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Health and Human Services

### Executive Summary

#### Key Objectives
- Identify key agency stakeholders associated with regulating the marijuana industry.
- Provide an analysis of OMMA’s current status and recommend key performance indicators to be achieved.
- Identify best practices from other states’ regulation of the industry.
- Identify a regulatory framework for Oklahoma’s medical marijuana industry that would limit illicit activity, enhance public safety, connect to the medical community, and support interagency coordination.

In 2018, Oklahoma voters approved an initiative petition to legalize medical marijuana. The statutory change enacted by the ballot measure provided the State just 60 days to establish an office for the regulation of medical licenses, dispensaries, growers, and processors.

The proponents of State Question 788 (SQ788) sought to ensure patient access to medical marijuana products. However, the measure’s language did not pro- vide for an adequate regulatory structure to address public safety, illicit activity, enforcement and compliance mechanisms, and consideration of the varied agencies that would be engaged with the industry.

With this evaluation, the Legislative Office of Fiscal Transparency sought to identify critical regulatory needs within the fast-growing medical marijuana industry, examine regulatory best practices from other states, and propose a regulatory framework to support public safety and health, curb illicit activity, and ensure proper enforcement.

This evaluation resulted in three key findings:

#### Finding 1: State Question 788 Created the Most Accessible Medical Marijuana Industry in the Nation
Three and a half years after the approval of SQ788, Oklahoma has the most accessible medical marijuana market in the country. Currently, Oklahoma has the greatest percentage of licensed medical marijuana patients, greatest number of dispensaries, and greatest number of growers of any state with medical marijuana.

![omma-data.png](https://dy8iim215g2zo.cloudfront.net/omma_data_32f064df6c.png)

Factors contributing to the level of access across Oklahoma’s medical marijuana industry include lower barriers to entry for both businesses and patients. Oklahoma has some of the lowest license fees for businesses, with no license limits, and is just one of three states that do not require a physician to verify a qualify- ing condition for patient access. Additionally, enforcement and compliance has been minimal in this early market, and there is a lack of clarity and authority regarding the roles and responsibilities of those involved in regulation.

#### Finding 2: Oklahoma’s Rapid Implementation of Medical Marijuana did not Allow for Develop- ment of an Adequate Regulatory Structure
Oklahoma’s four-month implementation was the fastest among states that regulate medical marijuana. The expedited timelines required under SQ788 resulted in Oklahoma bypassing key steps in planning that were undertaken by other states before the first sale of medical marijuana.

![dispensary-sale.png](https://dy8iim215g2zo.cloudfront.net/dispensary_sale_c35633e243.png)

With no time on the front end to develop a regulatory framework for medical marijuana, Oklahoma policymakers have been attempting to improve regulation in an active industry. A key action was creating the Oklahoma Medical Marijuana Authority (OMMA) as the primary entity responsible for overseeing regulation. However, effective regulation requires cooperation from various entities, including law enforcement, tax compliance, and environmental agencies.

With the implementation of medical marijuana, several state agencies quickly found themselves providing services outside of their normal operations. The lack of standardized processes for cooperation among those agencies has resulted in inefficiencies in operations, interagency communication, data sharing and delivery of services.

![ok-domains.png](https://dy8iim215g2zo.cloudfront.net/ok_domains_d8b48842b2.png)

#### Finding 3: A Strengthened Regulatory Structure is Key to Identifying and Achieving Evidence-Based Goals
The excise tax created through SQ788 was to ensure funding for the regulatory needs of medical marijuana, with excess funds apportioned to other state needs, such as education and drug and alcohol prevention. The Oklahoma Tax Commission reports approximately 40 percent of marijuana processors and dispensaries are delinquent with taxes. The collections of medical marijuana excise tax are volatile, and the continued evolution of regulations may impact the amount collected. As regulation improves, taxes could either increase for legal businesses coming into compliance, or decrease as bad actors exit the market. Proper regulation will force the market to find equilibrium between patients and providers.

