Oregon to set cannabis license caps

Oregon to set cannabis license caps


Prices in the state dropped to an all-time low last year.

Oregon’s regulated cannabis industry has long suffered from serious oversupply. But a new bill making its way to the governor’s desk may offer a way to combat it.

The Oregon State Senate passed House Bill 4121, which would establish limits on the number of allowed licenses based on population.

Gov. Tina Kotek is expected to sign the bill into law, after which it will take effect on Jan. 1, 2025.

Legislators hope the measure will right-size Oregon’s oversaturated cannabis market. Prices in the state reached an all-time low last year.

Oregon has employed temporary halts on new marijuana licenses for nearly six years now. A 2022 bill expanded a moratorium on new marijuana licenses to include all types of licenses except for those related to testing labs, but that measure expires on March 31.

Under this new legislation, the Oregon Liquor and Cannabis Commission will have to adhere to specific ratios when issuing new licenses for businesses.

Specifically, the bill stipulates that there cannot be more than:

One marijuana producer license for every 7,500 residents
One processor license per 12,500 residents
One wholesaler license per 12,500 residents
One retail license per 7,500 residents in the state

Given Oregon’s adult population, the state already exceeds the proposed cap, according to Canna Law Blog.

Portland attorney Vincent Sliwoski pointed out that the proposal is somewhat similar to how Oregon handles liquor store licenses, which are also limited based on population. But the two systems have differences, notably in product ownership and sales.

While the secondary market for cannabis license should see reprieve, formal regulation regarding how licenses are transferred between parties likely will likely place at some point as well.

“OLCC may finally have to get into rulemaking around license reassignment concepting,” Sliwoski wrote.

The bill does make allowances. For example, it does not affect the renewal of existing licenses or applications due to changes in business location or ownership.

Proponents of implementing license caps argue that it is a necessary move to control the high number of marijuana outlets, which can lead to overproduction and illicit market diversion. Critics, however, believe it may stifle competition and limit consumer choice.

The OLCC is also granted the authority to adopt additional rules to implement the provisions effectively, meaning that regulations may continue to evolve.

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