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The Freest State in the Country Doesn't Look So Free Anymore

Oklahoma is the land of many things.  Beyond being the first state Weedsy expanded its operations out to, the state is a hotspot for both the agricultural and energy industries, the land of Native American heritage, and arguably the state with the most relaxed cannabis regulations in the country!

Oklahoma is so relaxed on their cannabis regulations that to start a dispensary in the sate, a mere $2500 and proof of residency is required.  Compare that with California's licensing process that is done on a seemingly rigged lottery system and requires millions of dollars in upfront investment for the chance to receive a license, and Oklahoma reigns supreme with 7,348 growers, 2,286 dispensaries, and 1,433 processors all doing business in a state with a population of a little over 4 million.

America's freest state, however, doesn't seem so free after all.  House Bill 3208, which passed August 1st enables the state to enact a two-year moratorium on issuing more licenses.


THE MORATORIUM ON NEW CANNABIS BUSINESSES

With the passage of House Bill 3208, the Oklahoma Medical Marijuana Authority (OMMA) will be allowed to enact a two-year moratorium on the issuance of new cannabis business licenses.   OMMA did this for several reasons including, but not limited to:

  • Curb black market proliferation
  • Keep the existing businesses compliant
  • Cooperate with existing businesses to develop a more-robust cannabis taxation program

Since the state rolled out their medical cannabis program, literally thousands of businesses propped up.  Ranging from growers to dispensaries and everything in between, what the state failed to do was to also roll out an effective tax program, leaving Oklahoma with a functioning cannabis program but no way to truly monetize it into the machine its become for other states.


CURB BLACK MARKET PROLIFERATION

As long as cannabis is legal in some way shape or form, there will always be a black market that exists to skirt those regulations.  This is a known fact and in Oklahoma in particular, such relaxed regulations only invites further proliferation of the black market.  Back in January 2022, State Representative Sean Roberts introduced a series of regulations aimed at moving on from the "wild west" that emerged once cannabis became medically accessible.

These changes I am proposing wills top the many illegal operations in our state run by foreign actors,  such as criminal Chinese enterprises or cartels, who participate in human trafficking and are smuggling their illegal narcotics out of Oklahoma to other states." 

by Oklahoma State Representative Sean Roberts

Under the two year moratorium and spearheaded by Roberts, the OMMA will be responsible for changing the residency requirements to open a cannabis business.  Existing regulations state that one must possess at least a 75% residency, with the new regulations increasing that to full 100% residency.  Not only that, but the OMMA will create a new reporting system for the public to report illegal cannabis businesses and increase the penalties for any actors conducting business without a license.

A lot of these rules stem from states such as California, Colorado, and Oregon where their recreational cannabis programs al lead to a proliferation of the black market.


KEEPING EXISTING BUSINESSES COMPLIANT through taxes

Before HB208 passed,  Oklahoma maintained an unlimited number of cannabis licenses it can issue.  As a result, over 11,000 businesses exist in the state, with a whopping 40% of them consistently failing to pay their state taxes.  By closing the floodgates of new businesses coming in, the OMMA can focus on squaring up the existing businesses and keeping them compliant.

Currently, Oklahoma cannabis taxes break down as such:

  • Medical Sales Tax:4.50%
  • Medical Excise Tax:7.00%
  • Max Medical Tax:11.50%

Oklahoma patients are required to pay a 4.50% tax on every purchase with an additional 7% in excise taxes, for a total of nearly 12%.  The taxes are factored into the final price of the cannabis and collected through dispensaries.  If  40% of cannabis businesses aren't paying their taxes, the state's $111 million in marijuana sales tax revenue should be significantly higher.

The moratorium takes effect on August 1, 2022 and ends on August 1, 2024.  OMMA may extend or shorten the moratorium pending all license reviews, inspections, and/or investigations are settled.

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