Governor Stitt signs new cannabis industry regulations with more on the way

• Beth Wallis
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More than 90 cannabis-related bills were filed at the beginning of the session, but as lawmakers wind down their time at the Capitol, only 20 remain. Four bills have been signed by Gov. Kevin Stitt, while others are waiting to be heard on the floor or are working through conference committees. 

Several of the bills are aimed at cracking down on the cannabis black market — an issue heightened by multiple large-scale illegal marijuana busts. A few bills target standardizing operations, and others add more regulations and fees to the licensing process. Overall, bolstering the OMMA’s authority, increasing penalties for violations and implementing measures to mitigate impacts on natural resources were key areas of focus during this legislative session.

Here are the remaining cannabis-related bills:

*denotes the bill is in conference committee

**denotes the bill is waiting to be heard on the floor in one or both chambers

† denotes the bill has passed through both chambers and is waiting on governor approval

Signed into law by Gov. Kevin Stitt:

HB3019– Requires purchased marijuana leaving a dispensary to be contained in an exit package, which is described as an opaque bag. It would also require marijuana containers to be printed with “For use by licensed medical marijuana patients only,” and “Keep out of reach of children,” on the container. The container may be clear.

SB1543– Removes the OMMA as a division of the Oklahoma State Department of Health. The OMMA would instead function as its own distinct entity.

SB1367– Does a few things related to punishments for unauthorized transfers of cannabis:

• Would raise the penalty for purchases or transfers of value of medical marijuana by a marijuana business, its employees or agents of the business to unauthorized persons. For the first offense, the fine is $5,000 (up from $1,000) and $15,000 (up from $5,000) for subsequent violations occurring within a one-year timeframe. 
• Would raise the penalty for marijuana patients to share or sell marijuana to unauthorized persons. For the first offense, the fine is $400 (up from $200). For the second offense, the fine is $1,000 (up from $500), and the offender will have their license permanently revoked.
• Would raise the penalty for marijuana patients, caregivers, businesses or employees that share or sell marijuana to an unauthorized minor. For the first offense, the fine is $2,500 (up from a citation). For subsequent offenses, the offender is subject to a citation and fine of $5,000 (no change).
• Would revoke licenses upon the second incident of businesses, employees or agents fraudulently or inaccurately reporting within a 10-year period. 

HB3530– Creates the County Sheriff Public Safety Grant Revolving Fund, which would be used for law enforcement relating to marijuana. It would be funded by money received by the OMMA, as well as any federal funds, grants or donations from public or private sources.

SB1726– Would add commercial grow facilities to the list of new marijuana businesses that must establish themselves at least 1,000 from a public or private school. It would also add technology centers primarily used for classroom instruction to the definition of “school.”

For legislation still in conference committees, committee reports for the bills are sent to the originating chamber and then the opposite chamber for approval or rejection. Upon approval, the bill is read on the floor. Upon rejection, the bill can go back to the conference committee.

Marijuana business requirements:

HB4056†- Would require a private laboratory under contract with OMMA to provide a list of recommendations for marijuana testing equipment, as well as testing standards and operating procedures. Beginning in June 2024, laboratories renewing their licenses and new laboratories looking to obtain a license will have to be in compliance with the determined standards.

HB3752** – Would make it illegal for a commercial grow property owner to abandon the property without first restoring the land to its original condition.

SB1697*- Would require marijuana growers to acquire a bond before receiving their license or license renewal for the purpose of land reclamation. Every applicant would have to file a bond of at least $25,000 with the OMMA. The OMMA may request a higher amount if reclaiming the land after the grow facility vacates is expected to be more difficult. There is an exception — a commercial grower operating on land that has been owned by the licensee for at least five years prior to submitting their application is not required to obtain a bond.

SB1693** – Would require commercial grower and processor applicants and licensees to obtain a water use permit from the Oklahoma Water Resources Board if they use water from groundwater or an Oklahoma stream, as well as obtaining and registering an official statement of permission from the political subdivision that provides the water if using rural or municipal water.

HB3929†-Would require the OMMA to develop standards for process validation. Process validation would be voluntary and would require licensees to use the seed-to-sale system, meet testing requirements and pay an annual fee of $5,000.

SB1704†- Would require medical marijuana business employees to apply for a credential that authorizes them to work in the business. One or more third-party vendors would manage the credentialing process by conducting background checks, and verifying eligibility and suitability. If the application is not approved, the applicant can appeal the decision to the OMMA.

Packaging and selling requirements:

HB4287**– Requires processors and growers to sell marijuana only in pre-packaged form. Displaying marijuana and smelling would still be allowed, but “deli-style” sales would no longer be allowed. Package sizes can range from a half-gram to three ounces.

Bolstering OMMA and enforcement:

HB3208†– Would issue a moratorium on business licensing for either two years, starting Aug. 1, 2022, or until the OMMA can complete all pending license reviews, inspections and investigations.

