State audit: Oregon should prepare for national competition on marijuana

Auditors in Oregon said the state needs to make legal and regulatory changes to its marijuana industry to better compete with other states in the event of a national legalization of the drug.

Oregon, which was one of the first states in the U.S. to legalize medical marijuana in 1998 and recreational marijuana in 2014, has a stockpile of marijuana. If weed was legalized nationally, it would be in competition with other large-scale producers, like California and Colorado, for exports.

But a report by state auditors this month said the regulatory framework in the state, developed quickly by state lawmakers after voters chose to legalize recreational marijuana almost a decade ago, is catered too much to trying to ensure the federal government does not intervene and punish the state.

The auditors said the state’s rules for the industry, which produced $311 million in tax revenues between 2019 and 2021, provide unnecessary barriers for production.

The report said the regulations — like fining a marijuana licensee thousands of dollars if its security system fails; requiring cannabis companies to purchase land before being considered for a license; and spending as much as $100,000 a year for product tracking — can be costly for businesses. But the auditors argued that the risk of federal intervention in the state, while still present, is now considerably lower than in 2014. Yet the expensive regulations have remained in place. 

Given federal regulations, marijuana businesses are also unable to use most banking services, meaning they must accept and use cash almost exclusively. The cash makes them a vulnerable target for criminals.

Along with considering changes to the regulations in the state, auditors said policymakers should consider stimulating growth in the industry by establishing grants, tax incentives and other financial advantages to creating a cannabis company.