Despite 2023 marijuana enforcement criticism, Oklahoma won’t back down

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Amid a glut of both regulated and illicit marijuana production in 2023, Oklahoma regulators cracked down on businesses they believed to be noncompliant.

Critics say the state regulators overstepped their bounds, but others argue more oversight is needed for wholesale prices to recover.

In January 2023, there were 7,066 active licenses for cannabis grows in the state, according to a spokesperson at the Oklahoma Medical Marijuana Authority (OMMA).

Now, there are only 4,880.

“Through data-driven decisions, support and feedback from medical cannabis patients, industry leaders, partners across state government and Oklahomans spanning the state, we’re able to tackle the illicit operators and (noncompliant) licensees efficiently and effectively, protecting patient and public health,” OMMA Public Relations Manager Porsha Riley told MJBizDaily via email.

To identify illicit and noncompliant activity, the regulator oversaw more than 7,000 facility inspections and 4,600-plus operational status visits in 2023.

The OMMA also used data from its online Business Complaint Form, inventory-tracking system Metrc and NCS Analytics, according to Riley.

The agency’s efforts yielded 1,314 administrative cases in 2023, and authorities seized “tons” of illicit marijuana and embargoed thousands of pounds of dried marijuana flower and plants, Riley said.

A moratorium on cultivation licenses was extended in May until 2026.

“We’ve also implemented a rigorous license application-review process to prevent bad actors from ever entering our state’s medical market,” Riley noted.

The state’s medical marijuana market surged after voters approved legalization in 2018.

The market’s popularity largely was attributed to low licensing costs and few barriers to doing business compared to other states.

Oklahoma residents must have 75% ownership in licensed cannabis operations, but authorities allege some market players have skirted the rules by employing legal offices to help them bypass the law.

In June, the OMMA published results from a study concluding that the state was producing 32 times more marijuana than was needed for its 332,000 registered MMJ patients.

“The large oversupply observed in the regulated systems suggests that the licensed operators contributing to oversupply are very likely adding to an illicit market both at the point of cultivation and the point of retail sale,” according to the study.

In March, perhaps signaling they felt there was enough cannabis available through the state’s existing medical program, Oklahomans rejected a ballot initiative to legalize adult-use marijuana in the state.

Still too much cannabis

Wholesale marijuana prices have hovered at less than $1,000 per pound this year, according to New York-headquartered wholesale platform LeafLink.

That price is unlikely going to change any time soon, despite the OMMA’s efforts, according to Ben Burstein, senior corporate development officer at LeafLink.

To illustrate why, Burstein compared data from Oklahoma to Massachusetts.

Oklahoma’s monthly marijuana sales are around $60 million per month – less than half of Massachusetts’ sales, which reached more than $120 million per month in 2023.

In Massachusetts, the number of plants harvested each month has grown steadily to just over 18,000 at the end of 2023, according to data collected by the state’s Cannabis Control Commission.

In Oklahoma, which is more hospitable to outdoor growing, more than 600,000 cannabis plants took root in December alone, according to OMMA data.

As of Jan. 3, the state reported 6.8 million live plants in production.

Burstein noted that the numbers collected by the OMMA don’t include plants that aren’t tracked by Metrc or those bound for the illicit market.

And if the OMMA’s actions are directed toward noncompliant and/or illicit operators, it won’t have much of an impact on regulated wholesale dynamics, he said.

“I don’t think it’s going to have an impact on pricing,” Burstein said.

New laws and pushback from small operators

Some operators say the OMMA’s actions extend beyond noncompliant actors, meaning that fully legal, law-abiding operators are getting caught in the crossfire.

The agency responded to the allegations last spring, saying, “The narrative that OMMA is shutting down businesses for minor violations is simply untrue and is being used to unnecessarily spark fear among businesses acting within the law,” the regulator said in a memo published to its website.

In November, the OMMA said it had filed 165 petitions to revoke licenses from facilities that failed to have proper signage around the perimeter of their properties.

According to a former operator who did not want to be identified, many of the companies facing license revocation did, in fact, have the correct signage, but the cost of hiring a legal representative plus increased licensing costs prevented them from having a fair hearing on the matter.

The OMMA has no plans to slow its inspection efforts this year, focusing some of its work on the state’s 2,800-plus dispensaries.

A new law allows the regulator to hire secret shoppers who will be tasked with procuring products from dispensaries for lab-testing.

Employees at cannabis companies in the state also will be required to obtain OMMA certification, and MMJ cultivators are required to have a surety bond or proof of land ownership.

Kate Robertson can be reached at kate.robertson@mjbizdaily.com.