OMMA Tightens Regulations with New Emergency Rules: What Oklahoma Cannabis Businesses Need to Know
Oklahoma City, OK – As of August 16, 2024, the Oklahoma Medical Marijuana Authority (OMMA) has implemented a series of emergency rules that significantly impact the state’s cannabis industry. These rules, signed into effect by Governor Kevin Stitt, enforce legislative mandates from Senate Bills 758, 1635, and 1939 passed during the 2024 legislative session. For many cannabis businesses, these changes require immediate attention to remain compliant.
These new regulations encompass various aspects of business operations, from license renewals and ownership transfers to employee management and product testing. For Oklahoma’s rapidly growing cannabis market, understanding these updates is not just important—it’s critical for survival in an increasingly regulated environment.
Stricter Enforcement of Certificate of Occupancy Requirements
One of the most pressing changes comes under Senate Bill 1635, which introduces stricter enforcement of the Certificate of Occupancy (COO) requirement for all cannabis businesses.
What’s Changing:
• February 2024 Deadline: The emergency rules required all cannabis businesses to obtain a valid Certificate of Occupancy (COO) by February 2024. This deadline was non-negotiable, aimed at ensuring all cannabis operations comply with local building and safety codes.
Challenges for Businesses Waiting on Inspections:
• The Backlog Issue: Many businesses submitted their COO applications well before the February 2024 deadline but found themselves in a prolonged queue for inspections by the fire marshal. This backlog has created a significant bottleneck, leaving many businesses in limbo despite their best efforts to comply.
• License Revocation Risk: According to the new rules, businesses without a valid COO by the deadline are at risk of having their licenses revoked, even if the delay was caused by the backlog.
• OMMA’s Response: While the rules are strict, OMMA has not explicitly addressed how they will handle cases where delays are due to external factors like the fire marshal’s backlog. Businesses in this situation are advised to maintain regular communication with OMMA and the fire marshal’s office, documenting all efforts to comply, which could help in mitigating penalties or seeking exceptions.
• Legal Recourse: Businesses may need to seek legal counsel to explore their options, including appealing to OMMA for more time or challenging any adverse decisions due to external delays.
Impact on Businesses:
• Urgent Need for Action: Businesses still waiting for inspections should be proactive in their efforts to expedite the process, including regular follow-ups with the fire marshal’s office and ensuring all other aspects of their COO applications are flawless.
• Documentation and Communication: Keeping detailed records of all steps taken to comply could be crucial if they need to appeal a revocation or seek an exception.
Tightened Rules on Late License Renewals
OMMA’s new rules also bring significant changes to how late license renewals are handled.
What’s Changing:
• Shortened Grace Period: The grace period for renewing a license has been shortened from the previous 60 days to just 30 days. Businesses now have a much smaller window to renew their licenses before facing penalties.
• Immediate Penalties: After the 30-day grace period, businesses that have not renewed their licenses will face immediate penalties, including the suspension of their license, meaning they must cease all operations until the renewal is processed and approved by OMMA.
Impact on Businesses:
• Tighter Deadlines: With the grace period cut in half, businesses need to be even more diligent about tracking renewal deadlines. Missing the renewal deadline by even a day could lead to suspension, severely impacting the business’s ability to operate.
• Financial and Operational Risks: The immediate suspension of operations for late renewals could lead to significant financial losses. Business owners will need to ensure they have systems in place to avoid any lapses in their licensing.
• Administrative Burden: The reduced grace period necessitates stronger administrative oversight. Businesses should implement automatic reminders and possibly designate specific personnel to manage license renewals to avoid the risk of suspension.
Prohibition on Multiple Licenses at a Single Location
OMMA’s new rules now prohibit holding multiple licenses of the same type at a single location. This rule impacts businesses that may have consolidated operations under one roof to streamline costs.
What’s Changing:
• No More Multiple Licenses at One Address: A business can no longer hold multiple licenses of the same type (e.g., two dispensaries or two cultivation facilities) at a single location. Each licensed activity must now have its own distinct physical address.
Impact on Businesses:
• Forced Operational Separation: Businesses that have previously held multiple licenses at the same location will now need to relocate some of their operations to new addresses. This could lead to increased costs associated with renting or purchasing additional properties, utilities, and staffing.
• Logistical Complexities: Managing separate locations can introduce logistical challenges, such as coordinating inventory, transportation, and ensuring consistent operational standards across different sites. This could also increase security concerns, as each location will need to be independently managed and secured.
• Expansion Considerations: For businesses looking to expand, this rule will require a reassessment of their strategies. Expansion plans that previously relied on consolidating operations at one location will need to be revised to comply with the new requirement for separate addresses.
Handling of Medical Marijuana Post-License Expiration
What’s Changing:
• The new rules specify how businesses must handle medical marijuana products if their OMMA license expires. This includes clear guidelines for the possession, sale, or transfer of remaining cannabis products.
