Chapter 27 - Marijuana Law

Published by the League of Oregon Cities

May 2021

CHAPTER 27:

MARIJUANA LAW

Oregon Municipal Handbook

Table of Contents

I. Federal Law ....................................................................................................................................... 4

II. State Law ............................................................................................................................................ 5

A. Medical Marijuana ........................................................................................................................ 6

B. Recreational Marijuana ................................................................................................................. 7

C. Industrial Hemp ............................................................................................................................ 8

D. State Taxation of Recreational Marijuana and State Shared Revenue .......................................... 8

E. Registration and License Types .................................................................................................... 9

F. Is a Consolidated System on the Horizon? ................................................................................. 11

G. Liens............................................................................................................................................ 11

H. Illegal Marijuana Market Enforcement Grant Program .............................................................. 12

III. Local Laws ....................................................................................................................................... 13

A. State Restrictions on the Location of Medical and Recreational Marijuana Activities ............. 13

i. Medical Grow Sites and Recreational Producers ..................................................................... 13

ii. Medical Processing Sites and Recreational Processors ........................................................... 14

iii. Medical Marijuana Dispensaries .............................................................................................. 15

iv. Wholesalers and Recreational Retailers ................................................................................... 15

v. Compatibility with Local Land Use Requirements .................................................................. 16

B. Local Government Means of Regulation .................................................................................... 16

i. Taxes ........................................................................................................................................ 16

ii. Ban on State-Registered and Licensed Activities .................................................................... 18

iii. Time, Place, and Manner Regulations ..................................................................................... 20

iv. Federal RICO Lawsuits ............................................................................................................ 21

Appendix A - Opt Out by Voter Referral ............................................................................................ 22

Appendix B - City Council Repeal of Ordinance that Prohibits Marijuana Businesses ................. 29

Appendix C - Local Tax by Voter Referral ......................................................................................... 33

Appendix D - Sample Time, Place, and Manner Restrictions on Marijuana Businesses ................ 40

Oregon Municipal Handbook – Chapter 27: Marijuana Law 3

League of Oregon Cities

Chapter 27: Marijuana Law

This chapter begins with the history of marijuana as a controlled substance under

federal law and the recent changes to how this criminal drug law is enforced. In Part II, the

chapter turns to Oregon’s marijuana laws, which include the Oregon Medical Marijuana Act

and the Adult and Medical Use of Cannabis Act. This part addresses how the state regulates

marijuana-related activities and how these activities are taxed under state law. In Part III, this

chapter addresses the role of local governments under these laws and the degree of autonomy

that cities possess under their home rule authority to tax or regulate marijuana. Finally, this

chapter offers four appendices with sample ordinances that address “opting out” of local

marijuana establishments, as well as a sample tax measure and a sample ordinance that

imposes time, place, and manner restrictions on marijuana businesses. For more information on

Oregon’s marijuana laws, visit the LOC’s website for its Topics A-Z webpage on marijuana.

Marijuana Overview, League of Or Cities, https://www.orcities.org/resources/reference/topics-

z/details/marijuana (last accessed April 7, 2021).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 4

League of Oregon Cities

I. FEDERAL LAW

The history of marijuana as a prohibited substance under federal law dates back as

early as 1937 with the enactment of the Marijuana Tax Act, a law that effectively criminalized

the possession of marijuana for most purposes.

In the 1950s, the U.S. enacted stricter

sentencing laws that imposed mandatory minimum sentences for drug-related offenses; these

laws criminalized “narcotics” and defined this term to include marijuana.

After a 1969

Supreme Court ruling declared certain aspects of those laws unconstitutional, the U.S. enacted

the Controlled Substance Act of 1970 (CSA), which continued to criminalize unauthorized

possession of marijuana, as well as other drugs like heroin and morphine.

Today, marijuana remains a Schedule I controlled substance under the CSA.

Schedule

I substances are those for which the federal government has found there is (1) a high potential

for abuse; (2) no currently accepted medical use in treatment in the United States; and (3) a

lack of accepted safety for use of the drug or other substance under medical supervision.

Despite this, Oregon and more than a dozen other states have taken steps in recent years to

legalize marijuana for adult recreational use.

Some states also permit the use of marijuana for

medical purposes, including Oregon.

In December 2014, Congress passed a law directing the Department of Justice (DOJ) to

refrain from using funding to prevent states, including Oregon, from implementing state

medical marijuana laws.

In August 2016, the Ninth Circuit Court of Appeals upheld this law

in U.S. v. McIntosh and found that the DOJ could not use any funds to prosecute individuals

who engage in conduct associated with the use, distribution, possession and cultivation of

medical marijuana, provided the individuals’ conduct was specifically permitted by a state

statute and the individual fully complied with the terms of said state statute.

That decision

was only applicable to medical marijuana, and the Ninth Circuit’s decision cautioned that the

manufacture, distribution, and possession of marijuana is still a federal crime. The court found

that while the DOJ is not presently able to prosecute individuals for these crimes, that

Richard J. Bonnie, The Surprising Collapse f Marijuana Prohibition: What Now?, 50 UCDLR 573, 577 (2016).

Id.

Id.; see also Leary v. U.S., 395 U.S. 6, 12 (1969).

See 21 USCA § 812.

See 21 USCA § 812(b)(1).

Cannabis Overview, NATIONAL CONFERENCE OF STATE LEGISLATURES, https://www.ncsl.org/research/civil-and-

criminal-justice/marijuana-overview.aspx (last accessed March 25, 2021).

Id.

See U.S. v. McIntosh, 833 F.3d 1163, 1178-80 (9

Cir. 2016).

Id.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 5

League of Oregon Cities

limitation could expire if not renewed.

Since 2014, Congress has included this spending

limitation in every ones of its appropriations acts.

The federal government has been less welcoming of recreational marijuana, but recent

administrations have nevertheless shown they are reluctant to prosecute individuals for

marijuana-related offenses if the activities are legal under state law. The Obama

Administration, for example, took the position that prosecutorial resources were not to be used

to enforce marijuana offenses as long as the processing, sale, and possession of marijuana

complied with state law.

The Trump Administration, meanwhile, denounced recreational

marijuana publicly yet left enforcement of the CSA in states like Oregon in the discretion of

local U.S. attorneys.

In Oregon, this meant that federal prosecutors focused on

overproduction, interstate trafficking, and marijuana activities that are carried out on federal

land or by criminal organizations.

As this brief history demonstrates, federal prosecution of marijuana-related activities

has yet to impact marijuana establishments that comply with state law. That said, Oregon’s

laws on medical and recreational marijuana ultimately do not, and cannot, provide immunity

from federal prosecution. Consequently, if the federal government does choose to act under the

CSA against establishments that are legal under state law, the operators could be subject to

prosecution.

II. STATE LAW

Two separate regulatory structures govern the marijuana industry in Oregon. The first is

the Oregon Medical Marijuana Act (OMMA), which was enacted following the approval of

Measure 67 by Oregon voters in 1998.

This act regulates medical marijuana facilities and the

use of medical marijuana by registered cardholders.

The second is the Adult and Medical Use

of Cannabis Act, which was enacted in 2015 following the approval of Measure 91 by Oregon

Id.

See Robert Becher & William Weinreb, Ninth Circuit Clarifies Restrictions on Prosecutions Related to Medical

Marijuana, JD

SUPRA, July 17, 2020, https://www.jdsupra.com/legalnews/ninth-circuit-clarifies-restrictions-on-

87879/ (last accessed March 26, 2021).

See Memo from James M. Cole to All United States Attorneys, Guidance Regarding Marijuana Enforcement

(Aug 29, 2013), available at https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf

(last

accessed March 10, 2021).

