Oregon Liquor and Cannabis Commission (OLCC) officials have ceased issuing new cannabis licenses to those who submitted applications after Jan. 1, 2022, saying their hands are tied in the matter.

The license moratorium comes as Oregon’s cannabis market has experienced exponential growth, which has led to a crowded marketplace, according to OLCC officials.

Legislation that went into effect earlier this month leaves leeway for OLCC officials to restart licensing at some point in the future, based upon market supply, but language in a subsequent subsection specifically directs the commission to discontinue processing applications submitted after Jan. 1.

Passed by the Oregon Legislature in March, House Bill 4016 authorizes OLCC officials to, based on supply and demand for cannabis, refuse to issue initial cannabis production, processing, wholesale and retail licenses for an amount of time the commission determines necessary.

Specifically, the four-page bill states the OLCC may refuse to issue the licenses. Later on, the bill also states the commission shall inactivate an application for a license that was received after Jan. 1, 2022.

Gov. Kate Brown signed the bill into law April 4.

OLCC issued a news release April 22 stating that its licensing moratorium is in response to passed legislation requiring the commission to cease issuing licenses.

“We see both sides of this issue,” OLCC Commissioner Matt Maletis said in the release. “There’s people that are very happy and there’s people that are very unhappy, but the Legislature made a decision. We’ve always had a unique system in Oregon. There’s no easy way to do this.”

With previous concerns regarding oversupply and out-of-state diversion continuing to increase, Brown signed Senate Bill 218 into law in June 2019, in an effort to curb cannabis production, according to an OLCC legislative report. That legislation placed a moratorium on new producer licenses until January 2022.

With the sunset of the moratorium provision in S.B. 218, the new licensing moratorium from H.B. 4016 is now in place.

The H.B. 4016 moratorium does not apply to licensing renewals, or the issuance or reissuance of licenses necessitated by the change in location or ownership of production, processing, wholesale or retail facilities or premises, according to the bill.

The legislation also requires OLCC officials to study the effects the license moratorium has on the industry and report related economic developments each year.

In Oregon’s cannabis retail marketplace, state-licensed dispensaries reported a record of $110.8 million in sales in April 2021, representing a 77.7% increase from two years prior, according to OLCC data

Since April 2021, overall retail sales figures have been on a steady decline, dipping 27.4% to $80.5 million in February 2022, before a slight recovery to $88.5 million in March.  

As of March 17, OLCC has approved roughly 3,700 active cannabis business licenses, including 771 adult-use retail licenses, or roughly 18.3 dispensaries per 100,000 residents—the highest rate among continental adult-use markets in Western states. Those active business licenses also include 1,395 adult-use producers.

In 2021, Oregon had the second-highest per-capita sales for adult-use cannabis at $339 for its 21-and-over population, trailing only Colorado, according to data compiled by Cannabis Business Times.