As 2022 Legislative Session Ends, More Changes Coming to the Oregon Cannabis Industry

March 15, 2022

Danica Foster and Maureen McGee - Tonkon Torp LLP

View Full Article

Oregon

The 2022 Oregon Legislative Session closed on March 4 and with adjournment came a host of new laws applicable to the cannabis industry. We reviewed two of the most high profile pieces of legislation, HB 4016 (marijuana licensing moratoria) and SB 1564 (local hemp grower licensing moratoria), in our previous article. For this piece we will get more into the weeds to discuss pending changes to farmworker overtime, and new requirements for recordkeeping, reporting, testing, and more.

Farmworker Overtime

For cannabis industry members who employ agricultural workers, HB 4002, known as the farmworker overtime bill, establishes new maximum hour and overtime compensation requirements for those employees. The legislation establishes overtime pay requirements for agricultural workers in Oregon after 40 hours per week, with certain exemptions. The requirements are phased in over a five-year period, starting with 55 hours per week in 2023-24, 48 hours per week in 2025-26, and then 40 hours per week beginning in 2027. Employers may be held liable to agricultural workers for unpaid wages subject to enforcement by wage complaint to the Bureau of Labor and Industries or through private right of action.

For eligible employers who provide overtime compensation to agricultural workers, the bill also creates a refundable tax credit to offset a percentage of the additional cost of the overtime pay.

If you are an Oregon cannabis producer, it is important to be familiar with the laws for pay of agricultural workers. Contact your legal counsel if you have any questions about how these new overtime pay requirements may affect your business.

New Recordkeeping, Reporting, Testing, and Licensing Requirements

Changes coming out of two other bills passed this 2022 session, HB 4061 and HB 4074, are aimed mostly at combatting the social ills of illegal grows, which have been of particular concern in Southern Oregon for the last several years. These are both primarily bad actor bills, but bring with them new recordkeeping, reporting, testing, and licensing requirements that legitimate industry players need to be familiar with.

HB 4061 seeks to address issues of water theft at illegal grow operations. Illegal cannabis operations that use surface and ground water without water rights deplete the limited water resources available for legitimate uses, particularly in already water-strapped areas of Southern Oregon. According to the Oregon Water Resources Department (OWRD), these abuses often occur when water haulers legally obtain water from municipal fill stations, but then deliver the water to unregistered or unlicensed grow sites. Current law provides the OWRD with few options for adequate enforcement. HB 4061 establishes requirements for both the suppliers and purchasers of hauled water to maintain sales records for at least a year after each sale, with certain exceptions, and authorizes the OWRD to adopt rules for implementation. The bill also establishes new prohibitions and both civil and criminal penalties with a maximum fine of $25,000 for anyone who is hauling or arranging for the hauling of water to an unregistered or unlicensed cannabis grow site, or who is willfully or negligently providing false information to law enforcement or the OWRD regarding hauled water for cannabis. Legitimate Oregon cannabis producers should consult legal counsel to ensure recordkeeping for any purchased hauled water meets the new requirements. The bill becomes operative on the 91^st day after the Legislative Assembly adjourned.

Finally, HB 4074 includes a mishmash of new requirements and policies relevant to the cannabis industry. A primary focus of this bill was addressing humanitarian issues related to illegal grow operations. On that score, the bill requires an employee or worker of a marijuana licensee to report any human trafficking on the licensed premises to the Oregon Liquor and Cannabis Commission (OLCC). It also adds community-based organizations as eligible entities to receive financial assistance from the Illegal Marijuana Market Enforcement Grant Program to respond to the “humanitarian crises associated with unlawful marijuana cultivation and distribution operations,” and appropriates $6 million for that purpose. Previously, that grant program was only available to law enforcement agencies through cities and counties.

Other, unrelated policies contained in HB 4074 include:

• A provision directing the Oregon Department of Agriculture (ODA) to require rebuttal testing of cannabis to be performed in a department-operated lab
• Authorization for the OLCC to allow marijuana retailers who were mistakenly licensed to operate within 1,000 feet of a school to relocate to other premises without obtaining a new license
• A new requirement that marijuana testing lab employees must obtain worker permits from the OLCC

House Bill 4074 contains an emergency clause and will therefore take effect upon signature by Governor Kate Brown.

Questions? Contact Danica Foster, Maureen McGee, or any of the other experienced attorneys in Tonkon Torp’s Cannabis Industry Group. This update is prepared for the general information of our clients and friends. It should not be regarded as legal advice.

About Tonkon Torp
Tonkon Torp LLP is a leading business and litigation law firm serving public companies, substantial private enterprises, entrepreneurial businesses, and individuals throughout the Northwest. For more information, visit tonkon.com.