Memorandum from U.S. Attorney for the District of Oregon Billy Williams (May 18, 2018), https://media.

oregonlive.com/marijuana/other/2018/05/18/USAOR-Marijuana%20Enforcement%20Priorities-Final%20(1).pdf

(last accessed March 26, 2021).

Id.

See Michael Rosenblum & Barry Weisz, Cannabis State-By-State Regulations, JD SUPRA, Oct. 5, 2018,

https://www.jdsupra.com/legalnews/cannabis-state-by-state-regulations-46200/

(last accessed March 26, 2021).

Id.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 6

League of Oregon Cities

voters in the 2014 general election.

This act mostly regulates recreational marijuana facilities,

which produce marijuana to sell to any individuals who are 21 and over.

A. Medical Marijuana

Oregon’s medical marijuana program is codified at ORS 475B.785 to ORS 475B.949.

Since the enactment of the program in 1998, the Legislature has amended the OMMA on

several occasions and the Oregon Health Authority (OHA) — the state agency tasked with

administering the program — has promulgated rules that provide further specificity about the

program.

Generally, under the OMMA, a person suffering from a qualifying debilitating health

condition must show written documentation from a physician that the medical use of marijuana

may mitigate the symptoms or effects of that condition.

Cardholders also must reapply

annually with updated written documentation.

The patient may designate a caregiver and a

grower if the patient decides not to grow his or her own marijuana.

Patients, caregivers, and

growers who comply with the OMMA are exempt from state criminal prosecution for any

criminal offense in which possession, delivery or manufacture of marijuana is an element.

Patients without medical marijuana cards may still claim immunity from state criminal

prosecution if they comply with the OMMA and, within 12 months prior to the arrest at issue,

had received a diagnosis of a debilitating medical condition for which a physician had advised

medical marijuana could mitigate the symptoms or effects.

The OMMA also provides

protection from state criminal prosecution for medical marijuana processors and medical

marijuana dispensaries acting in compliance with the law.

The OMMA originally was envisioned as a system in which patients would grow for

themselves the marijuana that they needed, or designate a small-scale grower, and, as a result,

the regulation was relatively minimal. The OMMA did not originally envision large-scale

grow sites, processing sites or dispensaries. However, as time went on, the Legislature saw a

need to impose more restrictions on medical marijuana grows, create a system for registering

processors, and create a system for state-registered facilities to lawfully transfer medical

marijuana between growers and patients or caregivers.

Id.

See ORS 475B.785 to ORS 475B.949.

See OAR 333-080-0010 to OAR 333-008-9905.

ORS 475B.797(2).

ORS 475B.797(6)(b).

See ORS 475B.804; see also ORS 475B.810.

ORS 475B.907.

ORS 475B.913.

ORS 475B.907.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 7

League of Oregon Cities

Legislation in 2015, 2016, 2017, and 2018 addressed some of the local government

concerns about the lack of regulation that had not been addressed in the original legislation.

For example, a medical marijuana grow site now can have only a limited number of mature

marijuana plants and a limited amount of usable marijuana harvested from those plants.

addition, medical marijuana is now classified as a farm crop, but the Legislature was careful to

carve out local regulatory authority not available for other farm crops.

The Legislature also

added a new registration category for medical marijuana processors and imposed greater

restrictions on those facilities.

Along similar lines, the Legislature also added further

restrictions on where certain medical marijuana facilities can locate, and imposed new testing,

labeling, inspection and reporting requirements.

With the Legislature’s more robust statutory scheme came more extensive medical

marijuana administrative rules from the OHA.

These rules cover many of the gaps left by the

Legislature, including setting out a detailed registration system and requirements for testing,

reporting, background checks, security and advertising, among other things.

B. Recreational Marijuana

In November 2014, Oregon voters approved Ballot Measure 91, which decriminalized

the production and recreational use of certain amounts of marijuana by persons 21 years of age

or older.

The Oregon Liquor Control Commission (OLCC) is charged with licensing and

regulating the growing, processing, and sale of marijuana in the recreational market.

particular, the Legislature tasked the OLCC with administering a license program for

producers, processors, wholesalers, and retailers; under that program, a person may hold more

than one type of license.

In the years since the approval of Measure 91, the Legislature has made notable

changes to its laws governing recreational marijuana. For example, the Legislature added a

provision in 2017 that prohibits marijuana establishments from being sited within 1,000 feet of

ORS 475B.831.

See, e.g., ORS 475B.928.

ORS 475B.840.

See, e.g., ORS 475B.870; see also ORS 475B.600 to ORS 475B.655.

See OAR 333-008-0010 to OAR 333-008-9905.

See, e.g., OAR 333-008-2070.

See Michael Rosenblum & Barry Weisz, Cannabis State-By-State Regulations, JD SUPRA, Oct. 5, 2018,

https://www.jdsupra.com/legalnews/cannabis-state-by-state-regulations-46200/

(last accessed March 26, 2021).

See OAR 845-025-1000 to OAR 845-025-8750.

Id.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 8

League of Oregon Cities

a school, with limited exceptions.

The Legislature also expanded the OLCC’s rulemaking

authority, tasking the agency with, among other things, developing and maintaining a seed-to-

sale tracking system and adopting restrictions on the size of recreational marijuana grows.

Finally, the Legislature enacted a provision that requires the OLCC to create a system for

transitioning medical marijuana registrants to OLCC recreational licensing, with the possibility

for recreational licensees to register to engage in medical marijuana activities.

C. Industrial Hemp

The OLCC is tasked with developing rules to govern the transfer of industrial hemp

products into the retail marijuana market.

The Oregon Department of Agriculture also

licenses hemp growers, processors, and seed providers.

To sell hemp products at an OLCC-

licensed marijuana retailer, a hemp processor must apply for and obtain an “industrial hemp

grower certificate” from the OLCC.

OLCC-licensed processors, in turn, must receive a

“hemp endorsement” from the OLCC to receive raw hemp material and process that material

into concentrates or extracts.

Once processed, hemp material may be transferred to retailers.

D. State Taxation of Recreational Marijuana and State Shared Revenue

The sale of recreational marijuana items by OLCC-licensed retailers is subject to a 17

% state sales tax, to be collected by those retailers.

Medical marijuana cardholders and

caregivers do not have to pay the retail tax.

State tax revenue is distributed across the state government and local governments

through quarterly payments.

As an initial matter, not all local governments are entitled to the

revenue; only cities and counties that (1) have not banned marijuana premises in their

jurisdiction and (2) have provided a timely OLCC certification are eligible to receive state

shared revenue payments for state marijuana taxes collected.

Electronic certifications to the

OLCC, confirming whether a city has banned marijuana facilities in its jurisdiction, are

RANEE NIEDERMEYER, OR. LIQUOR CONTROL COMM., 2017 LEGISLATIVE SESSION SUMMARY 13 (2017),

https://www.oregon.gov/olcc/docs/Legislative_docs/2017_Session_Bill_Summary.pdf

(last accessed April 2,

2021).

See generally OAR 845-025-1000 to OAR 845-025-08750.

ORS 475B.167.

ORS 571.336.

ORS 571.272.

OAR 845-025-2700.

OAR 845-025-3210.

OAR 845-025-2750.

See ORS 475B.705.

ORS 475B.707.

ORS 475B.759(3)(a).

See ORS 475B.759(4)(A), ORS 475B.759(6)(b).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 9

League of Oregon Cities

required annually.

A city’s failure to timely certify will result in a forfeiture of its share of the

state revenue, with that city’s share going to the cities that filed the required certifications.

