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A committee that has been meeting in Salem for months is close to coming up with a set of guidelines for medical marijuana regulation, but it's plans must still be reviewed.

(Beth Nakamura/The Oregonian)

Beginning March 2014, medical marijuana retailers will be required to register with the state, maintain encrypted electronic records and ensure around-the-clock security for their valuable inventory.

The panel charged with crafting Oregon's first registry of medical marijuana outlets wrapped up its work Wednesday in Salem, even as one committee member predicted the registry program would fail because of thin staffing.

The committee has met since September to hammer out details such as security, background checks and marijuana testing. A draft version of the rules – covered in 30 pages – spells out the specifics of how the industry will operate in Oregon, which in 1998 was one of the first states to allow marijuana for medicinal use.

The rules, which head to the Oregon Health Authority for additional review, will be the subject of a series of public hearings around the state next year before they are finalized.

The Oregon Legislature earlier this year approved a law, which for the first time regulates the robust marijuana retail industry that's has cropped up in parts of the state in recent years. While retailers will fall under a blizzard of regulations starting next spring, marijuana growers and the cottage industry of companies testing the drug for potency and impurities will continue to operate without state oversight even under the new law.

"I see a train wreck coming," said Rob Bovett, Lincoln County's district attorney and a member of the rules committee. He said the rules don't meet Gov. John Kitzhaber's demands for patient and public safety. Bovett said the program's low staffing – four people will ensure retailers are complying with the rules – is inadequate.

"We are setting ourselves up for a failure," he said.

Still, the committee on Wednesday clarified a handful of complex issues. For instance, the rules, which will be implemented by the Oregon Health Authority, make clear that registering with the state is "not a guarantee that a facility is permitted to operate." Retail outlets must be in areas zoned for commercial, industrial use or agricultural land.

The issue of local control is a major one for many Oregon communities, including Medford, where the city council has taken steps to prohibit dispensaries from opening in the city.

Tom Burns, who oversees the state's pharmaceutical drug programs and serves as facilitator of the rules committee, said the panel didn't weigh in on whether local governments can legally regulate dispensaries.

"Whether local government has the authority to do that or not is something (the Oregon Health Authority) is not a party to," he said.

Shannon O'Fallon, an attorney with the Oregon Department of Justice who helped craft the rules, said the health authority won't check on businesses to make sure they are in compliance with local rules.

"The Oregon Health Authority cannot tell local governments that they have to allow these facilities to operate," she said. "It may be a legal fight that ends up happening between facilities and local government."

The health authority will begin accepting registry applications on March 3. Medical marijuana establishments currently operating in Oregon – advocates and dispensary owners estimate there are as many as 200 – will have to apply and receive state approval to continue operating.

Burns said he expects a flurry of activity as soon as the state begins accepting applications.

Oregon lawmakers planned for four employees to oversee the registry, which will require background checks of applicants and inspections of establishments.

"We anticipate a rush," Burns said. "We will move as quickly as we can."

He said the limited staff means marijuana businesses will be approved without initial inspections by the state.

“We are going to do a paper approval, and then over the next 12 months” the agency will do an in-person inspection, he said.

Burns said he expects annual inspections to include checks on whether establishments are making sure customers have valid medical marijuana cards and audits of intake and outflow of marijuana.

"The purpose of this is public safety," he said. "We want to make sure this product is not going out the door into the black market."

The rules committee also opted to allow patients who work in these outlets to use marijuana while at work. Initially, the committee planned to ban marijuana consumption on premises, but Burns said he heard from dispensary owners who made a case for allowing their sick employees to use medical marijuana in the establishments.

That could mean employees end up smoking in these outlets, which Bovett said raises a host of employment and environmental law issues.

Burns said employees will be allowed to use marijuana out of sight of others on the job. He said it will be up to employers to determine whether employees can smoke the drug or consume the drug in other ways, such as marijuana-infused products or oils.

"As long as it's out of sight and in a separate room, away from the public areas," said Burns, "they can set up whatever they want."