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Policing pot

Oregon Liquor Control Commission inspectors are fanning out across Southern Oregon to scrutinize local marijuana grows as part of Operation Good Harvest.

The goal is to make sure growers are complying with regulations and not straying into the black market.

“I came down to Southern Oregon because we’ve just started up Operation Good Harvest, which is where we’re doing saturation inspections of the outdoor harvest season this year,” said Steve Marks, executive director of OLCC, which is charged with regulating the state’s burgeoning marijuana industry.

Inspectors so far have visited about 25 Southern Oregon recreational grow operations but expect to visit more than 300 in the region, he said.

Jackson and Josephine counties are hotbeds of marijuana production, together accounting for more than a third of the recreational marijuana licenses in the state — 387 of 1,105, according to OLCC data.

OLCC has ramped up its workforce to handle the inspections, Marks said.

“The saturation inspections are going on and will endure throughout the ‘Croptober’ harvest season down here,” he said, referring to September and October, the heaviest harvest months for outdoor grows.

Indoor growers harvest year-round, so the autumn inspections are focused on outdoor grows, Marks said.

As part of the state’s seed-to-sale tracking system, inspectors are looking at everything from growers’ security cameras to their marijuana inventory tracking and transportation.

“I’d say about 80 percent of them are doing just fine — complying and doing what they’re supposed to. And that’s fantastic. That’s actually a good rate of compliance overall,” Marks said.

Another 10 percent are experiencing problems that can lead to education and correction, warnings and violations. The other 10 percent have serious violations that could cause them to lose their licenses, he said.

A main goal of the inspections is to make sure there’s no diversion of products to states that haven’t legalized marijuana, Marks said.

Oregon has been faulted for growing significantly more marijuana than can be consumed inside the state — causing prices to plummet and increasing the incentive for growers to sell elsewhere.

OLCC has put a halt to new license approvals as it deals with a lengthy backlog of license applications — some of which can take a year to process, Marks said.

Complicating matters, license renewals are proving to be a time-intensive process for OLCC, he said.

Tough market conditions have led to consolidation in the industry and some operations have layers of businesses, owners and investors involved. OLCC has to decide how far back on that chain it does background checks, Marks said.

“What we found out is once there’s a lot of marijuana growers, marijuana gets cheap. And it’s been tough for a lot of growers to make it on what their plans were,” he said.

The oversupply of growers shouldn’t come as a surprise to anyone, said Marks, who publicly warned about the problem at least three years ago at a cannabis conference.

“I said, ‘You know, this is an open system. There’s going to be a ton of competition. It’s going to be rough and tumble. You better be well capitalized because this is an open-entry system. It’s as capitalistic as you can have it. There’s no limits,’” he recalled.

But people still want to join what they see as a gold rush, as evidenced by OLCC’s application backlog. Some who have struggled have relinquished their licenses and are getting out of the business, Marks said.

The Oregon Legislature has been criticized for allowing out-of-state investment and not making residency a requirement for license applicants.

But now out-of-state entities with enough capital have been able to come in and buy out struggling Oregon growers — allowing the growers to recoup at least some of their investment, Marks said.

Those with licenses could eventually reap returns if marijuana legalization spreads in the country, allowing Oregon-grown marijuana to be sold in other states, Marks said.

He cautioned that OLCC doesn’t have a position on federal legalization.

“But obviously that would be a tremendous boon to those holders of licenses here,” Marks said.

Although the stiff competition has been hard on growers and retailers, it’s been a boon for marijuana consumers, he noted.

All product types are growing robustly, from edibles to vaping pens, Marks said.

“We’ve got more retail locations than Starbucks in Oregon, reportedly. But the profitability, all of that, has been drained by the intense competition,” he said.

As for marijuana and crime, Marks said there is no easy solution to stop robbers from victimizing growers.

Jackson County has had high-profile cases of growers and sellers being robbed by criminals who have traveled to Oregon.

In 2016, Wimer grower James Bowman was tortured, beaten and left for dead by gang-affiliated criminals who flew into Oregon and conspired with local men to rob him of marijuana and cash. They got away with pot, but virtually no money because Bowman hadn’t harvested his crop and was strapped for cash.

Marks said people in the marijuana industry need access to the banking system so they don’t have large amounts of cash on hand.

“That would do so much for public safety,” he said.

Three Pacific Northwest credit unions are offering checking accounts to marijuana businesses in Oregon, but those credit unions don’t serve all communities and none are in Southern Oregon. The credit unions also charge high fees because of the regulatory paperwork involved in serving those customers, Marks said.

He said the federal government should want banks to be able to serve the marijuana industry. That also could help weed out the growers and retailers engaged in illegal activities.

“There’s no better way to track criminals than give them a federally controlled and tracked banking account,” Marks said.

Reach Mail Tribune reporter Vickie Aldous at 541-776-4486 or valdous@rosebudmedia.com. Follow her on Twitter @VickieAldous.

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