Eligible cities receive 10% of the total marijuana tax revenue.

The revenue is

distributed among cities based 75 % on the city’s population and 25 % on licensure numbers in

the city, as compared to the populations and total licenses of all cities that opt to receive

marijuana tax revenue.

In part, this means that a city without any retailers or medical

marijuana shops is still eligible to receive its share of the population-based revenue, provided

that it meets the state’s requirements for receiving marijuana revenue. The remaining tax

revenues are distributed as follows: 10 % to counties; 40 % to the Common School Fund; 20 % to the

Mental Health Alcoholism and Drug Services Account; and 15 % to the State Police Account.

State shared marijuana tax payments will be bundled with any local tax payments for

those cities that have an intergovernmental agreement with the Oregon Department of Revenue

(DOR) for the collection of their local tax. This sample agreement is available on the

Marijuana topics page of the LOC website.

To receive an accompanying report to the tax

payment distributed, cities must provide a secrecy laws certificate to the DOR.

OLCC certification questions can be directed to [email protected] or (503) 872-

6366. DOR tax questions can be directed to marijuanatax.d[email protected] or (503) 947-2597.

E. Registration and License Types

In the context of medical and recreational marijuana, there is a total of 10 activities that

require registration or a license from the state. The table on the next page provides a summary

of each type of activity and its registration/licensing requirements along with a citation to the

laws that govern those activities.

Id.

ORS 475B.759(3)(b)(A).

Id.

See generally ORS 475B.759.

Marijuana Overview, LEAGUE OF OREGON CITIES, https://www.orcities.org/resources/reference/topics-z /details

/marijuana (last accessed April 6, 2021).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 10

League of Oregon Cities

Oregon’s Ten Regulated Marijuana Activities

Grow Make Products Wholesale Transfer to User

Research &

Testing*

Medical Regulated Activities

Marijuana Grow

Site:

Location for

planting,

cultivating,

growing,

trimming, or

harvesting

marijuana or

drying marijuana

leaves or flowers

ORS 475B.810; OAR

333-008-010 to 333-

008-0750

Marijuana

Processing Site:

Location for

compounding or

converting

marijuana into

medical products,

concentrates or

extracts

ORS 475B.840;

OAR 333-008-1600 to

333-oo8-2200

Wholesaler:**

Purchase

marijuana items

for resale to a

person other than a

consumer.

License with

OLCC

ORS 475B.129; OAR

845-025-3600

Dispensary:

Transfer usable

marijuana,

immature

marijuana plants,

seed, and medical

products,

concentrates and

extracts to patients

and caregivers.

ORS 475B.858; OAR

333-008-1000 to OAR

333-008-1248

Laboratories:

Conducts testing of

recreational and

medical marijuana

items.

Obtain license

under ORS

475B.560 and

OAR 845-025-

5000 to 845-025-

5075.

Obtain OHA

accreditation

ORS 475B.565

Researchers:

Public or private

research of

medical and

recreational

marijuana,

including medical

and agricultural

research

Certification from

OLCC

ORS 475B.286 and

OAR 845-025-5300 to

845-025-5350

Recreational Regulated Activities***

Producers:

Manufacture,

plant, cultivate,

grow, harvest

Obtain license

from OLCC

ORS 475B.070; OAR

845-025-2000 to OAR

845-025-2080

Processors:

Process,

compound or

convert marijuana

into products,

concentrates or

extracts, but does

not include

packaging or

labeling

Obtain license

from OLCC

ORS 475B.090; OAR

845-025-3200 to OAR

845-025-3290

Wholesalers:

Purchase

marijuana items

for resale to a

person other than a

consumer

Obtain license

from OLCC

ORS 475B.100; OAR

845-025-3500

Retailers:

Sell marijuana

items to a

consumer

Obtain license

from OLCC

ORS 475B.105; OAR

845-025-2800 to OAR

845-025-2890

*These activities support both the recreational and medical marijuana systems.

**There is no means for obtaining a medical wholesale license from OHA. Legislation in 2016 allows an OLCC licensed

recreational wholesaler to obtain authority from OLCC to also wholesale medical marijuana.

***In addition to the ten types of regulated activities, certain employees must also obtain an OLCC handlers permit. ORS

475B.261; OAR 845-025-5500 to OAR 845-025-5590.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 11

League of Oregon Cities

F. Is a Consolidated System on the Horizon?

During the 2016 legislative session, the Legislature amended the state’s recreational

marijuana laws to begin shifting towards a consolidated system. As noted above, the

Legislature imposed a requirement on the OLCC to adopt rules governing the process of

transitioning from medical registration with the OHA to medical and recreational licensing

with the OLCC.

In particular, state law required the OLCC to establish a program that allows

medical registrants to convert to a retail license.

Recreational marijuana licensees also are

allowed to register with the OLCC to distribute medical marijuana.

These laws and

regulations essentially allow any one establishment to engage in both retail and medical

marijuana activities.

Although oversight of marijuana activities is somewhat consolidated under the OLCC,

cities should note that the recreational and medical programs continue to retain separate

characteristics and, as such, marijuana businesses are still subject to different rules. For

example, in 2016, the Legislature added a separate description of what constitutes medical

marijuana, with a definition that suggests that medical products may carry a different potency

than recreational marijuana.

Additionally, as discussed below, the spacing requirements

remain different; while medical marijuana dispensaries are prohibited from being within 1,000

feet of each other under state law, there is no such requirement for recreational retailers unless

a city adopts it as a local time, place, and manner regulation.

G. Liens

Properties can be subject to liens under ORS Chapter 475B. Liens may be placed if the

owner of a building or premises knowingly has used (or allowed another to use) the building or

premises for the production, processing, sale or use of marijuana items contrary to the

provisions of any state law or local ordinance regulating the production, processing, sale or use

of marijuana items.

If state or local law is violated, the building or premises is subject to a

lien and may be sold to pay all fines and costs assessed against the occupants of the building or

premises.

ORS 475B.167.

Id.; see also OAR 845-025-2910.

See, e.g., ORS 475B.105(3)(e).

ORS 475B.015(27).

ORS 475B.858(3)(d); see also ORS 475B.486(2)(a).

ORS 475B.424.

Id.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 12

League of Oregon Cities

H. Illegal Marijuana Market Enforcement Grant Program

In 2018, the Legislature created the Illegal Marijuana Market Enforcement Grant

Program (the “Program”) through Senate Bill 1544.

The purpose of this program is to help

cities and counties defray the costs incurred by local law enforcement agencies in addressing

unlawful marijuana cultivation and distribution.

The Oregon Criminal Justice Commission

administers the program, in part by reviewing grant applications and publishing annual reports

that measure the status and effectiveness of the program.

The program is funded with $1.5

million per year, paid for out of the funds that go to the Oregon Liquor Control Commission

for OLCC marijuana operations.

Cities in rural parts of the state — particularly southwest

Oregon — with high marijuana production and inadequate law enforcement should seriously

consider participation in the new program.

The grant program runs through Jan. 1, 2024,

unless it is extended.

2018 Or Laws Ch. 103, §§ 13-17, 26.

Id.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 13

League of Oregon Cities

III. LOCAL LAWS

As set out in ORS 475B.486, ORS 475B.928, and under their home rule authority,

cities have several options for regulating marijuana activities. Whether to regulate is a local

choice. What follows is an overview of the options available to cities. However, before

embarking on any form of regulation, cities should begin by examining the 10 types of

marijuana activities authorized by state statute and the restrictions that state law places on each

type of activity to determine whether a gap exists between what state law allows and what the

community desires to further restrict.