HB3971†– Would implement a secret shopper program in which employees from the OMMA would purchase marijuana from dispensaries and send it to labs to test for contaminants and potency. Cannabis products found to have contaminants will have a recall issued.

HB4055**– Would require all commercial growers to inform involved utility companies or cooperatives of their status as a licensed grower by Dec. 1, 2022, or for new growers, at the time of utility connection. It would also require growers to submit monthly reports to the OMMA of how much water and electricity is being consumed. Refusal to participate would result in the permanent revocation of licenses.

Restructuring the licensure process:

HB2179†- Would increase the annual license fee for growers based on the size of their canopy; for processors based on the amount of marijuana processed; for dispensaries based on a tax formula, and would implement a flat fee for testing laboratories.

• All growers would pay $2,500 as a base. 
• Indoor facilities and greenhouses or light deprivation facilities with canopies over 1,667 square feet would then pay an additional $2,500 for up to 10,000 square feet of canopy. For 10,001-20,000 square feet, the fee is $5,000. These tiered rates continue, with a maximum fee for 100,000+ square feet of canopy at $50,000, plus 25 cents per additional square foot of canopy. 
• Canopy is defined as “the total surface area within a cultivation area that is dedicated to the cultivation of flowering marijuana plants.”
• Outdoor grows with canopies over 83,334 square feet would pay an additional $2,500 for up to 2.5 acres. For 2.5-5 acres, the fee is $5,000.  These tiered rates continue, with a maximum fee for 50 acres at $40,000, plus $250 per additional acre. 
• Processors would be required to pay an application fee of $2,000 for up to 2,000 pounds of dried marijuana, with an annual fee of $3,500. For 2001-3000 pounds, the application fee increases to $2,500, and the annual fee increases to $5,000. For more than 3,000 pounds of marijuana, the application fee increases to $15,000, and the annual fee increases to $20,000.
• For dispensaries, in addition to the $2,500 application fee, the annual fee would be calculated at 10% of the sum of 12 calendar months of combined annual sales tax and excise tax for the dispensary. The minimum fee must be at least $2,500, and the maximum fee can’t exceed $10,000.
• The annual fee for a testing laboratory license would be $20,000.
  

HB3734**– Would do a few things related to obtaining a temporary business license:

• Would require all commercial grows, processors, dispensaries or transporters seeking licensure to first apply for a temporary business license.
• Would require that a temporary or annual medical marijuana transporter license be issued to qualifying applicants for dispensaries, commercial growers or processors. The temporary or annual transporter license would be issued at the time of approval of the dispensary, commercial grower or processor license.
• The temporary license is a conditional license and doesn’t authorize any selling, growing, processing or transporting of marijuana.
• Temporary businesses licenses are valid for 180 days from their effective date. This can be extended by additional 90-day periods, up to 18 months, if: an application for an annual license has been submitted before the expiration date of the temporary license, or if the OMMA decides the application and documentation submitted by the applicant is somehow deficient.
• The fee for a temporary business license is $1,000.
• To obtain a temporary license, business owners would need to disclose all relevant financial information, all sources for utility usage and evidence of insurance. Required information includes: a list of funds in savings, checking or other accounts belonging to the applicant, as well as the account number and amount of money in the account; a list of every individual with a financial interest in the business; and a detailed diagram of the premises with camera placement identification.
• The fee for an annual business license is $1,500.
• If the application is rejected, the applicant can be granted an extension and assessed a $1,000 fee for every extension.
• Currently licensed businesses have 60 days after the date of renewal to submit the aforementioned newly required financial, utility and insurance documentation to the OMMA. Businesses are required to annually submit updated information.
  

SB1755*- Would require that OMMA licenses cannot be issued until all relevant local licenses and permits have been issued by the municipality, and all necessary inspections have been done. Would also allow applicants to obtain a conditional license if they haven’t obtained all necessary permits from their municipality and completed necessary inspections. A conditional license does not allow the applicant to operate as a licensed business.

SB1841**- Would allow the OMMA to deny licensure applications, suspend or revoke business licenses due to any violation of state law, any violations of a regulation applicable to the operation of a marijuana business or inaccurate reporting or disclosures to municipal governments.

Restructuring marijuana tax revenue:

SB1848*- Would change marijuana sales tax apportionments. It would be divided as follows: 35.7% (up from 34.62%) to the OMMA Revolving Fund for operations, up to $23,600,000; 44.625% (down from 59.23%) to the State Public Common School Building Equalization Fund; 14.875% (up from 6.15%) to the Department of Mental Health and Substance Abuse Services for drug and alcohol rehabilitation, up to $10 million; and 4.8% to the County Sheriff Public Safety Grant Revolving Fund, up to $3,200,000.

Editor’s note: this article has been updated to reflect bills that advanced after publication.