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GCM Roundup | Another OK town wants permits for home cannabis grows
Holders of cannabis-patient licenses in the small south-central Oklahoma town of Pauls Valley would have to undergo local inspections and obtain special permits in order to grow cannabis at home, a clear violation of the state’s medical-marijuana laws where they seek to protect patients from just such attempts.
Other provisions of an ordinance passed July 27 by the Pauls Valley City Council would impose numerous new restrictions on cannabis dispensaries and outright ban cultivators and processors. Those segments of the ordinance appear to have a greater chance of surviving legal muster.
Retail dispensaries under the ordinance could not locate within 300 feet of any library or playground, public park or recreational center, child-care center, halfway house, jail or prison, drug-rehabilitation center, or other cannabis shop. They would have to close at 9 pm and be closed entirely on Sundays, Christmas, Thanksgiving, and New Year’s Day.
With respect to home grows, state law is unambiguous. It was the legislature itself that beefed up these protections for patients after the initial decision from voters to move ahead with medical cannabis.
Title 63 Section 427.8 says in no uncertain terms:
“Municipal and county governing bodies may not enact medical marijuana guidelines which restrict or interfere with the rights of a licensed patient or caregiver to possess, purchase, cultivate, or transport medical marijuana ... or require patients or caregivers to obtain permits or licenses in addition to the state-required licenses provided herein.”
An assistant city manager for Pauls Valley nonetheless declared that patients “need to grow it in their home, not out in the backyard, not on the front porch.” The state’s cannabis laws say only that a home grow must be operated in a way “so that the marijuana is not accessible to a member of the general public” and not visible “from any street adjacent to the property.”
The other provisions of the Pauls Valley ordinance affecting cannabis businesses aren’t so simple, thanks in part to the passage of Senate Bill 1030 in 2019. Under that law, retail dispensaries cannot be banned entirely, but they can be restricted by local governments beyond what state law prescribes.
Cultivators and processors have even fewer protections and can be completely prohibited. Senate Bill 1030 was led by a frequent critic of cannabis in the state legislature, Sen. Lonnie Paxton (R-Tuttle), who also sponsored a controversial bill this year that would have effectively re-criminalized cannabis in Oklahoma by making those accused of diversion eligible for severe penalties.
The Pauls Valley ordinance largely mirrors another in Yukon, Oklahoma, that still stands today. Following a challenge filed there in 2018, a judge ruled that the portions of the ordinance addressing commercial cannabis businesses could stand, including an outright ban on cultivators and processors. But the ruling also enjoined Yukon from enforcing the provisions related to home grows. While those provisions still exist even now in Yukon’s city ordinances, officials have promised not to enforce them.
The small town of Heavener in southeastern Oklahoma attempted a similar ordinance earlier this year that included numerous new restrictions for cannabis businesses, as well as local permits and inspections for home grows. Most of the restrictions were rescinded after local cannabis advocates began meeting and talking with city officials. After hearing from cannabis stakeholders, the commissioners even revised away the dispensary rules that otherwise appeared legal.
The latest move in Pauls Valley comes following several high-profile actions taken by local law enforcement and the Oklahoma Bureau of Narcotics against illegal and black-market cultivation operations in the state.
A pair of April raids near Pauls Valley carried about by local authorities and state drug enforcers uncovered at least 6,000 plants. Those actions led to charges against five people. Among them was the legal secretary of a cannabis law firm who some believe (including rival cannabis attorney Ron Durbin) was used as a “ghost owner” for innumerable licensees.
Rural residents have steadily complained to lawmakers and officials that outside bad actors and criminal organizations are taking advantage of the state’s comparatively low barriers for becoming a cannabis business. Despite the steady stream of headlines and statements of grave concern from officials about an international criminal influence on cannabis in Oklahoma, however, few of the raids so far have netted major arrests and formal charges. Or at least there hasn’t been a high enough number of arrests and charges to be proportionate with the alarmist language often used by authorities to characterize the threat to public safety.
Cannabis in the hype machine
The Oklahoman and the Tulsa World have each published several in-depth stories in recent weeks about legal cannabis in Oklahoma. They’re covering what is undoubtedly a big story in the state right now: the campaign by regulators, political officials, and law enforcement to oust cannabis black marketers and address worries from residents that medical marijuana is attracting criminal elements.
Major regional newspapers have a tendency to influence the story choices made by area TV and radio stations and smaller local newspapers. This kind of publicity around cannabis, for good or ill, can be a powerful force that drives public opinion and the actions and reactions of government.
Many of these stories attribute information to statements made by officials with little effort made to independently verify what’s being said. To be fair, newsrooms in Oklahoma -- and everywhere -- have been thoroughly disrupted and decimated by the arrival of digital online advertising. All newsrooms have a fraction of the reporting capacity they once did.
