By Matt Walstatter

My last article in CBE focused on the launch of Oregon’s Liquor Control Commission’s (OLCC) regulated recreational cannabis system, which has proceeded in fits and starts. The Oregon Health Authority (OHA) simultaneously implemented new rules for the medical system, which are causing some major ripples of their own.

The OHA-regulated medical system remains important since most sales in the state, including the majority of recreational sales, continue to take place in OHA-licensed medical stores. Recall that medical stores are temporarily authorized to sell limited products to recreational customers. This authorization sunsets at the end of this year, but until then, medical stores are doing most of the heavy lifting in Oregon.

The changes implemented on October 1 represent the most substantial modifications to the medical program in some time. What follows is a list of the most significant and impactful new rules.

Packaging and Labeling

Beginning October 1, all cannabis products sold in OHA-licensed dispensaries must be contained in a pre-approved package with a pre-approved label. In a rare instance of communication and coordination, the OLCC is handling all packaging and labeling approvals—even for OHA-licensed businesses.

The main criteria for approval of packaging is that it be childproof. Packages that are not childproof, but are otherwise compliant may be placed in a childproof exit bag. Single use items must be childproof when they leave the store. Multiple use items must have resealable, continuously childproof packaging. Packages that contain misleading information or are attractive to minors will not be approved.

The labeling requirements are more complex and detailed. Each type of product (flower, extract etc.) has different rules regarding what must be on the label. These rules specify information like product name, batch number, lab testing information and much more that must appear on the label. They also require specific warnings and the state’s universal symbol. The rules even set minimum font sizes and mandate that certain information be found in certain, specific areas of the packaging.

Keep in mind that not only must the packages and labels comply with all rules, they must also be specifically approved by regulators for each specific business and product. That being said, the state has provided a bit of wiggle room.

For packaging, once a package is approved by the OLCC, it goes on the approved list and other businesses may use it without receiving additional approval. This allows manufacturers of packaging to obtain pre-approval for their products and sell them as such, a significant value-add for their customers.

On the labeling side, a label that contains all required information and would be approvable by the OLCC may avoid the approval process if it is generic. A generic label is one that contains only type, with no images of any kind other than the universal symbol.

Licensing

Until early this year, medical cannabis stores bought all cannabis products from medical cardholders; no licenses for processors existed. Beginning last March, the state began requiring that all extracts be purchased from a licensed processor. Because of the long approval process, processors who have completed their application are placed on a list, and are authorized to process and sell products until they are either approved or denied for a license.

Beginning October 1, this requirement was extended to all other categories of processed products—concentrates, edibles, tinctures, capsules, topicals etc. A dispensary can only purchase these products from processors who have secured a license or who have at least completed the application.

This rule will change again on January 1. Beginning then, processors must actually be licensed in order to sell products to dispensaries. At that point, a completed application will no longer be sufficient.

Concentration Limits

Prior to October 1, 2016, medical edibles had no upper limit on potency. An edible could contain 10 mg, 100 mg or 1,000 mg of THC. The new rules cap the concentration of medical edibles at a maximum of 100 mg THC.

This is a concern for many medical patients who rely on high dose edibles to manage symptoms and treat diseases. They will now be forced to buy several products to obtain the medicine that they need. This is something that we’ll be watching closely.

Recreational edibles sold at OLCC-licensed rec stores can contain up to 50 mg THC, but these edibles cannot be sold to rec customers at OHA-licensed medical shops. Rec customers purchasing edibles at medical stores remain subject to the early start rules, which allow them one edible per day with a maximum of 15 mg THC.

Lab Testing

The new lab testing rules are by far the most problematic of the new medical rules for Oregon’s cannabis community. In fact, the new testing requirements are so rigorous and costly that they currently pose an existential threat to the entire industry.

New licensing requirements have reduced the number of labs from somewhere between 30-40 to less than ten. Of these ten, only four are licensed to screen for pesticides. This lack of lab capacity has pushed up prices and created a huge bottleneck in the system.

The lack of lab capacity combined with the increased regulatory burden has driven the price of a lab test from about $100 per test to $300-$400 per test.

The new rules also require labs to pull substantially more samples and to perform many more tests, sending costs through the roof. Here’s an example of just how burdensome the system has become.

Prior to October 1, a 300 gram batch of shatter would need one test at a cost of approximately $100. Now, that same batch would require eight tests, which could cost as much as $3,500 ($3,200 for testing, plus the value of the eight samples). All for a batch of shatter worth about $4,500.

Oregon businesses and organizations like the Oregon Cannabis Association are lobbying hard for immediate changes. Next time I’ll cover the lab situation in more detail, including more information about the rules themselves and the industry’s response to this crisis.