Oklahoma Cannabis Operators Should Be Alert of Increased Enforcement and Heightened License Application Scrutiny from OMMA
By Genevieve Meehan, Emily Hackman
Jul 26, 2023
As can occur with any new statewide medical marijuana program, there was an expected ramp-up period in Oklahoma whereby regulators and operators alike became familiar with implementing the rules and regulations of the program, state licensing staff reviewed and approved a flurry of initial license applications, and the early licensees commenced operations. In newer statewide marijuana programs, the compliance arm of the state regulating authority initially takes a more educational and informative approach when conducting inspections and, once the market matures and inspectors gain more experience and knowledge of the state of the industry, results from inspections and audits can become more punitive.
In our recent interactions with The Oklahoma Medical Marijuana Authority (OMMA) on behalf of our clients, it is becoming increasingly clear that OMMA staff and regulators have entered medical marijuana program maturity. In the words of a licensing manager, "we've figured out what we're doing."
In late 2022, OMMA became an independent state agency separate from the Oklahoma State Department of Health. Perhaps OMMA's seemingly recent attitude shift is a matter of the maturing market, or perhaps a byproduct of the establishment as an independent agency. Regardless, OMMA's shift is showing itself through increased and escalated enforcement and heightened license application scrutiny.
In a press release from OMMA in March 2023, following a favorable administrative law judge ruling regarding a licensee's fraudulent ownership information, OMMA Executive Director Adria Berry indicated that "we're just getting started. “There are dozens of other cases of suspected fraudulent ownership that we’re reviewing right now. This won’t be the last time we take action on someone trying to harm Oklahomans through illegal business practices.”
With the state's residency ownership requirement, there is a high proliferation of bad actors, which OMMA has been vocal about identifying and obstructing. These bad actors often submit "strawman ownership" or "ghost ownership" applications and identify an Oklahoma resident who is not a real owner. OMMA, in addition to the Oklahoma Bureau of Narcotics and Dangerous Drugs Control (OBNDD) and other state law enforcement agencies, has long understood that a significant number of the licensed cultivation operations in the state are illegal based on the state's patient population size, the amount of marijuana produced, and other organized criminal enterprise intelligence. We expect to see the Department's commitment to enforcement efforts on licensees in the state continue in this manner for the foreseeable future. See the Department’s published Strategic Response to counteract the state’s over-supply issues released in June 2023.
In addition to OMMA’s heightened scrutiny, OBNDD's recently established Supplemental Application packet (for growers and manufacturers) is now an official requirement for all existing registrants in addition to new registrants and requires detailed company ownership, corporate documents, employee information, and facility security and safety details. While the OBNDD is requesting new documents, it is verifying that licensees are complying with otherwise existing public safety laws and regulatory requirements, including residency ownership requirements and certificate of occupancy. This is another demonstration of a maturing Oklahoma medical marijuana market and the importance of maintaining compliance.
Be Prepared for Inspections! Check out the Updated Inspection Forms.
In April 2023, OMMA updated its website to include new inspection forms:
Coupled with OMMA’s recent statements, the release of new inspection forms for licensed growers and processors suggests an increase in on-site inspections and enforcement. To position your business well for unannounced inspections by the regulators, consider implementing a cadence of quarterly internal auditing at your facility so that you and your team can assess potential areas of vulnerability, ensure conformance with regulatory requirements, and prepare corrective action plans to maintain compliance. We also recommend a third-party audit at least once annually.
Reach out to our Compliance Team to talk about our auditing services!