” measures, and nothing appears particularly onerous.

“It’s the ‘Keep it simple, stupid’ rule,” Simpson said, referring to the benefit of implementing regulations that are relatively straightforward and streamlined.

Although the rules won’t be finalized until mid-September, officials don’t expect any significant changes, according to a spokesman at the Oregon Health Authority.

Under the proposed rules, dispensaries that want to sell recreational marijuana would have to:

  • Document all sales and related information, including the amount and weight of product sold along with the sale date, price and the birthdate of the customer.
  • Figure out a way to ensure that a single customer isn’t sold more than the legal amount in more than one trip to a single store on a given day.
  • Engage in public education efforts by hanging posters featuring warnings over how cannabis use might affect pregnancies and information on preventing poisoning, as well as an “Educate Before You Recreate” flyer.
  • Hand out “Marijuana Information Cards” – designed by the state – with each recreational purchase.

The proposals come after Oregon recently passed a bill that allows dispensaries to begin selling recreational marijuana on Oct. 1 – much earlier than the initial timeline for adult-use sales to begin. Officials must still develop overarching regulations on recreational sales, but for now they’re focusing on cementing rules that allow the state’s network of regulated dispensaries to peddle adult-use cannabis.

Dispensaries will be able to sell an individual recreational customer up to a quarter of an ounce per day. They also will be limited to cannabis flower, seeds and non-flowering plants, as recreational edibles and concentrates sales will be banned until the full recreational program gets up and running, which isn’t expected to be until the second half of next year.

The Oregon Liquor Control Commission will begin accepting business license applications for other rec companies on Jan. 4, 2016, and the early rec sales provision sunsets at the end of next year.

Dispensary owners don’t seem to mind the new rules too much, saying they’ll be fairly easy to incorporate.

“They don’t really seem terribly burdensome to me. There’s not a lot we’re going to have to change in our procedures in able to dispense to adult-use customers and stay compliant,” said Matt Walstatter, owner of Pure Green dispensary in Portland.

Simpson, however, said some dispensaries may have trouble figuring out how they’ll keep track of customers to make sure they don’t try to purchase more than a quarter of an ounce at a particular shop in a day.

“(The state isn’t) requiring any kind of high-level traceability or tracking, so how would (a dispensary) know if a guy came in and bought a quarter of an ounce, and then came back in later with a hat on?” Simpson said, and added that a dispensary could lose its license if caught in a sting operation by state regulators.

Still, it shouldn’t bee too difficult. Both Simpson and Walstatter said they’re most likely going to adapt their current point-of-sale systems so they’ll be able to do a simple quick check on every rec customer’s driver’s license number, and stay compliant that way.

Another question mark is how many local governments will allow early rec sales to begin in October. There is a provision in state law that allows cities and counties to “opt out” of early rec sales without a vote of the people. And in localities where at least 55% of voters opposed Measure 91 (which legalized rec last year), local leaders can enact bans without a new public vote.

That’s already happening in some parts of Oregon, Simpson said, so it’s hard to tell how big the rec market will actually be come October.

“Portland’s all on board, but a city right next door is not. They don’t want anything to do with early rec sales,” Simpson said. “The market’s going to be kind of broken up into little areas, where some people that are already legally medical stay medical but aren’t allowed to sell rec.”

Separately, 11 cities and five counties have already opted out of commercial rec sales altogether, not just early rec sales. Some of those local governments will also refer the question to voters, and some plan to just let their bans stand as new laws.

One of Chalice Farms’ dispensaries, in unincorporated Washington County to the west of Portland, is still waiting on word from county leaders as to whether or not the shop will be allowed to sell adult-use marijuana, Simpson said.

“The onus was on us to call them and make sure we’d be OK selling early rec,” Simpson said.

Still, Walstatter echoed a sentiment he’s been preaching for months: Early rec sales will be a serious boon to a lot of struggling Oregon cannabis companies.

“If you look at our market about a year ago, we had 100 licensed dispensaries in the state. Now, we have more than 300, so a lot of shops are feeling that squeeze,” Walstatter said.

As of June 12, there were 310 registered dispensaries in the state, according to the Oregon Health Authority’s website.

A final factor in early rec sales that may or may not play into sales trends is that the adult-use transactions starting Oct. 1 will be tax-free until Jan. 4, 2016, when a new but temporary 25% sales tax will go into effect. That could result in a sales rush between October and December, though Walstatter and Simpson said they don’t expect a huge boost simply because of the tax.

“The reality is that cannabis is a perishable commodity,” Walstatter said. “You can only stock up so much.”

John Schroyer can be reached at johns@mjbizmedia.com