HB 2646 just Passed the Senate: Here’s what’s inside

The senate passed HB 2646 with amendments that raise new cause for regulatory concern for Oklahoma cannabis businesses.

HB 2646 clarifies the duties of the Oklahoma Medical Marijuana Authority and carries over much of what was included in HB 3228, a bill Governor Stitt vetoed in May of last year. It’s a 100+ page bill that touches every aspect of the industry.

The measure introduces a short-term 60 day medical patient license for those who can’t get a two year doctor recommendation; it would have introduced a 3 day temporary license for out of state patients; allows grows to package to sell pre-rolls to dispensaries; dispensaries to prepare and package non-infused pre-rolls to sell to patients.

It specifies that distance from schools is to be measured from the nearest property line of the school to the nearest perimeter wall of the dispensary and grandfathers in dispensaries licensed before the act. The establishment of a school within 1,000 feet of an already existing dispensary would also not be cause for revocation or non-renewal of the license, the bill states.

Testing laboratories would’t be able employ or be owned by any individual who is financially interested in any licensee or medical marijuana business located within the state of Oklahoma. They’d also be required to obtain accreditation prior to applying for and receiving a license, beginning November 1, 2021. The limits for test batches, harvest batches and production batches growers and processors must separate are also modified in the bill.

Transporters license annual fees would be reduced from $100 to $25, and applicants would be required to show proof of current residency as with all other license types. Transporter licenses would also be issued to licensed research and education facilities and testing laboratories.

With the bills’ passing, the OSDH would be authorized to issue two types of medical marijuana processor licenses:

1. Nonvolatile, which involves using any solvent in the extraction process that is not a volatile solvent, including carbon dioxide; and

2. Volatile, which involves using any solvent that is or produces a flammable gas or vapor that, when present in the air in sufficient quantities, will create explosive or ignitable mixtures and may also include extraction using nonvolatile solvents or no solvents.

(Now represented as “hazardous” and “non-hazardous” with definitions removed)

Processors would undergo up to two inspections a year to determine their compliance with the preparation standards..

The bill also raises the fines for grossly inaccurate or fraudulent reporting by a medical marijuana business from $1,000 to $5,000 for the first offense and from $5,000 to $10,000 for any subsequent offense.

Literally, every aspect of the industry. Patients, processors, growers, dispensaries, labs transporters—HB 2646 touches all the bases.

One initial regulatory cause for concern was the measure’s language that the OSDH and OMMA would no longer be required to provide 24 hours notice before inspecting or investigating any business licensee or provide sufficient time for the licensee to secure legal representation before questioning. Now after the passing of the Senate amended version, there’s more than that one initial concern to consider…

What changed in the senate?

All of what was mentioned above besides the 3 day temporary license provision for out of state card holders remains in what was passed by the senate. There were however, some key additions that raise new cause for regulatory concern for Oklahoma cannabis businesses. Those are:

• The OSDH is now authorized by the measure to issue an emergency order in certain circumstances. Entities failing to comply with the emergency order shall be subject to a $10,000 fine per day of noncompliance.

• No dispensary can display, offer or allow handling, smell or otherwise physical contact with any marijuana product not contained in a sealed or separate package.

• The measure now establishes regulations which require a medical marijuana business to submit information to the OMMA deemed reasonably necessary to assist the Authority in the prevention of diversion of medical marijuana by a licensed medical marijuana business. Such information required by the Authority may include, but shall not be limited to:

  • the square footage of the licensed premise,

  • a diagram of the licensed premise,

  • the number and type of lights at the licensed medical marijuana commercial grower business,

  • the number, type and production capacity of equipment located at the medical marijuana processing facility,

  • the names, addresses and telephone numbers of employees or agents of a medical marijuana business,

  • employment manuals and standard operating procedures for the medical marijuana business, and

  • any other information as the Authority reasonably deems necessary.

The final form of HB 2646 as it passed the senate adds to the list of uncertainties cannabis business owners and managers navigate daily within otherwise secure foundational operations. If witnessing the current Metrc compliance race has taught us anything, it’s that unexpected barriers—from costs to education—can come up along the way that act as speed bumps for cannabis business owners trying to meet state deadlines for new regulatory measures. And there will likely be resistance when they come.

Additionally, enacting regulation that would do away with the deli style dispensary experience doesn't take into account the very aspects of cannabis flower that connects patients with the optimal medicinal product for their specific needs and preferences. While there may be a few benefits to pre-packaged cannabis flower, none of them are medically important.

Oklahoma has been lucky so far as our regulatory landscape is concerned in comparison to other legal markets. The new business requirement provisions said be set forth to prevent the diversion of medical cannabis are commonplace elsewhere and even exist already here in Oklahoma within certain counties and city limits. These steps can be navigated successfully, but often require additional expertise and capital to complete to satisfaction.

HB 2646 now heads back to the House before moving on to the Governor’s desk if the House concurs in Senate amendments.

As our market matures and its growth continues to accelerate, the legislature will naturally enact new regulation to keep up, contain or corral it. It’s most important to understand these changes and their implications to remain in compliance and in business, and that’s becoming increasingly true as regulatory enforcement ramps up alongside new measures.

The attorneys at Gies Law Firm have followed these trends in cannabis law from California to Colorado and now to Oklahoma. We are prepared and well positioned to guide you through this ever-evolving legal landscape. Remember, this is a new industry with plenty of legal barriers and gray areas to flesh out as it is. That hasn’t kept Oklahoma’s medical cannabis market, our clients, from thriving before. We don’t plan to let it start now. The attorneys at Gies Law Firm are here to help guide you through these and all coming changes to a path of realizing and reaching your cannabis business goals. Contact us today to start a conversation.

For right now, get involved in this active and ongoing process. Write your representatives and urge them to refuse to concur with the amendments.