CONTROL, REGULATION, AND TAXATION OF MARIJUANA AND INDUSTRIAL HEMP ACT PRESENTATION TO LEGISLATIVE TASK FORCE ON OLCC 11/19/14
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1 CONTROL, REGULATION, AND TAXATION OF MARIJUANA AND INDUSTRIAL HEMP ACT PRESENTATION TO LEGISLATIVE TASK FORCE ON OLCC 11/19/14 1
2 THE BASICS Measure 91 was approved by the voters on Nov. 4. The act is modeled after ORS Chapter 471 (Liquor Control Act). Gives OLCC authority to tax, license and regulate. The act allows home grow of up to 4 plants and 8 oz. per residence. The act prohibits consumption in public. Localities may go dry through a general election. 2
3 TIMELINE Effective 30 days from passage Operative 7/1/15 (personal use legalized) OLCC must adopt rules and accept license applications by 1/4/16 3
4 LICENSES Four license types: Producer, Processor, Wholesale and Retail Individuals and entities may hold multiple licenses and multiple license types ( tied house permitted) No residency requirement Act does not explicitly limit location or number of licenses 4
5 LICENSE TYPES Producer:The only license able to cultivate marijuana. Responsible for payment of tax at first point of sale. Processor: Packages and labels marijuana items. Also manufactures edible marijuana products and marijuana concentrates (hash). Wholesale: Buys and sells at wholesale. Retail: Sells marijuana items at retail to adults over 21. 5
6 TAX Excise tax is paid by Producer license at first point of sale. $35/oz. for flower, $10/oz. for leaves, $5 per immature plant (indexed to inflation) 6
7 EXCLUSIONS The act does not affect the Oregon Medical Marijuana Program. The act does not affect landlord-tenant or employment law. OLCC may not possess nor distribute. 7
8 FEDERAL CONSIDERATIONS Marijuana remains illegal under federal law. On August 29, 2013, the US Department of Justice issued guidance to states that had legalized recreational marijuana -- the Cole Memo. 8
9 THE COLE MEMO IDENTIFIES EIGHT OBJECTIVES: 1. Preventing the distribution of marijuana to minors; 2. Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels; 3. Preventing the diversion of marijuana from where it is legal under state law to other states; 4. Preventing state-authorized activity from being used as a cover for illegal activity; 5. Preventing violence and the use of firearms in the cultivation and distribution of marijuana; 6. Preventing drugged driving and other adverse public health consequences associated with marijuana use; 7. Preventing the growing of marijuana on public lands; 8. Preventing marijuana use on public property. 9
10 SITING CONSIDERATIONS The act does not set forth any siting requirements, but OLCC may have authority to adopt rules. Local governments may not prohibit licenses in their jurisdiction except via general election. Local governments may adopt time, place and manner restrictions to regulate public nuisance. 10
11 ADVERTISING, PACKAGING AND TESTING The act gives OLCC authority to regulate or prohibit advertising. First Amendment considerations OLCC may regulate packages and labels to prevent appeal to minors. OLCC may adopt standards and testing requirements. 11
12 EDIBLES Edible marijuana products are products such as cookies and brownies that have been infused with marijuana. These products may not contain consistent dosage and could take 1-2 hours to effect the user. OLCC has authority to adopt rules to ensure that products are appropriately labeled and do not appeal to minors. 12
13 ENFORCEMENT PRIORITIES 1. Ensure licensed business are operating according to regulations and preventing access to minors. 2. Prevent product migration between the legal and black markets. 3. Support local law enforcement agencies in their efforts to prevent unlicensed production and distribution of marijuana. 13
14 POLICY CONSIDERATION: SEED TO SALE TRACKING SYSTEM Colorado and Washington require robust inventory tracking software in order to ensure that taxes are collected and inventory does not migrate from the legal market. Every plant is tracked via code from seedling to final sale to consumer. Designed to allow for more effective audits, tax collection and enforcement. 14
15 IMPAIRED DRIVING The act requires OLCC to examine research and present a report to the Legislature in The act does not identify a specific limit for marijuana intoxication. OLCC will partner with DOJ Criminal Investigation Division and Oregon State Police to: actively track data related to traffic incidents and intoxication, and facilitate research on this issue. 15
16 INITIAL FISCAL ESTIMATES, ANTICIPATED COSTS TO OLCC OLCC is currently evaluating adequate start up costs for program with DAS CFO and Legislative Fiscal Office. Initial cost estimates FY 2015: $333k FY 2016: $2.6 million Biennium: $6.7 million 28 total positions Seed to sale tracking system is a cost factor. 16
17 ANNUAL REVENUE ESTIMATES FROM MARIJUANA TAX COLLECTION Financial Estimates Committee (Voters Pamphlet) $17 Million to $40 million Legislative Revenue Office (State budget) $17 Million to $26 million EcoNorthwest (prepared for the petitioners) $38 Million 17
18 DISTRIBUTION OF MARIJUANA REVENUE Marijuana Program Expenses Net Revenue Distribution 40% to Common School Fund 20% to Mental Health Alcoholism and Drug Services 15% to State Police 10% to Cities For Law Enforcement 10% to Counties for Law Enforcement 5% to Oregon Health Authority For Alcohol and Drug Abuse Prevention 18
19 IMPLEMENTATION STRATEGY Statewide listening tour Outreach to local governments and public safety partners Work groups consisting of stakeholders and experts to identify policy issues and make recommendations Formal rule making Monitor legislation during 2015 session Coordination with other states Continued inter-agency collaboration 19
20 FOR MORE INFORMATION Website: Frequently asked questions Measure 91 text OLCC s statement on passage Comparison chart Oregon/Washington/Colorado Contact Info To keep up to date, sign up for notifications through the subscription link on our website marijuana.oregon.gov After checking the frequently asked questions on the website, additional questions to marijuana@oregon.gov Phone: (Informational only - no messages accepted at this time) 20
21 NEXT STEPS December E-board request 4 positions to begin work immediately Listening tour begins early 2015 Continued engagement with Legislature 21
22 QUESTIONS? 22
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