OK cannabis bills would cap licenses and move oversight to alcohol enforcers
State lawmakers met in Oklahoma City Feb. 18 to vote on whether to pass several cannabis bills out of committee to a full vote by the House of Representatives. This certainly doesn’t mean they’ll pass. But it signals what key members of the legislature are making a priority about cannabis regulation and what could become law.
I wrote here and here previously about the bills discussed. The proposals were considered by the House Committee on Alcohol, Tobacco, and Controlled Substances. Oklahoma doesn’t make it all that convenient to track bills online and find out how to view committee hearings, so I uploaded it to YouTube.
Here’s a PDF of the meeting's agenda, because the government also loves making things unnecessarily complicated with PDFs. Details of the action taken on the bills are below.
House Bill 2272 (beginning of video)
Rep. West says the constituents in his district covering Mayes and Delaware counties requested this bill. His district sits on the Missouri line, and West says his constituents have complained about black-market cannabis importing and exporting with nearby states.
West says after the bill was filed, he heard from other areas of the state where similar complaints were being made. It would cap the total number of cannabis business licenses awarded by the state for cultivators, processors, and dispensaries.
The cap would become where the numbers stood on Sept. 1, 2021, and would include applications that were pending at the time. It would additionally reduce the number of overall cannabis business licenses available in the state by not reactivating those licenses that have been surrendered, cancelled, or terminated.
By removing licenses through this method, the bill intends to push down the overall number of cannabis business licenses available to 2,000 for dispensaries, 5,000 for cultivators, and 1,000 for processors.
Republican Scott Fetgatter of Okmulgee said he had concerns with the bill and how it could negatively affect the industry. He wants to sunset it in two years, so that lawmakers have a chance to review the impacts by then. Fetgatter said he also received constituent complaints from people in his district 16 covering Muskogee, Okmulgee, Tulsa, and Wagoner counties.
“As we know,” Fetgatter added, “[the Oklahoma Medical Marijuana Authority] has been through three major administrative changes … and that has caused quite a disruption. And I don’t know if a cap on the licenses is going to be the answer. I think the enforcement side of the industry is more important right now.”
Republican Jon Echols of Oklahoma City said he shared many of the same concerns as Fetgatter. But Echols said he would vote to pass the bill out of committee anyway “understanding that we’re going to keep working on it.”
“I have some constitutional concerns about taking away a license, which the late Chief Justice Opala [Peter Opala of the Oklahoma Supreme Court] would call a vested right without due process of law. We might run afoul of the contract clause of the federal and Oklahoma constitutions.”
House Bill 2674 (at the 23:00 mark)
Republicans Jon Echols and Scott Fetgatter have become close observers since 2018 of cannabis regulations in the state. HB 2674 by Echols would completely turn over the newly created Oklahoma Medical Marijuana Authority to another state agency with a dissimilar mission.
The proposal would move OMMA from the Oklahoma Department of Health to the Oklahoma Alcoholic Beverage Laws Enforcement Commission. This major shift would among other things seem to redefine medical marijuana as being in need of law enforcement scrutiny, rather than a medical treatment overseen by health experts.
Echols said at the hearing he didn’t believe more regulations were necessary. He just wants to see better enforcement of what rules and laws exist. Democratic Rep. Forrest Bennett asked why the Oklahoma Medical Marijuana Authority wasn’t simply made its own standalone agency.
Echols supports doing that also but there’s resistance to the idea elsewhere in the state. So he thinks this is a compromise that boosts OMMA’s enforcement capabilities in the industry. He believes as many as 150 new field agents should be hired to enforce industry standards.
At the hearing, Echols said constituents from the industry were calling and complaining that regulations were being unevenly enforced. He also emphasized that state alcohol enforcers at the ABLE Commission are viewed by many people in the alcohol industry as fair.
House Bill 1909 (at the 11:30 mark)
This bill addresses an area of the federal Internal Revenue Code known as 280E. It’s little-known outside of the cannabis industry. But 280E dramatically pushes up how much state-legal cannabis businesses are required to shell out in federal businesses taxes.
Fetgatter points out that under 280E, cannabis businesses are not able to write off traditional business expenses in order to lower their federal tax bills like traditional business.
“That is really tough on our business owners,” he said. “So I have worked with house staff to verify that it would be okay that we drop the state portion of 280E. There have been other states that have done it.”
As it stands, Oklahoma imposes a controlled substances tax on licensees who purchase and transport. Fetgetter has requested an analysis of the fiscal impact of HB 1909 but believes it will be difficult to determine. This bill passed out of committee and moved on for a floor House vote.
House Bill 1142 (at the 16:00 minute mark)
Provides for the destruction of industrial hemp where it fails compliance testing by containing too much THC. Passed out of committee and moves on for a full House vote.
House Bill 1908 (at the 17:10 mark)
Fetgatter said at the hearing that heard individual cannabis businesses were bragging about not paying what amounts to millions of dollars in cannabis sales taxes. The Oklahoma Tax Commission if this bill passes could investigate cannabis tax dodgers, but it doesn’t want to do so with being compensated.
So HB 1908 would move responsibility for collecting the state’s 7-percent excise tax on medical marijuana from the Oklahoma State Department of Health to the Oklahoma Tax Commission. The commission would receive 1.5 percent of the gross proceeds for its collection efforts.
House Bill 2244 (at the 20:00 mark)
Current Oklahoma laws list jobs and professions determined to be “safety-sensitive” that could be affected by the use of medical marijuana, such as operating heavy machinery. This bill would remove the task of “performing firefighting duties” from the list. Rep. May says firefighters requested the bill, in part because it was viewed as unfair that law enforcers were not on the list.
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