A. State Restrictions on the Location of Medical and Recreational

Marijuana Activities

Before regulating or prohibiting state-registered or licensed marijuana activities, the

LOC recommends that cities examine the existing restrictions under state law. First, it is

important to know about any state restrictions that create a regulatory “floor.” In other words,

although courts generally have upheld a city’s authority to impose more stringent restrictions

than those described in state law, a city generally cannot impose restrictions that are more

lenient than those described in state law.

Second, some cities may determine that the state’s

limits on marijuana activities are sufficient, and that local regulation is therefore unnecessary.

i. Medical Grow Sites and Recreational Producers

ORS Chapter 475B does not restrict where medical marijuana grow sites or recreational

marijuana producers can locate. In fact, in 2016, the Legislature clarified that both medical and

recreational marijuana are farm crops, allowing marijuana to be grown on land zoned for

exclusive farm use.

Nonetheless, such grows are still subject to local time, place, and manner

restrictions.

See, e.g., City of La Grande v. Public Emp. Retirement Bd., 281 Or 137, 140 (1978) (noting that local laws are

preempted by state law where they impose rules that are “incompatible” with state law). For more information on

Oregon’s state preemption doctrine, refer to the chapter of this Handbook on home rule).

ORS 475B.526.

ORS 475B.928.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 14

League of Oregon Cities

In addition, the OLCC has adopted some administrative restrictions on where

recreational marijuana facilities can locate, particularly recreational marijuana producers.

For

example, all recreational marijuana facilities are prohibited from locating on federal property.

Facilities also are prohibited from locating at the same physical location or address as a liquor

licensee or at the same physical location or address as an OHA-licensed medical marijuana

facility.

Recreational marijuana growers in particular are prohibited from locating on public

land, the same tax lot or parcel as another licensed grower under common ownership, and

several other areas.

Cities should review these limitations before adopting their own time,

place, and manner ordinances.

In addition to location restrictions, state statutes and administrative rules place

limitations on the number of plants that a medical marijuana grower can grow in residential

zones, and on the size of recreational marijuana grow canopies.

Generally, a medical

marijuana grow site may have up to 12 mature plants if it is in a residential zone, and up to 48

mature plants if it is located in any other zone.

However, there are exceptions for certain

grow sites that were in existence and had registered with the state by January 1, 2015.

For

those grow sites, the number of plants is limited to the number of plants that were at the grow

site as of December 31, 2015, as long as that number does not exceed 24 mature plants per

grow site in a residential zone and 96 mature plants per grow site in all other zones.

grower loses the right to claim those exceptions, however, if the grower’s registration is

currently suspended or revoked.

ii. Medical Processing Sites and Recreational Processors

Processors that produce medical marijuana extracts cannot be located in an area zoned

for residential use.

The OHA has defined “zoned for residential use” to mean “the only

primary use allowed outright in the designated zone is residential.”

See OAR 845-025-1230.

OAR 845-025-1230(1)(a).

OAR 845-025-1230(1)(b)(B)-(D).

OAR 845-025-1230(2).

ORS 475B.085; ORS 475B.831.

Id.

ORS 475B.831(5)(a).

ORS 475B.840(3)(a).

OAR 333-008-0010(77).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 15

League of Oregon Cities

Processors that make recreational marijuana extracts cannot be located in an area zoned

exclusively for residential use, and they are also subject to the general location restrictions in

the OLCC rules outlined above.

iii. Medical Marijuana Dispensaries

Under state law, medical marijuana dispensaries cannot be located in residential zones,

at the same address as a grow site, or within 1,000 feet of another dispensary.

In addition, dispensaries cannot locate within 1,000 feet of most public elementary or

secondary schools, nor within 1,000 feet of a private or parochial elementary or secondary

school.

However, if a school is established within 1,000 feet of an existing dispensary, the

dispensary may remain where it is unless the OHA revokes its registration.

A dispensary can

also be located as close as 500 feet to a school if the OHA finds there is a physical or

geographic barrier between the school and establishment that prevents children from being

capable of traversing there.

iv. Wholesalers and Recreational Retailers

Wholesale and retail licensees may not locate in an area that is zoned exclusively for

residential use and are subject to many of the same restrictions on location.

The same

requirements that apply to medical marijuana dispensaries regarding their proximity to schools

apply to retail licensees.

If a school is established within 1,000 feet of an existing retail

licensee, the licensee may remain where it is unless the OLCC revokes its license.

establishment can be located as close as 500 feet to a school if the OLCC finds there is a

physical or geographic barrier between the school and establishment that prevents children

from being capable of traversing there.

State law does not impose a 1,000-foot buffer between retailers as it does for medical

marijuana dispensaries. While cities can create this buffer under local law, state law prohibits

cities from requiring a distance greater than 1,000 feet from another retailer.

In other words,

the maximum buffer that can exist between retailers is 1,000 feet.

OAR 845-025-1230(1)(b).

ORS 475B.858(3).

Id.

ORS 475B.870.

ORS 475B.864.

See, e.g., ORS 475B.105.

Id.

ORS 475B.115.

ORS 475B.109.

ORS 475B.486.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 16

League of Oregon Cities

v. Compatibility with Local Land Use Requirements

In addition to express restrictions on the location of certain marijuana facilities, state

law also requires certain marijuana facilities to obtain a land use compatibility statement

(LUCS) from a local government before the state will issue a license.

In particular,

recreational producers, processors, wholesalers, and retailers must request a LUCS from a local

government before the OLCC issues a license.

A LUCS describes whether the proposed use

is allowable in the zone requested, and must be issued within 21 days of (1) Receipt of the

request if the land use is allowable as an outright permitted use; or (2) Final local permit

approval, if the land use is allowable as a conditional use.

Certain small-scale medical

marijuana growers outside of a city’s limits do not have to request a LUCS when applying for a

recreational marijuana license.

A local government that has a ballot measure proposing to ban marijuana activities does

not have to act on the LUCS while the ballot measure is pending.

B. Local Government Means of Regulation

In recent years, the Legislature has enacted several pieces of legislation that have

encroached on, but not entirely preempted, a city’s home rule authority to regulate marijuana.

What follows is a discussion of those various encroachments, and the options that remain

available for cities that may wish to regulate marijuana activities.

i. Taxes

The OMMA was silent on local authority to tax. Local governments, therefore, retained

their home rule authority to tax medical marijuana. Measure 91, on the other hand, attempted

to preempt local government authority to tax recreational marijuana, though there were

significant questions regarding the effect and scope of that purported preemption.

Under ORS 475B.491, adopted in 2015, the Legislature vested authority to “impose a

tax or fee on the production, processing or sale of marijuana items” solely in the Legislature,

thereby preempting local governments from imposing their own tax except as provided by the

law.

The Legislature went on to provide that cities may adopt an ordinance imposing a tax or

fee of up to 3 % on the sale of marijuana items by a retail licensee.

The ordinance must be

ORS 475B.063.

Id.

ORS 475B.074(e).

ORS 475B.063(3).

ORS 475B.491.

ORS 475B.491(4)(a).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 17

League of Oregon Cities

referred to the voters in a statewide general election, meaning an election in November of an

even-numbered year.

However, if a city has adopted an ordinance prohibiting the

establishment of any other recreational or medical marijuana establishments in the city, the city

may not impose a local tax under that provision.

100

In addition, in 2016, the Legislature

adopted a restriction on local governments by providing that a local tax may not be imposed on

a medical marijuana patient or caregiver.

101

Cities that do impose a local tax may look to the state for help in administering that tax.

