Why this audit is important
The Oregon Liquor and Cannabis Commission (OLCC) regulates recreational cannabis businesses; a billion-dollar industry that generated $311 million in tax revenues during the 2019-21 biennium.
Cannabis tax revenues are used to support a variety of key state programs and services.
Oregon’s climate and agricultural prowess positions the state to maximize cannabis as an agricultural commodity, as it does in the case of the timber, wine, and micro brewing industries, to grow and expand the state’s economy.
What we found
Oregon’s cannabis industry is subject to some regulations that when coupled with the current licensing moratorium, federal restrictions on interstate commerce, banking and taxation create burdens the alcohol industry does not face. These regulations are not clearly based on a robust risk assessment, or the test of real-world effectiveness.
Instead of ensuring the state’s cannabis industry receives similar supports provided to other industries that help bolster the economy, many of Oregon’s cannabis regulations are based on repealed federal guidance and are largely in place to prevent federal intervention in Oregon’s legal cannabis system, a concern that no longer carries the same significance, risk, or likelihood.
Oregon should adopt creative strategies to mitigate risks caused by existing federal cannabis laws and related barriers.
Government support of businesses, especially newer industries and smaller businesses is critical for promoting business equity and enhancing the state economy; however, Business Oregon, the state’s economic development agency, will not work with cannabis businesses due to concerns over losing its federal funding and criminal liability. This situation is especially problematic as other state agencies provide services and supports to the cannabis industry, including OLCC.
Oregon did not consider or include targeted equity provisions when developing the recreational cannabis program. Although the state is considering options for an equity program, there are limitations and barriers preventing significant progress.
OLCC’s current licensing system is not capable of tracking demographic data, hindering efforts to mitigate the disproportionate impacts experienced in communities targeted by the War on Drugs.
What we recommend
We made three recommendations to OLCC, and two recommendations to the Governor and Legislature. OLCC agreed with all of our recommendations. The response can be found at the end of the report.