The Pressure is On

The office of the Oregon’s Secretary of State announced recently that it will be doing its first audit on the production and sale of recreational cannabis in Oregon. The auditing department for Secretary of State Dennis Richardson hopes to officially evaluate how well the Oregon Liquor Control Commission (OLCC) enforces the rules, and it will rate how well-regulated the OLCC has been keeping the relatively new system. 

“Audit objectives will include an initial risk assessment of the state’s marijuana regulatory framework and a review of the effectiveness of Oregon’s oversight of its marijuana cash-based industry. Audit objectives will also evaluate state guidance and communications to marijuana businesses.” 

Although recreational cannabis has been sold in dispensaries since 2015, it wasn’t until October of 2016 that the OLCC first started granting licenses for solely recreational sales. Up until that point, recreational cannabis had only been sold at previously existing medical dispensaries. So regulating the recreational system is still fresh, and there are much different rules than strictly medical-only dispensaries. There have been constant changes to the recreational system’s rules, from how to qualify and apply for a production or retail license, to product testing and labeling requirements and cash flow regulations. 

Since the cannabis industry is primarily cash-based, the audit is going to take a look into how finances are tracked and if accurate numbers are kept by businesses, which will also include how much cannabis is actually produced and sold. Constant changes to Oregon’s legal cannabis program, as well as keeping up with so many business regulations, have been overwhelming the OLCC since legalization began.

The OLCC was already audited earlier this year by an outside group. The results of the audit suggested that that the task of enforcing Oregon’s recreational regulations was too big. However, the OLCC has responded consistently and effectively to changes since the program began. The OLCC responded to its initial audit by hiring more staff, including a Public Safety Director, and the commission has announced plans to expand the recreational cannabis regulatory program. 

The OLCC also announced its plans this past month to work with local police agencies in hopes of cutting down on black market sales in Oregon, as well as cannabis trafficked out of state. The need for improvements to Oregon’s legal cannabis system have become evident to state lawmakers and regulators, partly because of criticism of Oregon’s recreational system by U.S. Attorney General Jeff Sessions this past summer. His letter to Gov. Kate Brown cited inconclusive and inaccurate evidence regarding the enforcement of legal cannabis regulations in Oregon, but communicated a clear message about the Attorney General’s disappointment in Oregon’s legal system thus far.

Sessions has held meetings with several Oregon officials regarding the new recreational system, including U.S. Attorney Billy Williams and the head of the Portland Police Association, Mike Reese. 

The 2017-2018 audit plan was released by Dennis Richardson’s office this past month. The plan outlines Richardson’s goals to, “assess the state’s regulatory framework for enforcing financial regulations resulting from marijuana production and sales. Audit objectives will include an initial risk assessment of the state’s marijuana regulatory framework and a review of the effectiveness of Oregon’s oversight of its marijuana cash-based industry. Audit objectives will also evaluate state guidance and communications to marijuana businesses.” 

OLCC Executive Director Steven Marks is not worried about the audit and feels that the regulatory systems are off to a great start. There are learning curves to any new industry, with recreational cannabis being no exception. As the industry continues to get scrutinized, it will also continue to improve. Dennis Richardson’s upcoming audit will be another tool to help the OLCC develop a smoothly running regulatory system. And as long as the federal government continues to keep its hands out of the state’s legal cannabis enforcement, Oregonians can look forward to a thriving and beneficial industry.