Recognizing that cities, particularly smaller cities, may not have the resources to administer

and enforce a local marijuana tax, the Legislature, in 2016, authorized the Oregon Department

of Revenue (DOR) to collect, enforce, administer, and distribute locally-imposed marijuana

taxes by intergovernmental agreement.

102

The DOR has prepared a sample intergovernmental

agreement that cities may use as a starting point in their negotiations with the DOR when

seeking assistance in collecting the local tax. This sample agreement is available on the

Marijuana topics page of the LOC website.

103

If the municipality has an agreement with the

DOR for tax administration, the marijuana business would make local tax payments the same

way it makes state tax payments. The business would also include the local tax information on

the quarterly return filed with the DOR. For questions about, cities should contact the DOR at

[email protected] or at (503) 947-2597.

For those cities that enacted taxes on medical or recreational marijuana prior to the

Legislature’s adoption of ORS 475B.491, the status of those taxes remains an open question.

Arguably, cities that had “adopt[ed] or enact[ed]” taxes prior to the effective date of ORS

475B.491 are grandfathered in under the law. However, the issue is not free from doubt, and

cities that decide to collect on pre-ORS 475B.491 taxes should be prepared to defend their

ability to do so against legal challenge. Consequently, cities that plan to continue to collect

taxes imposed prior to the passage of ORS 475B.491 should work closely with their city

attorney to discuss the implications and risks of that approach.

If a city council amends an existing marijuana ordinance to prohibit or allow any of those listed below, the

ordinance can be amended without referring the amendment to the electors of the city: a medical marijuana

processing site; a medical marijuana dispensary; a marijuana producer that holds a license issued under ORS

475B.070 and that has been designated as an exclusively medical licensee; or, a marijuana retailer that holds a

license issued under ORS 475B.110 and is designated as an exclusively medical licensee.

100

ORS 475B.968(7).

101

ORS 475B.491(4).

102

ORS 305.620(1).

103

Marijuana Overview, LEAGUE OF OREGON CITIES, https://www.orcities.org/resources/reference/topics-z

/details /marijuana (last accessed April 6, 2021).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 18

League of Oregon Cities

ii. Ban on State-Registered and Licensed Activities

Under ORS 475B.968, cities may prohibit within their jurisdiction the operation of

recreational marijuana producers, processors, wholesalers, and retailers, as well as medical

marijuana processors and medical marijuana dispensaries.

104

This law is silent on whether a

city can ban medical marijuana growers, marijuana laboratories, and marijuana researchers

from operating in the city.

105

However, ORS 475B.968 does not indicate that the bill’s process

for banning marijuana activities is the exclusive means of doing so. Cities considering banning

medical marijuana grow sites, marijuana laboratories, or marijuana researchers should consult

their city attorney about whether they can do so under either home rule, federal preemption or

both legal theories. Please be advised that this approach may entail significant risk of litigation

and potential financial implications.

Before December 24, 2015, cities located in counties that voted against Measure 91 by

55 % or more (Baker, Crook, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur,

Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler Counties) had the opportunity to

enact a ban through council adoption of an ordinance prohibiting any of the six activities listed

in ORS 475B.968. For cities that did not take that approach within the required timeline, and

for cities not located in those counties, the city council may adopt an ordinance banning any of

the six activities, but that ordinance must be referred to the voters at a statewide general

election, meaning an election in November of an even-numbered year.

106

Medical marijuana

dispensaries and medical marijuana processors that have registered with the state by the time

their city adopts a prohibition ordinance are not subject to the ban if they have successfully

completed a city or county land use application process.

107

Under either procedure, as soon as the city council adopts the ordinance, it must submit

it to the OHA for medical bans and the OLCC for recreational bans, and those agencies will

stop registering and licensing the banned facilities.

108

In other words, for cities using the

referral process, the council’s adoption of an ordinance acts as a moratorium on new facilities

until the election occurs. Adoption of such an ordinance will also make a city ineligible for

state shared revenues from the state marijuana tax distributions, as cities are required to certify

annually to the OLCC that they do not have a ban to receive payment.

109

For cities using the referral process, it is also important to note that once the elections

official files the referral with the county election office, the ballot measure is certified to the

104

ORS 475B.968.

105

Id.

106

Id.

107

ORS 475B.968(8)-(9).

108

ORS 475B.968(3)-(4).

109

ORS 475B.759(4)(a).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 19

League of Oregon Cities

ballot. At that point, the restrictions on public employees engaging in political activity will

apply. Consequently, cities should consult the secretary of state and their city attorney to

ensure that public employees are complying with state elections law in their communications

about the pending measure. For more information on these laws and process, consult the

Handbook chapter on Oregon election law.

If voters reject a ballot measure proposing to ban marijuana activities, the OHA and the

OLCC will not begin registering and licensing marijuana facilities until the first business day

of the January following the statewide general election.

110

This provision affords time to cities

that want to regulate marijuana businesses, allowing them the opportunity to adopt time, place,

and manner ordinances after the ban is rejected and before new registrations or licenses are

issued by the state.

In determining whether to prohibit any of the marijuana activities registered or licensed

by the state, cities may want to consider the tax implications. Cities that enact a prohibition on

any marijuana activity will not be eligible to receive state marijuana tax revenues or impose a

local tax, even if the city bans only certain activities and allows others.

111

If a city council amends an existing marijuana ordinance to prohibit or allow any of

those listed below, the ordinance can be amended without referring the amendment to the

electors of the city: a medical marijuana processing site; a medical marijuana dispensary; a

marijuana producer that holds a license issued under ORS 475B.070 and that has been

designated as an exclusively medical licensee; and, a marijuana retailer that holds a license

issued under ORS 475B.110 and is designated as an exclusively medical licensee.

112

Similarly, the governing body of a city may repeal an ordinance without referring the

decision to voters.

113

If an ordinance is repealed, the city must give notice of the change to the

appropriate regulatory agency, either OHA or OLCC.

114

It is also important to note that, in 2016, the Legislature preempted cities from

imposing restrictions on certain aspects of the personal possession of recreational and medical

marijuana.

115

As a result, cities interested in enacting a ban on any aspect of personal use and

growing of marijuana should consult with their city attorney to discuss the scope of the

preemption, and whether the city can regulate or ban possession under either home rule, federal

110

ORS 475B.968(5).

111

ORS 475B.968(7).

112

ORS 475B.968(6).

113

ORS 475B.496.

114

ORS 475B.496(2).

115

ORS 475B.477.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 20

League of Oregon Cities

preemption or both legal theories. Again, this option involves risks that could have legal and

financial implications for a city.

iii. Time, Place, and Manner Regulations

Under Oregon law, cities are permitted to adopt “reasonable regulations” of

commercial marijuana activities.

116

This includes placing conditions on commercial marijuana

activities through the issuance of local business licenses or through a separate licensing or

registration system for marijuana establishments.

ORS 475B.486 and ORS 475B.928 provide that local governments may impose

reasonable regulations on the time, place, and manner of operation of recreational and medical

marijuana facilities, respectively.

117

The LOC believes that, under the home rule provisions of

the Oregon Constitution, local governments do not need legislative authorization to impose

time, place, and manner restrictions, and that the Legislature’s decision to expressly confirm

local authority to impose certain restrictions does not foreclose cities from imposing other

restrictions not described in state law.

State law expressly provides that cities may impose reasonable regulations that include,

but are not limited to, the following:

• Cities may limit the hours of operation of retail licensees and medical marijuana grow

sites, processing sites and dispensaries;

• Cities may limit the location of all four types of recreational licensees, as well as

medical marijuana grow sites, processing sites and dispensaries, except that a city may

not impose more than a 1,000-foot buffer between retail licensees;

• Cities may impose reasonable conditions on the manner in which marijuana is

processed or sold to the public; and

• Cities may limit the public’s access to the premises of all four types of recreational

licenses, as well as medical marijuana grow sites, processing sites and dispensaries.