That said, Mark Woodward, public information officer for the Oklahoma Bureau of Narcotics, often breathlessly describes in frightening terms the threat of criminal organizations in cannabis here. He does so while simultaneously taking pains to say the agency is unconcerned with legal operators. Other times, he describes serious allegations like labor and human trafficking but says the agency merely has its suspicions about them with little in the way of evidence.
Woodward doesn’t seem to go very many days lately without being quoted by a newspaper of TV station. Many of the stories I’ve seen don’t give the cannabis industry a chance to speak until well after Woodward was quoted or summarized at length. Some stories manage to only showcase the views of Woodward the Oklahoma Bureau of Narcotics with no perspective from cannabis at all.
No doubt black-market cannabis is occurring in Oklahoma, and there likely are worrisome labor issues. But it’s still the case that few formal arrests have been announced, either for growing illegally or mistreating workers. Here’s a snapshot of the major newspaper coverage:
The Oklahoman -- June 28 Oklahoma passes $1.5 billion in marijuana sales. But how is the marijuana tax getting used?
“If the growth continues at its present rate, Oklahoma's cannabis sector is poised to become a billion-dollar-a-year industry based solely on retail sales. That doesn't account for the value of farms, distribution, and business services offered throughout the industry.”
Tulsa World -- July 7 Foreign investors, crime among concerns as cannabis booms in rural Oklahoma
Quoting Rep. Josh West (R-Grove): “We have so many grow operations. ... The free market should have taken care of it but hasn't ... because of the black market. You've got the cartel; you've got the Chinese drug ring; you've got the biker gangs. Pretty much every criminal organization is operating in the state of Oklahoma right now.”
“By population, [Delaware County] is only about a tenth the size of the city of Tulsa but not far off in terms of the total number of licensed growing operations. Located in the northeast corner of the state, Delaware County is not far from the Arkansas, Missouri, and Kansas state lines. … Chicken houses once dotted the landscape, but many of the abandoned poultry operations are now known by locals as the ‘pot houses.’”
The Oklahoman -- July 19 Black market cannabis investigations open door to labor trafficking
Quoting Mark Woodward: “It’s possible, absolutely, that some [workers] could have been smuggled here inside cargo containers weeks ago, and some of them could have been here for generations. We don’t know what we don’t know about a lot of these workers.”
The Oklahoman -- July 23 Marijuana is Oklahoma's latest boom industry. But can it be sustained?
“When he's speaking to industry forums and conferences, Bud Scott often mentions Oklahoma has more dispensaries than McDonald's, Starbucks, and Walmart stores combined. ‘And just from a pure market-demand analysis, that is completely unsustainable,’ said Scott, head of the Oklahoma Cannabis Industry Association.”
Tulsa World -- July 26 Legal cannabis industry funds more enforcement efforts as criminals ‘make us look bad’
Quoting a grower in Garvin County: “It needs to happen. The industry needs to regulate itself. We need to make sure bad actors are not here. For those of us who live and breathe these rules every day, it makes us look bad.”
More from Oklahoma and beyond
Another day, another grow raid in Oklahoma with a noisy press release from law enforcement to accompany it. Sheriff’s deputies in Love County near the state line with Texas rushed to Facebook July 22 to report that along with several other agencies -- including the ever-present Oklahoma Bureau of Narcotics -- they had seized some 2,300 plants and $64,000 from “an illegal, Chinese owned-and-operated marijuana grow.” Seems like the only part that should matter here is the illegal part. If it was perfectly legal tomorrow to sell cannabis over state lines, and someone did so fully licensed, would it be illegal if the owners were Chinese? Meanwhile, after looking at tax figures for the state back in March, I realized that small Love County and its little over 10,000 residents were generating more in cannabis tax revenues per person at over $100 each than any other county in the state. My guess is Texans are dashing into Oklahoma and using straw buyers. This is an outcome Oklahoma could have prevented if two-year temporary patient licenses for out-of-staters had passed during the 2021 legislative session. House Bill 2022 was sponsored by representatives Scott Fetgatter (R-Okmulgee) and James Leewright (R-Bristow) and died in a state Senate committee.
The town of Weatherford, Oklahoma, is worried about the cannabis industry leading to an excessive foreign ownership of Oklahoma land. According to the Weatherford Daily News, disagreement sparked by the rise of cannabis in Oklahoma hardly compares to when pork became a major industry here in the 1990s. Complaints over sludge from production prompted the state to issue a moratorium halting further expansion until the issues could be resolved.
A local resident complained to the Custer County Board of Commissioners July 26 that the area was bloated with cannabis grows: “We are producing way more marijuana in our county than the dispensaries can sell.” (Oklahoma also produces way more wheat than it can eat. We sell the rest. It’s called a cash crop.)
