Legal cannabis industry funds more enforcement efforts as criminals ‘make us look bad’

“It needs to happen. The industry needs to regulate itself,” an Oklahoma Medical Marijuana Authority-licensed Garvin County grower told the Tulsa World. “We need to make sure bad actors are not here. For those of us who live and breathe these rules every day, it makes us look bad.”

Officials with OMMA and the Oklahoma Bureau of Narcotics are hopeful a new memorandum of understanding between the two organizations, despite their differing roles, will improve efforts to efficiently block illicit activity — whether from within the state’s medical program or otherwise.

“We are not the law enforcement component,” OMMA deputy director of compliance enforcement Taylor Hartin said  of the agency in a recent interview. “What I mean to say by that is that we currently do not have cease-and-desist or embargo authority. That’s something that will change in November with House Bill 2646, which will give us more power on that front.”

HB 2646 has a provision allowing the OMMA to direct a licensee to cease and desist operating without notice if it “finds that an emergency exists requiring immediate action in order to protect the health or welfare of the public.”

But Hartin said that change, while important for patient protection, does not afford the OMMA the same level of legal authority as the OBNDD.

“We will have an avenue to say, ‘You can’t transfer this product.’ We will also have more authority to embargo product … and make sure that product is actually what people are saying it is,” she said.

Expanding the teams

House Bill 2904 includes a call for the Oklahoma State Department of Health, which oversees the OMMA, to “utilize an amount necessary” from its budget to add staff to the still-new agency. Hartin said the changes would “almost double the size of OMMA.”

In that plan, the department would shift to more of what Hartin called a “satellite model” of monitoring the state’s industry, with inspectors would be stationed in geographic quadrants based primarily on concentration of licensees per region, plus in Oklahoma City and Tulsa.

Now, the OMMA will also — through a memorandum of understanding allowed after Senate Bill 1033 — help OBNDD fund hiring and operations for an enforcement unit that will specialize in handling criminal investigations related to cannabis. The OMMA confirmed the agreement was signed last week.

A similar agreement between OMMA and the Oklahoma Tax Commission allows for some of the funding from fees to go toward audits of licensed businesses to determine whether businesses are complying with laws and regulations for tax collection and remittance.

Oklahoma Bureau of Narcotics and Dangerous Drugs spokesman Mark Woodward stressed his view the department’s “lane is very narrow” on enforcement of medical cannabis licensees, though each business is required to obtain a license from OBNDD before it can open.

“When it falls into our lane is when there’s criminal activity,” Woodward said. “But that’s really where you’ve been seeing the activity lately.”

Hartin said OMMA’s function, in comparison, is “more on the regulatory side of things, like patient safety, being transparent in terms of record-keeping, where it’s being grown, how it’s being sold, et cetera.” 

Asked about the caseload of cannabis-related investigations his staff has handled this year, Woodward said, “Since about March it is absolutely overwhelming our agency and stretching us to the absolute limit.” He said the department ideally would hire up to 30 people and spend $5 million for an enforcement unit, which would come from licensing fees the OMMA routes to OBNDD via the memorandum.

Woodward said Thursday that OBNDD has already started moving agents internally based on the commitment OMMA made and had hiring boards to add staff to what will be called the OBN Marijuana Enforcement Team.

Sen. Jim Inhofe has also announced his desire for Oklahoma law enforcement to receive a $4 million appropriation for the same purpose from the U.S. Department of Justice. If Congress approves it, Woodward said those funds — expected to go toward multiple law enforcement authorities’ “overall efforts” to combat illegal activity — would become available likely starting in spring 2022.

Scrutiny of growers

Illegal operations, some of them not even attempting to get properly licensed, that hide behind the state’s legal cannabis industry are taking up a lot of OBNDD investigators’ time, according to Woodward. He said OBNDD has so far shut down about three dozen farms in Oklahoma for criminal activity, with at least 300 “farms and networks” under scrutiny in some way.

A June bust in Muskogee County was reported widely after the agency alleged workers had been trafficked to the state and worked for low wages in poor living conditions. Concerned residents are sending tips to OMMA and OBNDD on suspicious new farming operations.

“For the first 2½ years, we had a few businesses we had to shut down because they didn’t make an effort to get a license, but that was a really, really rare occurrence,” he said. That changed last fall, Woodward said, when he noticed an increase in land acquisitions and license applications in rural areas. “When we started to see the prime growing season, the calls started coming in to law enforcement about a suspicious grow,” he said. “In late March to early April, we really started doing deep dives. And we really did find connections to organized crime.”

He also said that following the U.S. Supreme Court McGirt decision, the OBNDD has been working with tribal law enforcement during at least some of the raids. Some tribes, including the Muscogee Nation, recently amended some ordinances related to cannabis based on Oklahoma’s passage of SQ 788, but for the sake of patient health rather than economic benefit.

Woodward said he’s seen instances in which out-of-state entities enlist an Oklahoman who meets the legal two-year residency requirement to acknowledge on paper they are an owner of a business while having little, if any, involvement in its operations.

OBNDD staff reportedly saw an increase in workers at such operations diverting products out of Oklahoma for sale around the world.

Spokeswoman Terri Watkins said OMMA makes every effort to ensure applicants meet residency and ownership criteria, which she acknowledged can be difficult. Statistics indicate OMMA has in excess of 10,000 licensed, though not necessarily active, businesses on record. 

“If the person providing the proper documentation for the 75% provides the information that they are the 75% owner and shows residency in Oklahoma for the last two years,” Watkins said as an example, “it becomes extremely difficult to try to determine if that documentation is not correct when everything appears to be in full compliance with Oklahoma law.”

Investigations of an administrative or even criminal nature may begin with a review of licensing documentation. For example, OMMA’s publicly available list of dispensaries reveals the same email address, which is tied to a law firm, appears on 95 different business entries. Meanwhile, the same person’s name appears in the OBNDD’s database on records for 11 medical marijuana businesses.

‘Things that need to be fixed’

For Pauls Valley-based growers Reid Colley and Joe Hendrix, it’s clear Oklahoma’s medical program would require government agencies to adapt. They said they were pleased to learn OMMA and OBNDD are formalizing an agreement, pointing out Oklahoma’s medical industry is also still adjusting three years later.

“But the problem is when you dump this workload on politicians where their goal might not be about thinking of developing a medical program,” Colley said. “So you get a lot of things that need to be fixed.”

While acknowledging it’s a challenge to oversee a program that has grown at the rate of Oklahoma’s, Colley said some businesses remain unsure of what they are supposed to do if a compliance inspector visits them.

That type of confusion is part of why Hartin said she’s interested in maintaining a “heavy educational component” to compliance inspections. She acknowledged that in some cases a business owner may be legitimately unaware they’re in violation of a rule.

“For a group like us, there’s nothing to hide, and obviously we’ll welcome the day that it comes. But again not everybody is in that position with people with different skillsets to make sure every detail is being monitored,” Colley said.

Some licensees have shared concerns OMMA isn’t proactively communicating important rule changes and that the gaps in oversight to this point have likely contributed to the problems of illegal activity. Hartin, though, said “the aim is not to hide the ball from anyone.”

“The more we can apprise people and help them know what to expect for efficiency and safety, the better,” Hartin said.

OMMA has and will continue to coordinate with OBNDD in cases of suspected illegal activity, but Hartin said she hopes the method of OMMA inspections will show the agency’s desire not to be punitive.

“It’s always my preference to protect patients rather than penalize businesses,” she said.