118

Another common clause in local business license ordinances is that the licensee must

comply with local, state, and federal law. Oregon’s appellate courts have yet to reach a holding

on whether this type of local provision can be enforced against marijuana establishments.

116

ORS 475B.486; see also ORS 475B.928.

117

Id.

118

Id.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 21

League of Oregon Cities

Arguably, requiring local marijuana businesses to comply with federal law is not a

“reasonable” regulation because it precludes any of them from operating within the city.

Moreover, charter amendments or ordinances that are inconsistent with the terms of ORS

Chapter 475B are preempted under ORS 475B.454. That said, ORS Chapter 475B is itself

inconsistent with federal law and could be subject to federal preemption. At any rate, cities that

seek to impose this type of clause against marijuana businesses should consult legal counsel

about the risk of litigation with this option and the potential financial implications for the city.

iv. Federal RICO Lawsuits

The federal Racketeer Influenced and Corrupt Organizations Act (RICO) was enacted

in 1970 as Title IX of the Organized Crime Control Act of 1970.

119

RICO is primarily known

as a tool to help law enforcement prosecute organized criminal enterprises. RICO also

contains a civil provision, however, that allows a person who suffers economic harm because

of criminal activity to file a lawsuit for injunctive relief, treble damages, and attorney fees.

120

Because the possession and sale of marijuana remain illegal under federal law, marijuana

retailers, wholesalers, and processors are potentially vulnerable to a civil RICO lawsuit.

In 2017, the Tenth Circuit Court of Appeals held that marijuana production can

constitute a pattern of criminal activity that triggers the civil remedy provisions under RICO,

even when that production is legal under state law.

121

Since 2017, several RICO cases have

been filed against business in states where recreational marijuana is legal, including Oregon.

122

While this right to recover exists in theory, it is a difficult case to prove.

123

Courts tends to

dismiss these claims against marijuana businesses on the grounds that there is not enough

evidence of actual financial injury.

124

Despite this trend, civil RICO lawsuits have the potential to disrupt the marijuana

economy in states where its production is legalized. The threat of a lawsuit remains for these

businesses, particularly if a plaintiff can show concrete proof that a marijuana business is the

direct cause of one’s loss in income or other financial injury. Theoretically, a civil RICO suit

119

18 U.S.C. §§ 1961-1968.

120

18 U.S.C. § 1964.

121

See Safe Streets Alliance v. Hickenlooper, 859 F.3d 865, 884 (10th Cir. 2017) (holding that “[m]arijuana is a

controlled substance under the CSA,” and “the manufacture, distribution, and sale of that substance is [therefore]

racketeering activity under RICO.”).

122

See, e.g., Ainsworth v. Owenby, 326 F. Supp. 3d 1111 (D. Or. 2018) (dismissing a RICO claim because the

plaintiff’s alleged need to purchase security cameras was not a sufficient injury caused by the neighboring

marijuana business); see also Shoultz v. Derrick, 369 F. Supp. 3d 1120 (D. Or. 2019) (dismissing a RICO claim

because the plaintiff failed to show clear financial harm).

123

Id.

124

Id.; but see Momtazi Family, LLC v. Wagner, 2019 4059178 (D. Or. 2019) (denying the defendant’s motion to

dismiss where the plaintiff alleged the defendant’s adjacent marijuana business had materially diminished the fair

market value of plaintiff’s vineyard and rental income from the property.).

Oregon Municipal Handbook – Chapter 27: Marijuana Law 22

League of Oregon Cities

could even be filed by a city, though cities should note that the Ninth Circuit Court of Appeals

has yet to interpret RICO and may reach a different conclusion than did the Tenth Circuit,

which only hears cases arising in Colorado, Kansas, New Mexico, Oklahoma, Utah, and

Wyoming.

Appendix A

Opt Out by Voter Referral

Appendix A: Opt Out by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 23

League of Oregon Cities

APPENDIX A

Opt Out by Voter Referral

Since December 24, 2015, all cities that desire to ban certain marijuana activities must do so by

referral at a statewide general election, meaning an election in November of an even-numbered

year. Cities should consult the secretary of state’s referral manual and work with the city

recorder or similar official to determine the procedures necessary to refer an ordinance to the

voters.

Once a city council adopts an ordinance, its city must submit the ordinance to the Oregon Health

Authority (if banning medical marijuana businesses) and/or the Oregon Liquor Control

Commission (if banning recreational marijuana businesses). Those agencies will then stop

registering and licensing the prohibited businesses until the next statewide general election, when

the voters will decide whether to approve or reject the ordinance. In other words, the council’s

adoption of an ordinance acts as a moratorium on new facilities until the election. Each agency

has a form for submitting the ordinances.

Medical marijuana dispensaries are grandfathered and can operate despite a ban if they: (1)

applied to be registered by July 1, 2015, or were registered prior to the date on which the

ordinance was adopted by the city council, and (2) successfully completed the land use

application process (if applicable). Medical marijuana processors are grandfathered and are able

to operate despite a ban if they: (1) were registered under ORS 475B.840 to ORS 475B.855 and

were processing usable marijuana on or before July 1, 2015; or (2) are registered under ORS

475B.840 prior to the date on which the ordinance is adopted by the governing body; and (3)

have successfully completed a local land use application process (if applicable).

Cities that adopt an ordinance prohibiting the establishment of medical or recreational marijuana

businesses are not eligible to receive a distribution of state marijuana tax revenues or to impose a

local tax under section ORS 475B.491.

In addition, it is important to note that once elections officials file the referral with the county

election office, the ballot measure is certified to the ballot. At that point, the restrictions on

public employees engaging in political activity will apply. Consequently, cities should consult

the Secretary of State’s manual Restrictions on Political Campaigning by Public Employees and

their city attorney to ensure that public employees are complying with state elections law in their

communications about the pending measure.

*************

AN ORDINANCE OF THE CITY OF {NAME} DECLARING A BAN ON {MEDICAL

MARIJUANA PROCESSING SITES, MEDICAL MARIJUANA DISPENSARIES,

RECREATIONAL MARIJUANA PRODUCERS, RECREATIONAL MARIJUANA

PROCESSORS, RECREATIONAL MARIJUANA WHOLESALERS, AND/OR

RECREATIONAL MARIJUANA RETAILERS}; REFERRING ORDINANCE; AND

DECLARING AN EMERGENCY

Appendix A: Opt Out by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 24

League of Oregon Cities

Whereas, ORS 475B.840 to 475B.876 directs the Oregon Health Authority will register medical

marijuana processing sites and medical marijuana dispensaries;

Whereas, ORS 475B.010 to 475B.545 directs the Oregon Liquor Control Commission to license

the production, processing, wholesale, and retail sale of recreational marijuana;

Whereas, ORS 475B.968 provides that a city council may adopt an ordinance to be referred to

the electors of the city prohibiting the establishment of certain state-registered and state-licensed

marijuana businesses in the area subject to the jurisdiction of the city;

Whereas, the city council wants to refer the question of whether to prohibit {recreational

marijuana producers, processors, wholesalers, and/or retailers, as well as medical marijuana

processors and/or medical marijuana dispensaries} to the voters of {City};

NOW THEREFORE, BASED ON THE FOREGOING, THE CITY OF {NAME} ORDAINS

AS FOLLOWS:

DEFINITIONS.

