Extras on Excise: Oklahoma Proposes Amendments to Controversial Medical Marijuana Rules

Oklahoma voters passed State Question 788 on June 26, 2018, voting 56.86 percent to 43.14 percent to legalize the use of marijuana for medical purposes. Question 788 provides for a $2,500 application fee for entities interested in becoming medical marijuana dispensaries, as well requiring a 7 percent excise tax on gross amounts received by dispensaries for retail sales of medical marijuana.

However, not all of the provisions in Question 788 have been implemented in a straightforward manner.

Question 788 provides that individuals aged 18 years and older with state-issued medical marijuana licenses may possess up to three ounces of smokable marijuana on their person and up to eight ounces of smokable marijuana in their residence.

Nevertheless, as Tulsa World reports, after Question 788’s passage, the Oklahoma State Department of Health (“Department”), in charge of issuing regulations for the new law, voted 5-4 to ban the sale of smokable marijuana at medical dispensaries throughout the state.

Specifically, in Emergency Regulation 310:681-2-11(c), the Department states that medical marijuana products may only be dispensed to patients via pill, oil, topical agent, tincture, liquid, or a “form medically appropriate for administration by vaporization or nebulization, excluding flower, dry leaf or plant form.”

Per Emergency Reg. 310:681-5-6, the Department may fine dispensaries up to $5,000 for an unpermitted sale of medical marijuana, with additional unlawful sales resulting in the revocation of the dispensary’s license, making it unlikely that dispensaries will violate these regulations.

The backlash to the regulations was immediate: multiple lawsuits were filed against the Department and the state, in addition to State Sen. Majority Leader Greg Treat (R) stating, per The City Sentinel, that the Department’s “adoption of last-minute amendments without public comments has undermined the public’s confidence in the system.”

More dramatic fallout from the Department’s regulations includes an Oklahoma County District Attorney launching a criminal probe to determine whether the State Board of Pharmacy’s executive director bribed the Department’s top attorney to write favorable medical marijuana regulations, as U.S. News and World Report reports.

In light of this abundance of negative publicity, the Department reacted swiftly, issuing a set of amended proposed emergency regulations that would replace the initial version, and would remove all limitations on smokable marijuana for medical purposes.

The Department plans to meet at 3:00 p.m. on Aug. 1, 2018, to discuss these new emergency regulations.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Do you believe the tax rate for medical marijuana in Oklahoma is too high, too low, or just right?

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