H.B. 2272 - Oklahoma Cap on Medical Marijuana Businesses Act of 2021
Note: As of publication of this article, Oklahoma House of Representatives Bill 2272 (the “Bill”) has been passed by the Oklahoma House of Representatives and submitted to the Oklahoma Senate. Before going into effect, the Bill must still be passed by the Senate and signed into law by Governor Stitt. Therefore, it is not yet law. This article seeks to analyze the impacts of the Bill in the event it does become law.
BACKGROUND
On March 10, 2021, the Oklahoma House of Representatives passed H.B. 2272 (the “Bill”), known as the “Oklahoma Cap on Medical Marijuana Businesses Act of 2021.” As the title implies, if passed and signed by the governor, this Bill would place caps on the number of medical cannabis businesses in Oklahoma. However, what does it really mean for Oklahoma’s medical cannabis industry?
IMPLICATIONS
First, for a two-year period beginning September 1, 2021, the Bill would cap the total number of dispensary licenses, commercial grower licenses, and processor licenses to the total number of active licenses on September 1, plus the number of pending applications with the Oklahoma Medical Marijuana Authority (“OMMA”) for each license category. The Bill specifically states that OMMA will process all applications which are pending on September 1, 2021.
Second, the Bill caps the number of dispensaries, commercial growers, and processors licensed to operate in the state until each category reaches the following maximums:
Dispensaries: 2,000
Commercial Growers: 5,000
Processors: 1,000
According to OMMA, as of March 5, 2021, there were 2,144 active dispensary licenses, 7,004 active commercial grower licenses, and 1,325 active processor licenses in the state. Therefore, each license category currently exceeds the maximum number of licenses permitted in the Bill. In order to minimize the licenses authorized in the Bill, the licenses in each category will be “automatically reduced” by the number of licenses in each category which are “surrendered, canceled or otherwise terminated.” In other words, no new licenses will be issued until the number of licenses falls below the caps listed in the Bill.
Third, in addition to placing caps on the number of each license authorized, the Bill also places restrictions on the renewals of those licenses. As written, the Bill requires a dispensary or processor license-holder to have a minimum of $5,000.00 monthly average gross sales for a 12-month period. For holders of a commercial grower license, they must have a minimum of 50 marijuana plants under cultivation each month, averaged for a 12-month period. If the minimum thresholds are not met, the license-holder will be prohibited from renewing the license. Once the authorized licenses are reduced to the mandated thresholds, the Bill calls for the creation of a “number-based lottery” for issuing any available licenses in the future.
Understandably, the Bill may cause concern to those in or seeking to enter the Oklahoma medical cannabis business, as well as to Oklahoma patients who rely on medical cannabis for treatment. Due to the $5,000.00 minimum threshold requirement, the Bill may have negative implications for small businesses, especially in some rural Oklahoma communities. Although it may not sound like an exorbitant amount of money, $5,000.00 per month may be more than some dispensaries or processors can do and may be more than some need to sustain their business. As a result, this may lead to dispensaries closing in counties with smaller populations, making it more difficult for patients to access medical cannabis in those areas of the state.
As noted above, as of publication of this article, the Bill has been passed by the Oklahoma House of Representatives and submitted to the Oklahoma Senate. Before going into effect, the Bill must still be passed by the Senate and signed into law by Governor Stitt.
You can follow its progress here: http://www.oklegislature.gov/BillInfo.aspx?Bill=HB%202272
You can read the full text of the Bill here: http://webserver1.lsb.state.ok.us/cf_pdf/2021-22%20ENGR/hB/HB2272%20ENGR.PDF
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Founded in 2007, Munson & McMillin, PC, is a mid-sized law firm with offices in Edmond and Tulsa, Oklahoma with a focus on oil and gas, business litigation, cannabis, estate planning, and real estate law.
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The information contained in this publication is not legal advice and should not be construed as such. Nor is this publication intended to create an attorney-client relationship by and between Munson & McMillin and the reader. If you are interested in applying for a dispensary, commercial grower, or processor license, we recommend beginning work on your application as soon as possible. At Munson & McMillin, we are experienced in successfully navigating the OMMA application process and are ready to answer any questions or to help you begin work on your application for an OMMA business license.
This publication is provided by Munson & McMillin as a service to businesses. If you or someone you know needs advice, legal representation, or consultation in the emerging Oklahoma medical cannabis industry, please contact Vijay Madduri at vmadduri@munsonmcmillin.com or B.J. Bergner at bbergner@munsonmcmillin.com.