Marijuana means the plant Cannabis family Cannabaceae, any part of the plant Cannabis family

Cannabaceae and the seeds of the plant Cannabis family Cannabaceae.

Marijuana processing site means an entity registered with the Oregon Health Authority to

process marijuana.

Marijuana processor means an entity licensed by the Oregon Liquor Control Commission to

process marijuana.

Marijuana producer means an entity licensed by the Oregon Liquor Control Commission to

manufacture, plant, cultivate, grow or harvest marijuana.

Marijuana retailer means an entity licensed by the Oregon Liquor Control Commission to sell

marijuana items to a consumer in this state.

Marijuana wholesaler means an entity licensed by the Oregon Liquor Control Commission to

purchase items in this state for resale to a person other than a consumer.

Medical marijuana dispensary means an entity registered with the Oregon Health Authority to

transfer marijuana.

BAN DECLARED. As described in section ORS 475B.968, the City of {Name} hereby

prohibits the establishment {and operation}

of the following in the area subject to the

jurisdiction of the city {select desired options from the list below}:

(a) Marijuana processing sites;

(b) Medical marijuana dispensaries;

Include this wording if (1) there are existing recreational licensees operating within the city and (2) the city does

not wish to grandfather in those activities.

Appendix A: Opt Out by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 25

League of Oregon Cities

(d) Marijuana processors;

(e) Marijuana wholesalers;

(f) Marijuana retailers.

EXCEPTION. The prohibition set out in this ordinance does not apply to a marijuana processing

site or medical marijuana dispensary that meets the conditions set out in ORS 475B.968(8)-(9).

REFERRAL. This ordinance shall be referred to the electors of the city of {name} at the next

statewide general election on {date}.

EMERGENCY. This ordinance being necessary for the immediate preservation of the public

peace, health and safety, an emergency is declared to exist, and this ordinance shall be in full

force and effect on {date/passage}.

*************

A RESOLUTION APPROVING REFERRAL TO THE ELECTORS OF THE CITY OF

{NAME} THE QUESTION OF BANNING {MEDICAL MARIJUANA PROCESSING SITES,

MEDICAL MARIJUANA DISPENSARIES, RECREATIONAL MARIJUANA PRODUCERS,

RECREATIONAL MARIJUANA PROCESSORS, RECREATIONAL MARIJUANA

WHOLESALERS, AND/OR RECREATIONAL MARIJUANA RETAILERS} WITHIN THE

CITY

Whereas, section ORS 475B.968 provides that a city council may adopt an ordinance to be

referred to the electors of the city prohibiting the establishment of certain state-registered and

state-licensed marijuana businesses in the area subject to the jurisdiction of the city;

Whereas, the CITY OF {NAME} city council adopted Ordinance {number}, which prohibits the

establishment of {list of marijuana activities) in the area subject to the jurisdiction of the city;

NOW, THEREFORE, THE CITY OF {NAME} RESOLVES AS FOLLOWS:

MEASURE. A measure election is hereby called for submitting to the electors of the CITY OF

{NAME} a measure prohibiting the establishment of certain marijuana activities in the area

subject to the jurisdiction of the city, a copy of which is attached hereto as “Exhibit 1,” and

incorporated herein by reference.

ELECTION CONDUCTED BY MAIL. The measure election shall be held in the CITY OF

{NAME} on {date}. As required by ORS 254.465, the measure election shall be conducted by

mail by the County Clerk of {county name} County, according to the procedures adopted by the

Oregon Secretary of State.

DELEGATION. The CITY OF {NAME} authorizes the {City Manager, City Administrator,

City Recorder, or other appropriate city official} or the {City Manager, City Administrator, City

Recorder, or other appropriate city official} designee, to act on behalf of the city and to take such

Some cities approve the ballot title, question, summary, and explanatory statement by adopting an ordinance,

rather than by adopting a separate resolution.

Exhibit 1 should include the question and summary.

Appendix A: Opt Out by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 26

League of Oregon Cities

further action as is necessary to carry out the intent and purposes set forth herein, in compliance

with the applicable provisions of law.

PREPARATION OF BALLOT TITLE. The City Attorney is hereby directed to prepare the

ballot title for the measure, and deposit the ballot title with the {city elections officer} within the

times set forth by law.

NOTICE OF BALLOT TITLE AND RIGHT TO APPEAL. Upon receiving the ballot title for

this measure, the {city elections officer} shall publish in the next available edition of a

newspaper of general circulation in the city a notice of receipt of the ballot title, including notice

that an elector may file a petition for review of the ballot title.

EXPLANATORY STATEMENT. The explanatory statement for the measure, which is attached

hereto as “Exhibit 2,” and incorporated herein by reference, is hereby approved.

FILING WITH COUNTY ELECTIONS OFFICE. The {city elections officer} shall deliver the

Notice of Measure Election to the county clerk for {name of county} County for inclusion on the

ballot for the {date} election.

EFFECTIVE DATE. This resolution is effective upon adoption.

*************

As noted, the ballot title, question, summary, and explanatory statement may be approved by the

council through ordinance or resolution.

BALLOT TITLE

A caption which reasonably identifies the subject of the measure

10-word limit under ORS 250.035(1)(a)

Prohibits certain marijuana registrants {and/or} licensees in {city}

QUESTION

A question which plainly phrases the chief purpose of the measure so that an affirmative

response to the question corresponds to an affirmative vote on the measure

20-word limit under ORS 250.035(1)(b)

Shall {city} prohibit {medical marijuana processors, medical marijuana dispensaries,

recreational marijuana producers, processors, wholesalers, and retailers} in {city}?

SUMMARY

Alternatively, the council may prepare the ballot title and attach it to the resolution for approval. In that case, this

section might say, “The ballot title for the measure set forth as Exhibit {number} to this resolution is hereby

adopted.” A city’s local rules may dictate who will prepare the ballot title.

The Notice of Measure Election is a form provided by the Oregon Secretary of State where cities provide the ballot

title, question, summary, and explanatory statement. The form can be found on the Secretary of State’s website at

www.sos.oregon.gov

Appendix A: Opt Out by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 27

League of Oregon Cities

A concise and impartial statement summarizing the measure and its major effect

17- word limit under ORS 250.035(1)(c)

*Note: This summary may need to be modified depending on which activities a city proposes to

ban and whether it will grandfather in existing retail activities. By law, certain medical

marijuana businesses can continue operating.

State law allows operation of registered medical marijuana processors, medical marijuana

dispensaries and licensed recreational marijuana producers, processors, wholesalers, and

retailers. State law provides that a city council may adopt an ordinance to be referred to the

voters to prohibit the establishment of any of those registered or licensed activities.

Approval of this measure would prohibit the establishment {and operation}

of {medical

marijuana processors, medical marijuana dispensaries, recreational marijuana producers,

processors, wholesalers, and retailers} within the area subject to the jurisdiction of the city

{provided that state law allows for continued operation of medical marijuana processors and

medical marijuana dispensaries already registered—or in some cases, that have applied to be

registered—and that have successfully completed a local land use application process}.

If this measure is approved, the city will be ineligible to receive distributions of state marijuana

tax revenues and will be unable to impose a local tax or fee on the production, processing or sale

of marijuana or any product into which marijuana has been incorporated.

*************

EXPLANATORY STATEMENT

An impartial, simple and understandable statement explaining the measure and its effect for use

in the county voters’ pamphlet

500-word limit under ORS 251.345 and OAR 165-022-0040(3)

Approval of this measure would prohibit the establishment {and operation}

of certain marijuana

activities within the city.

