Oregon medical cannabis policy and industry future in question.
Oregon medical cannabis policy and industry future in question.

Over the last several months, Oregon’s legalization agenda has shifted considerably towards that of Washington. Usually, it’s not clear who is doing the moving, and we are left to engage with emergent discourses that support the re-criminalization of most cannabis production outside of a tightly regulated “recreational” framework. This means stricter and stricter interpretations of the Federal Cole Memo from August 2014 concerning the prospect of “diversion” as it pertains to state medical, rather than legal, regulatory frameworks.

This is Part I of a two-part series. Part II will be titled “Oregon Cannabis Growers are not Disposable Citizens.”

This post highlights and puts in wider context a clear private sector influence catalyzing on that agenda, dated April 15, 2015: a white paper from Privateer Holdings, Inc., authored by a former DEA agent on their payroll, Patrick Moen.

Before the analysis, let’s quickly lay out some definitions. We can classify a “Colorado” model in which the presence of existing medical regulations meant that rulemakers could concentrate on creating and nurturing emergent legal markets. And we can classify a “Washington” model, where in 2011 then-Governor Gregoire vetoed medical cannabis regulation for fear of federal intervention. In this model, the idea that new legal regulations should be mobilized to create new medical market regulations has greater purchase with Washington State policymakers.

Thus an antagonism between medical and recreational stakeholders has sprouted to radically alter the ecology of cannabis production, processing, distribution and processing in the state. Oregon’s veer away from the Colorado model in its rulemaking process defies historical explanation based on pre-existing regulatory conditions. It needs to be explained before discourses of inevitability bury the possibility of pragmatic, peaceful policymaking in Oregon and any other state that attempts to implement cannabis legalization.

Calculating Oregon’s Supply and Demand for Cannabis

“Diversion of Medical Marijuana in Oregon: A Privateer Holdings Whitepaper” re-establishes evidence for something Oregon legalization advocates first noted in 1986: Oregon is a net exporter of cannabis by a considerable margin. In 1986, of course, none of Oregon’s gardens had the legal protection afforded by a state medical cannabis program.

Today, the fact that Oregon cannabis growers have availed themselves of that protection sets them up to be re-stigmatized by Privateer as “criminals and bootleggers,” as CEO Brendan Kennedy recently put in a recent interview with Willamette Week. The interview made clear that Privateer has a major private interest in taking over cannabis production in Oregon from undesirable elements, and establishes the socially exclusionary political agenda supported by the white paper’s economic analysis.

The economic analysis is well-reasoned in and of itself, a welcome addition to existing estimates of Oregon’s supply and demand for medical cannabis. It’s the second major effort at doing so since 1986, following Seth Crawford’s “Estimating the Quasi-Underground: Oregon’s Informal Marijuana Economy” that published August 2014 in the Humboldt Journal of Social Relations.

A Tale of Two Reports on Oregon Cannabis

Crawford’s approach is more scholarly. Using medical cannabis records from Oregon State, his survey methodology and quantitative calculations sketch the contours of cannabis markets as embedded in highly decentralized social relations of production and consumption. This approach humanizes Oregon cannabis markets and establishes a ground-level reality that considers citizens and policy as part of wider social contexts. It is, in short, socially inclusionary.

The Privateer agenda, by contrast, is exclusionary. It aims to centralize production in the hands of new market actors, and it does so by taking a social fact, that Oregon is a net exporter of cannabis, and turning that fact against a narrow reading of what the Cole memo means by “diversion.” Diversion, in the Privateer agenda, means diversion of plant material from a strictly tracked and traced system, whether to one’s neighbor down the street or across the country to New York. It’s the fault of medical marijuana producers who are gaming the system, according to this perspective. And it’s bad, because the Cole memo says state legal cannabis markets must not be diverted. Therefore, medical cannabis in Oregon has to be “reined in” so that legal cannabis production can flourish in the hands of professionals who won’t divert, such as Privateer Holdings, Inc.

This policy recommendation is tidily summed as the final “takeaway” point of the Executive Summary on page 4:

“Comparable regulation of both recreational and medical markets will be essential. Restructuring the medical marijuana production in Oregon with regulations ensuring that growers can meet but not greatly exceed the needs of marijuana patients will help foster the growth of a legitimate recreational market. Failing to regulate medical productions will ensure continued flow into the black market.”

Thousands of Oregon citizens who have raised their families and paid their bills for decades by growing cannabis, most recently with the protection of OMMA, are disposable. They have no place in a regulated cannabis future. The math says so: medical cannabis producers should no longer be legally protected by OMMA, because of the Cole Memo’s diversion condition. The Cole memo’s diversion condition originally concerned only emergent legal markets, and was not intended to force states to do something 40 years of Federal prohibition failed to do, on the one hand; and successfully stimulated, on the other: rein in the black market.

Privateer’s socially exclusionary policy recommendation misappropriates Federal Cole Memo guidelines for private sector interest and is bad social policy. It is bad social policy because it cannot work and will stimulate social conflict rather than peaceful transition.

If followed, it will re-criminalize thousands of its citizens’ main economic activity, the cultivation of a plant that was declared dangerous to society for political rather than evidence-based reasons. Rather than diminish the black market, it will swell the black market with the ranks of formerly protected medical growers. In reality the creation of new, centralized production in a state that’s already bursting at the seams with existing production cannot possibly help with diversion: the state needs less production, not more. And finally the centralization of policy and market power in the hands of Big Marijuana cannot be a positive development for Oregon. That logic has only one constituent, and it doesn’t reside in Oregon.

In Part II of this essay, I will engage positively with alternative readings of the Cole Memo and logics of rule-making that reflect the interests of social peace in Oregon, especially by focusing on a recent letter to Oregon Governor Kate Brown authored by Umpqua Cannabis Association Executive Director John Sajo.


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