Impact on Businesses:
• Strict Compliance Required: Businesses must follow OMMA’s detailed procedures for handling any remaining cannabis products after their license expires. This includes proper documentation and adherence to protocols for either transferring the products to another licensed entity or destroying them according to state regulations.
• Penalties for Non-Compliance: Failure to comply with these guidelines can result in severe penalties, including fines and potential legal action. Non-compliance may also impact the business’s ability to renew or obtain a new license in the future.
Background on the Previous Rule:
• Ambiguity in Handling Expired Licenses: Before these rules, there was less clarity on how businesses should handle products after a license expiration. The new rules provide specific steps to ensure that expired licensees manage their inventory legally and responsibly, closing previous loopholes.
Increased Scrutiny on Ownership Transfers
The process of transferring ownership in a licensed cannabis business is now under stricter scrutiny with the new OMMA rules.
What’s Changing:
• Mandatory Reporting: Any change in the ownership of a cannabis business must be reported immediately to OMMA. This includes changes in majority ownership, transfers of shares, or any other significant ownership shifts.
• Stricter Compliance Standards: OMMA will closely review any ownership changes to ensure that the new owners meet all regulatory requirements. Failure to report changes promptly or comply with these regulations could result in penalties, including license revocation.
Impact on Businesses:
• Legal and Administrative Complexity: Transferring ownership now involves a more complex process, requiring thorough documentation and legal oversight. Businesses must ensure that all ownership changes are fully compliant with OMMA’s regulations, which may necessitate hiring legal professionals with expertise in cannabis law.
• Potential Delays: The need for detailed reporting and compliance could delay the transfer process. Business owners considering selling or transferring ownership should plan well in advance to account for these new requirements.
• Risk of License Revocation: Any errors or omissions in the reporting process could result in severe consequences, including the potential loss of the business’s license. This makes it critical for business owners to ensure that all paperwork is accurate and submitted on time.
New Laboratory Testing Standards: Ensuring Compliance with Updated Definitions
The OMMA emergency rules also introduce significant updates to laboratory testing standards, aiming to enhance product safety and consistency.
What’s Changing:
New Definitions
• Final Harvest Batch: This term refers to a specifically identified quantity of cannabis that is uniform in strain, grown using the same cultivation practices, and harvested at the same time. It must be cured under uniform conditions before being considered ready for testing and transfer to a licensed dispensary.
• Final Product: The “final product” is the finished cannabis product that is ready for sale or transfer to consumers. This product must have passed all required testing and meet OMMA’s quality standards.
• Final Production Batch: This term describes a batch of cannabis products that have been processed using the same extraction methods and are uniform in composition. The final production batch must also meet all regulatory requirements before it can be sold.
Impact on Businesses:
• Enhanced Testing Requirements: With the introduction of these new definitions, businesses must ensure that their products are tested according to the specific batch and production standards outlined by OMMA. This means more precise categorization and testing at various stages of production, which could increase the complexity of the production process.
• Increased Costs: The more rigorous testing standards may lead to higher costs, as businesses will need to ensure that each batch and final product meets the updated regulatory requirements. This might involve additional testing, more frequent sampling, or investing in higher-quality testing methods.
• Quality Control: Businesses must implement stricter quality control measures to ensure that all products comply with the new definitions and testing standards. This includes keeping detailed records of each batch’s testing results and being prepared for OMMA audits or inspections.
Mandatory Display of Employee Credentials
Starting in 2024, OMMA requires that all employees in the cannabis industry wear or display their credentials while on duty. This rule aims to enhance transparency and security within the industry, ensuring that only authorized individuals are handling cannabis products.
What’s Changing:
• Mandatory Employee Identification: All employees must visibly display their credentials during work hours. This ensures that only individuals who are authorized and have undergone necessary background checks are handling cannabis products.
Impact on Businesses:
• Compliance Requirements: Businesses will need to enforce this new rule by ensuring all employees have proper identification. This might require investment in new ID systems or additional training to ensure compliance.
• Penalties for Non-Compliance: Failure to comply with the employee credential display rule could result in penalties during inspections, affecting the business’s ability to operate smoothly. This makes it crucial for businesses to implement these changes promptly.
Conclusion
The new OMMA emergency rules bring a wave of changes that Oklahoma’s cannabis businesses must navigate carefully. Each aspect of the new regulations—from late renewals to ownership transfers, multiple licenses, employee credentials, and laboratory testing—requires a proactive approach to ensure compliance and avoid the severe penalties that come with non-compliance.
Business owners must stay informed, update their operational procedures, and seek professional advice where necessary to adapt to these changes. By doing so, they can continue to operate successfully in a market that is becoming increasingly regulated and competitive.
For more detailed information and ongoing updates, businesses are encouraged to visit OMMA’s official rules page and consult with legal professionals to ensure they are fully compliant with the latest regulations.
