Entrepreneurs learn the rules of pot business

About 1,000 people interested in becoming marijuana growers, processors or retailers packed into Salem's Armory Auditorium on Wednesday for two workshops about the rules governing the cannabis industry.

There were presentations from state agencies, advocacy groups and Rep. Ken Helm, D-Beaverton, on energy use, agricultural regulations, water rights, food safety, conflict resolution and more.

Dave Dillion, executive vice president of the Oregon Farm Bureau, a non-governmental organization representing agricultural interests that sponsored the workshop with the Oregon Association of Nurseries, said he knew that cannabis entrepreneurs were running out of patience when it came to state rulemaking.

"We're not quite there yet, but we're getting close," he said during the afternoon session.

Yet in presentations on pesticides and laboratory testing, attendees learned that the rulemaking process is far from over.

In fact, the draft rules are changing so frequently, David Farrer, a toxicologist at the Oregon Health Authority, said the information on his presentation slides had changed in the draft rules just the day before.

The Oregon Liquor Control Commission, which is running the licensing for recreational marijuana sales, released draft rules just last week. The rules, although only a draft, are the result of input from hundreds of industry stakeholders and citizens.

The OLCC anticipates the draft rules will take effect in January. The agency then has 180 days to adopt permanent rules.

What is certain is that marijuana businesses, from growing to processing to distribution and sales, will need to ask and answer a lot of questions before diving head-first in to business.

Does their grow location have water rights? If so, are they using groundwater or surface water? Is it a junior or senior water right? Has it been in use within the past five years? Who is the local water master?

Farmers will also need to know what their land is zoned for so they stay in compliance with state and local law.

Is the land an exclusive farm use zone? Can a building or dwelling legally be added to the property? Can marijuana grow businesses operate farm stands? (The answer to that one is no.)

And to get a marijuana plant from seed to sale, there's still more questions that need to be asked.

How will samples be collected and sent to a state accredited laboratory for testing? What will that testing cost? What will be tested for? If a product fails a pesticide test, how does the lab know it isn't a false positive?

Businesses will need to know how nuisance odor rules from the Oregon Department of Environmental Quality apply to them.

For weighing marijuana for sale, they'll have to purchase scales certified for commercial use and register each one with the Department of Agriculture.

They have the barriers of not being able to certify their products as organic because marijuana is illegal under federal law.

On top of the regulations, there's the added complexity of county and city rules.

Ten counties and 29 cities have instituted their own laws, in accordance with state law, prohibiting production, processing and retailing of marijuana in their jurisdiction. Most of the counties and cities are in Eastern Oregon.

And, some cities or counties will — or won't — allow marijuana business activities within certain zoning areas.

These are only a few of the contingencies Oregonian cannabis entrepreneurs need to be aware of. Add that to the complexity of the industry's changing rules, high license fees and the difficulty of securing capital and profit can be elusive.

For some cannabis entrepreneurs, the realities of a new market and regulations are setting in. Making it in the cannabis industry isn't a simple endeavor.

Despite initial estimates that Oregon's recreational cannabis sales topped $11 million during its first five days, numerous cannabis entrepreneurs — or potrepreneurs as they're referred to colloquially — report that they aren't making money hand over first. At least, not yet.

Some have expressed solace just in the fact that the milestone of repealing prohibition has been reached. Now cannabis businesses can come into the open and add to the economy rather than participate in the black market.

"From our perspective, in the Department of Agriculture, we view cannabis as welcome to the family. We're excited to work with growers and processors here in Oregon," Department of Agriculture Director Katy Coba said Wednesday. "We have a lot to learn and we hope that we can learn from you."

Although there's much that's yet to be decided on cannabis industry rules, Helm said it's not too late for the public to get involved.

He said the best way to make an impact is to show up to public hearings and provide specific suggestions toward solving a problem.

"If you want the decision makers to remember what you said, you have to hand them a piece of paper."

gfriedman2@statesmanjournal.com, (503) 399-6653, on Twitter @gordonrfriedman or Facebook.com/gordonrfriedman