ORS 475B.840 to 475B.876 directs the Oregon Health Authority will register medical marijuana

processors and medical marijuana dispensaries. Medical marijuana processors compound or

convert marijuana into concentrates, extracts, edible products, and other products intended for

human consumption and use. Medical marijuana dispensaries facilitate the transfer of marijuana

and marijuana products between patients, caregivers, processors, and growers. ORS 475B.010 to

475B.545 directs the Oregon Liquor Control Commission will license recreational marijuana

producers (those who manufacture, plant, cultivate, grow or harvest marijuana), processors,

wholesalers, and retailers.

Include this wording if (1) there are existing recreational licensees operating within the city and (2) the city does

not wish to grandfather in those activities.

Include this wording if (1) there are existing recreational licensees operating within the city and (2) the city does

not wish to grandfather in those activities.

Appendix A: Opt Out by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 28

League of Oregon Cities

A city council may adopt an ordinance prohibiting the establishment of any of those entities

within the city, but the council must refer the ordinance to the voters at a statewide general

election. The CITY OF {NAME} city council has adopted an ordinance prohibiting the

establishment of {list of marijuana activities to be banned} within the city and, as a result, has

referred this measure to the voters.

If approved, this measure would prohibit {medical marijuana processors, medical marijuana

dispensaries, and/or recreational marijuana producers, processors, wholesalers, and/or retailers}

within the city. Medical marijuana processors and medical marijuana dispensaries that were

registered with the state before the city council adopted the ordinance, and medical marijuana

dispensaries that had applied to be registered on or before July 1, 2015, can continue operating in

the city even if this measure is approved, if those entities have successfully completed a local

land use application process.

Approval of this measure has revenue impacts. Currently, 10% of state marijuana tax revenues

will be distributed to cities under ORS 475B.759(3)(b)(A). If approved, this measure would

make the city ineligible to receive distributions of state marijuana tax revenues.

Currently, under ORS 475B.491, a city may impose up to a 3% tax on the sale of marijuana

items by a marijuana retailer in the city. However, a city that adopts an ordinance prohibiting the

establishment of medical marijuana processors, medical marijuana dispensaries, or recreational

marijuana producers, processors, wholesalers, or retailers may not impose a local tax or fee on

the production, processing or sale of marijuana or any product into which marijuana has been

incorporated. Approval of this measure would therefore prevent a city from imposing a local tax

on those activities.

This document is not a substitute for legal advice. City councils considering prohibiting or

taxing any marijuana facilities should not rely solely on this sample. Any city council

considering any form of regulation of marijuana should consult with its city attorney regarding

the advantages, disadvantages, risks and limitations of any given approach.

Legal counsel can also assist a city in preparing an ordinance that is consistent with local

procedures, existing ordinances and a city’s charter, and advise on what process is needed to

adopt the ordinance. The sample provided is intended to be a starting point, not an ending point,

for any jurisdiction considering prohibiting or taxing marijuana.

Oregon Municipal Handbook – Chapter 27: Marijuana Law 29

League of Oregon Cities

Appendix B

City Council Repeal of Ordinance that

Prohibits Marijuana Businesses

Appendix B: Opt In by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 30

League of Oregon Cities

APPENDIX B

City Council Repeal of Ordinance that Prohibits Marijuana

Businesses

Under ORS 475B.496, cities may repeal an earlier ordinance prohibiting the establishment of

marijuana businesses. A repeal under ORS 475B.496 does not need to be referred to the voters.

Alternatively, a city can “opt-in” to allowing marijuana facilities by adopting an ordinance under

ORS 475B.968 and referring that ordinance to the voters at the next statewide general election.

Cities should consult the secretary of state’s referral manual and work with their city recorder or

similar official to determine the procedures necessary to refer an ordinance to the voters. The

process for referring an “opt-in” ordinance will be the same as the process for referring an “opt-

out” ordinance, as set forth in Appendix A, with the appropriate changes in ballot title language.

If a city adopts a repeal ordinance under ORS 475B.496, the city must submit the ordinance to

the Oregon Health Authority (if the ordinance being repealed relates to medical marijuana

businesses) or the Oregon Liquor Control Commission (if the ordinance being repealed relates to

recreational marijuana businesses). Each agency has a form for submitting the ordinances.

If a city adopts an “opt-in” ordinance under ORS 475B.968, the Oregon Liquor Control

Commission or the Oregon Health Authority (depending upon whether a recreational marijuana

or medical marijuana business is involved) will begin licensing businesses on January 1

following the November election. That delay should provide cities with an opportunity to update

its ordinances and codes to add any needed time, manner, and place restrictions.

Any referral election to opt-in or opt-out under ORS 475B.968 must be held at the next statewide

general election following the council’s adoption of the predicate ordinance.

In addition, it is important to note that once the elections official files the referral with the county

election office, the ballot measure is certified to the ballot. At that point, the restrictions on

public employees engaging in political activity will apply. Consequently, cities should consult

the secretary of state’s manual Restrictions on Political Campaigning by Public Employees and

their city attorney to ensure that public employees are complying with state elections law in their

communications about the pending measure.

*************

Appendix B: Opt In by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 31

League of Oregon Cities

AN ORDINANCE OF THE CITY OF {NAME} REPEALING A BAN ON {MEDICAL

MARIJUANA PROCESSING SITES, MEDICAL MARIJUANA DISPENSARIES,

RECREATIONAL MARIJUANA PRODUCERS, RECREATIONAL MARIJUANA

PROCESSORS, RECREATIONAL MARIJUANA WHOLESALERS, AND/OR

RECREATIONAL MARIJUANA RETAILERS}; AND DECLARING AN EMERGENCY

Whereas, the city electors approved a ban on {medical marijuana processing sites, medical

marijuana dispensaries, recreational marijuana producers, recreational marijuana processors,

recreational marijuana wholesalers, and/or recreational marijuana retailers} on

[_______________];

Whereas, ORS 475B.496 provides that a city council may adopt an ordinance repealing

ordinances that prohibit the establishment of marijuana related businesses in the area subject to

the jurisdiction of the city;

Whereas, the city council wants to repeal the prohibition on {recreational marijuana producers,

processors, wholesalers, and/or retailers, as well as medical marijuana processors and/or medical

marijuana dispensaries};

NOW THEREFORE, BASED ON THE FOREGOING, THE CITY OF {NAME} ORDAINS

AS FOLLOWS:

DEFINITIONS.

Marijuana means the plant Cannabis family Cannabaceae, any part of the plant Cannabis family

Cannabaceae and the seeds of the plant Cannabis family Cannabaceae.

Marijuana processing site means an entity registered with the Oregon Health Authority to

process marijuana.

Marijuana processor means an entity licensed by the Oregon Liquor Control Commission to

process marijuana.

Marijuana producer means an entity licensed by the Oregon Liquor Control Commission to

manufacture, plant, cultivate, grow or harvest marijuana.

Marijuana retailer means an entity licensed by the Oregon Liquor Control Commission to sell

marijuana items to a consumer in this state.

Marijuana wholesaler means an entity licensed by the Oregon Liquor Control Commission to

purchase items in this state for resale to a person other than a consumer.

Medical marijuana dispensary means an entity registered with the Oregon Health Authority to

transfer marijuana.

BAN REPEALED. As described in ORS 475B.496, the City of {Name} hereby repeals its

ordinance{s} {list ordinance by name/number/date} prohibiting the establishment {and operation

of the following in the area subject to the jurisdiction of the city {select desired options from the

list below}:

Appendix B: Opt In by Voter Referral

Oregon Municipal Handbook – Chapter 27: Marijuana Law 32