OR Legislature passes interstate trade bill

In a harbinger of the future of the cannabis industry, the Oregon Legislature today passed a measure that will allow the governor to enter into agreements with other states for the licensed transfer of cannabis between legal markets. Senate Bill 582, which passed the House in a bipartisan vote of 42 to 17, would take effect when the federal government signals that it will tolerate interstate trade in cannabis. The bill now goes to Governor Kate Brown’s desk.

 “This is a very strong statement by the Oregon Legislature, and one that will reverberate across the country,” says State Senator Floyd Prozanski (D-Eugene), who sponsored the bill. “The future of this industry is that cannabis will primarily be grown where it grows best, and most efficiently, and most sustainably. That’s what functioning legal markets do.”

Locally owned craft growers and manufacturers across Oregon face some of the most challenging market and regulatory environments in any industry anywhere.  They shoulder a high tax burden, have little access to banking, and exist in a regulatory environment that is sometimes unreasonable and always in flux.  But in a natural producer state with a tiny population, the biggest hurdle they face is the inability to access other legal markets where their products would be in high demand at a reasonable price.  Gaining access to those markets sooner than later is vital to the survival of local ownership.

 “The Emerald Region, from Oregon through Northern California, is one of the best and most important cannabis-producing regions in the world,” says Adam J. Smith, Founder and Executive Director of the Craft Cannabis Alliance. “In fact, this region has produced the lion’s share of the nation’s domestic cannabis for generations.  As we move inexorably towards regulated markets, this bill brings us one step closer to sharing Oregon's bounty, legally, with consumers everywhere.”

 House Republican Leader Carl Wilson (R-Grants Pass), whose Southern Oregon district encompasses a large swath of Oregon’s famed cannabis-producing region, sees the bill as a harbinger of the future of cannabis markets. 

  “This bill [SB 582] is a strategic business approach,” says Rep. Wilson. “It correctly assesses the industry’s strengths and foresees a time when export turns Oregon’s oversupply in a constrained market into a traded commodity in a national marketplace. Cannabis policy is rapidly evolving in the United States; the federal stance toward marijuana could change quickly, with congressional action or something as simple as a memo from Dept. of Justice.  In this arena, Oregon has competitive advantage on the nation and the world.”

 The bill, seen as a long-shot before the session, has gained national attention as the country wrestles with the future of legal cannabis. Under current conventions, every newly legal state must create an entirely self-contained production industry, regardless of economic or environmental suitability.

 “This is a paradigm shift, to be sure,” says Casey Houlihan, founder and executive director of the Oregon Retailers of Cannabis Association. “This was not something that most legislators expected to get behind this session. But it is smart public policy, it’s important to our members, and it is obviously the future of the industry. Passing this bill now is a testament to the value in building strong relationships and doing the work in the Capitol to educate legislators.”

Rhea and Matt Miller of Millerville Farms are both second-generation growers in Southern Oregon, which gives them good historical context in their vision for the industry.

“This region is as important to cannabis as cannabis is to the region,” says Matt. “People started coming out here 60 and 70 years ago because it was the best place in the world that they knew to grow pot.  They didn’t come here to get rich, and for the most part they didn’t.  They came because they love this plant, and that love affair has only grown.” 

“That tradition and culture, the biodiversity they developed first underground, then in the medical market, and now the legal market, and the incredible knowledge and talent base that has developed here make the region special.  Of course we want to share this wondrous bounty with cannabis lovers everywhere.  That’s what we do here.”

 Even if another state were to want to bring Oregon cannabis in, such transfers will not happen immediately.  The bill contains a  “trigger” requiring that before the governor can enter into such agreements, the federal government must either allow such transfers in federal statute, or indicate tolerance of them via Department of Justice memo or policy directive, much like the tolerance that has allowed the adult use industry to develop across eleven states. 

 “We are going to bring more states to this movement, and act decisively to move cannabis between legal states by 2021,” said Smith. 

 Chris Dolinar, CEO of Pilot Farm, located outside of Ashland OR, prefers free markets to command economies.

“As far as I’m concerned, people should be allowed to grow cannabis, personally or commercially, anywhere in the country,” he said. “But it’s irrational to force dozens of states to create inefficient, resource-intensive production industries in places you would never otherwise grow cannabis at scale. This bill is a powerful statement of that truth.”