While efforts to immediately improve the industry’s regulation are having an impact, the long-term effects are uncertain. Considering the brief three-and-a-half-year history of medical marijuana in Oklahoma, the lack of data collection, limited accountability for businesses through inspections, and an evolving regulatory environment, it is difficult to forecast the medical marijuana market and corresponding tax collections. Before Oklahoma can determine the cost of effective regulation of the medical marijuana industry, it must first establish an effective regulatory system. Additionally, while OMMA’s role as the regulatory authority is to ensure all regulatory functions are delivered, the agency is not required to deliver every function.

LOFT’s research of more than 30 state medical marijuana programs identified several best practices that led to development of a proposed regulatory framework for Oklahoma’s medical marijuana industry. The model includes developing a state strategy, identifying measurable objectives, centralizing data and coordination of needs, and using a funding structure that can adapt to changing priorities. LOFT identified both short and long-term objectives for effective regulation.

![marijuana-regulation.png](https://dy8iim215g2zo.cloudfront.net/marijuana_regulation_87c59fd343.png)


Executive Summary

Regulation of Oklahoma’s Medical Marijuana Industry

Report

Report & Resources

Interactive

### Summary of Policy Considerations and Agency Recommendations

#### Policy Considerations
The Legislature may consider the following policy changes:
- Establish an Agency Advisory Committee, or comparable structure, that requires agencies to:
    - define their roles and responsibilities within the medical marijuana industry
    - further develop the missing processes within the industry 
    - develop and deliver strategic plans
    - develop and measure Key Performance Indicators (KPIs), and
    - utilize MOU agreements for the budgeting of regulatory functions
- Establish a legislative oversight body responsible for reviewing and approving strategic plans, KPIs, and for ongoing feedback related to medical marijuana regulation.
- Utilize the legislative oversight body to review and approve KPIs for each regulatory entity and to tie information into decisions regarding apportionment of tax collections, as OMMA is a non-appropriated agency.
- Require an independent operational assessment related to transitioning OMMA to a stand- alone state agency or independent commission.
- Review best practices for tracking and responding to supply and demand needs.
- Institute a moratorium on business licenses until such a time the State can fully develop and implement its regulatory framework and bring the industry into compliance.

#### Agency Recommendations
The Oklahoma Medical Marijuana Authority should:
- Develop an annual Strategic Plan with quantifiable and attainable measures to evaluate its performance in regulating the medical marijuana industry. The report would be delivered at a time determined by the Legislature.
- Enhance the data collected from medical marijuana business applications to obtain more in- formation on growth and changes in the industry, and to inform the review process.
- Develop a more comprehensive supply chain management strategy, including process implementation for the upcoming seed-to-sale tool and other strategies for collecting quality data to inform the decision-making process.
- Work to improve the quality, quantity, and transparency of available data for medical marijuana metrics to allow for future evidenced-based investments.

Recommendations

February 2022

 Regulation of Oklahoma’s Medical Marijuana Industry

Evaluations In Progress

General Government 

Report: 24-296-01
Conduct an operational assessment of the Ethics Commission.


Operational Assessment of the Oklahoma Ethics Commission

Education

Report: 24-265-03
Review disbursements related to each of the five funding areas:
•	Title Funds
•	School Resource Officer/School Security Funds
•	Maternity Leave
•	Inhalers
•	Pay Raises for Teachers Employed at “Off-Formula” Schools


Oklahoma State Department of Education Disbursements of Funds

Report: 24-807-01
Conduct a review of all funding sources available to the Health Care Authority, identifying federal match levels of programs. Review revolving fund balances and purposes.


Regulation of Oklahoma’s Medical Marijuana Industry

Regulation of Oklahoma’s Medical Marijuana Industry

More Reports & Evaluations

Operational Assessment of the Oklahoma Ethics Commission

Oklahoma State Department of Education Disbursements of Funds

Health Care Authority: Review of Funding Sources