A new study says that cannabis legalization actually turns out to be great for home-property values. The reason is new tax revenues driving improvements to public services and infrastructure.
Speaking of, the city of Lawton is using $440,000 in tax revenues from cannabis to make sidewalk improvements. You’re welcome, Lawton.
Oklahoma cannabis cultivators have reason to worry about their new neighbors, too. Pesticides used on traditional Oklahoma farms are threatening to drift onto cannabis grows: “It’s weed against weed in parts of rural Oklahoma, as the state’s medical marijuana growers clash with traditional agriculture producers over the use of herbicides and pesticides. … The [federal Environmental Protection Agency] has not approved or designated pesticide thresholds for cannabis, so Oklahoma, like other states, has adopted the position that there is no allowable amount.”
I didn’t honestly know Oklahoma even had a secretary of public safety. Turns out we do, and she, too, says Chinese and Mexican criminal organizations are converging on the state and that “drug trafficking is becoming an international problem in Oklahoma.”
The number of cannabis licensees in a three-county area around Oklahoma’s Grand Lake has more than doubled since August of last year to 370. “According to real-estate professionals, many of the former poultry operations, as well as farmers who are retiring, are selling their land to marijuana growers who offer as much as $10,000 or more per acre. The largest number of growers, 88, [is] in the Jay zip codes [and] up from 22 a year ago.” (The Grove Sun -- paywalled content)
A guy in Oklahoma City got caught with more than 1,200 pre-roll joints, and when authorities asked him about it, the man said simply that he had a medical-marijuana card. Police weren’t impressed and charged him with possession of a firearm and illegal cultivation.
Turns out a handgun from Oklahoma is worth about as much as one or two pounds of quality California cannabis. Federal prosecutors say members of the Oklahoma street gang Squeeze Team for two years made trips to California to swap guns for weed by either driving their own cars or taking long-distance bus lines and using fake names.
Black-market cannabis operators are as much of a lightning-rod political issue in California as they are here. A crusading Republican congressman in Siskiyou County near the northern state line with Oregon posted videos of himself in late July triumphantly bulldozing an illegal grow operation. “I love the smell of diesel power in the afternoon. It smells like victory,” he says in one of the videos, quoting the 1979 movie “Apocalypse Now.”
Three illegal operators in California’s heavily regulated cannabis market spoke to Marijuana Business Daily about why they continue on without licenses in a legal state. One cultivator tried for a year to go legit before giving up. “Every time it seems like we get close, they got something to trip you up,” he said of the compliance process.
Online commerce surged in popularity during the pandemic and is further killing the American brick-and-mortar shopping center. Some commercial landlords are recovering the lost revenue by ignoring the stigma of cannabis and moving in dispensaries as tenants. Said one real-estate owner who added a cannabis shop to his portfolio: “This is not a dispensary, in my opinion. It is retail.”
Ray Breer, 29, found himself back in jail after testing positive for marijuana while on probation in Missouri despite having a medical-cannabis card. His previous charges that led to the probation were also cannabis-related. Marijuana Moment reports that weed offenses are happening elsewhere in the state and landing people back behind bars. Missouri’s cannabis laws state that “the possession of marijuana … shall not subject the possessor to arrest, criminal or civil liability, or sanctions.”
A Missouri cannabis business managed to launch and operate eight clinics and then close them all in one year due to “significant … competitive and financial difficulties.”
A major difference between the House and Senate versions of proposed cannabis legalization bills is the excise tax rates. In the House, the federal excise tax would climb from five to eight percent over a period of years. On the Senate side, it’s 10 to ultimately 25 percent. Both are steep enough when added to existing state and local taxes. But it gets worse. In both bills, the tax would hinge not on the price set for an ounce at your local dispensary. It would instead be based on the average price of an ounce across the United States at a given time, even if one market was far more expensive than another.
Included in both federal bills to legalize cannabis would be the repeal of the obscure federal tax rules known as 280E. They result in major payments being due to the IRS from cannabis entrepreneurs that are not required of most other businesses. These federal rules were first created to punish drug lords. Ironically, lawmakers in Washington are now trying to figure out how to replace the revenue flowing in from state-legal cannabis businesses. Repealing 280E could mean a loss of as much as $400 million in the first year to federal coffers and $5 billion over 10 years.
Sana Packaging was one of 20 companies I mentioned back in May that are working to address excessive packaging in the cannabis industry. The company recently announced that it has succeeded in creating a lid for concentrates made entirely from reclaimed and ocean-bound plastic.
Tulsa cannabis attorney Ron Durbin is again suing the Oklahoma Medical Marijuana Authority, this time for violating the state’s open-meetings laws. His first lawsuit over the state’s plan for tracking every cannabis plant from seed to sale is ongoing.
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