The State of Oregon is paving the way as the first state to design and implement psilocybin licensure within their communities. Under Oregon Health Authority’s framework, there will be four (4) types of licenses to apply for: (1) Service Center; (2) Manufacturer; (3) Facilitator; and (4) Psilocybin Testing Laboratory. From the Oregon Department of Revenue to the Oregon Department of Agriculture, we heard from several agencies on how they will be taking on the task of setting up first-of-its kind programs, as well as how they can assist those needing assistance with achieving licensure in the “Beaver State.” Let’s delve into what we learned at the Oregon Psilocybin Fall Business Forum:
After introductions by the Oregon Psilocybin Services (“OPS”) and Oregon Secretary of State’s Office of Small Business Assistance, attendees were informed that applications for the above four (4) licenses will be accepted starting January 2, 2023. Further, updates on the draft rules were provided as December 30th was stated as the set deadline for OPS to finalize all applicable rules, including license fees. OPS informed the audience that the application portal is will be released in the near future as they will be utilizing the Training Program, Licensing, and Compliance (“TLC”) platform for license applications. After hearing from the Office of Small Business Assistance, attendees were selected to ask questions regarding the application process. One audience member inquired about whether there is a requirement for local zoning support. We were informed that applicants are required to get local zoning support from the Planning Department. Further, for the proposed premise for a service center, manufacturer, or testing laboratory license, applicants must either own the property or lease it by a place that is not mortgaged by a bank due to the federal Controlled Substances Act. Lastly, it was addressed that the November 8th election will determine whether a municipality opts-in or -out of permitting psilocybin businesses within their boundaries.
Next on the agenda was details regarding local government, ordinances, and taxes. For a Service Center license, it cannot be located within 1,000 ft. of a school nor can it be on public land or located in exclusively residential-zoned property within city limits. Further, all Service Centers must have defined boundaries. For Manufacturers, the premise cannot be located on public land nor is outdoor cultivation permitted. In addition, all Manufacturers’ premises must have defined boundaries and if leased, must acquire consent of the landlord for the business’ use. Moreover, there are several security and storage requirements they must follow to ensure compliance with Oregon rules and regulations.
Local governments may adopt ordinances to prohibit Manufacturers and Service Centers, so long as the ordinance is voted on and passes in the November 8th election. After the election, OPS will post a list of the localities that opt-out of permitting the above licenses. Further, local governments can additionally enlist time, place, and manner regulations such as hours of operations regarding the psilocybin businesses in their communities. Service Centers and Manufacturers must request a Land Use Compatibility Statement (“LUCS”) from their local government before submitting a license application. There is a LUCS standardized form on their website, which one can use to have it completed by their local jurisdiction to show consistency with local zoning.
The Oregon Department of Revenue detailed several important factors regarding taxes, especially while working in a business with federally illegal substances. Oregon uses a combined payroll tax reporting system that affects employers – Form OQ, which is electronically filed with the Oregon Employment Department Frances Online System. It is important to note some payroll taxes are done at the local level as well. An employer must file Form OQ’s every quarter, even if no payroll occurred during that quarter (April 30th, July 31st, October 31st, January 31st). Additionally, you must register for a Business Identification Number (“BIN”) to report and pay Oregon Combined Payroll Taxes. All payments are made to the Oregon Department of Revenue using an OTC-V voucher. There are additional forms to be aware of as well such as OR-W-4 for employees, as well as Annual Withholding Reconciliation Return OR-WR and W2s and 1099s using iWire.
There will be an Oregon Psilocybin Tax – 15% on the purchase price of psilocybin products sold at Service Centers. However, services conducted there are not subject to a tax. The revenue generated from the tax will be held in a trust to be remitted to the Department of Revenue. Although IRS Section 280E does not permit business deductions due to the federal Controlled Substances Act like cannabis businesses, Oregon does allow business deductions for such businesses to be aware of.
The last session before a break for lunch discussed resources for new employers. During this session, there was a lot of discussion in the shared Zoom chats as the costs for new employers did not seem as manageable as others thought it would be. From discussing Worker’s Compensation resources to Oregon OSHA and Consultative Services, there were several side discussions that took away from the presentation as several small business owners were stating that the only way they could overcome such costs was to develop co-operations and partnerships. Even though the Oregon Labor and Industries Department maintained their stance on being there to assist those who needed assistance, the meeting of the minds was not met by audience members. Due to such tensions, the shared chat system was removed from future sessions.
After the hour lunch break, audience members returned to hear about OPS training programs, background checks, and HECC licensure. In Oregon, there is a different method to conducting background checks as they utilize the “weight test” as defined in their statutes. Under the weigh test, evaluators review potentially disqualifying convictions and arrests. To further ensure background checks do not induce further trauma, they review several factors such as the age when arrested/convicted, circumstances of the arrest/conviction, and the individual’s situation since then. Next, presenters addressed the education and training for the Facilitator’s license. Currently, there is a temporary program in place, however, OPS will soon announce how to get approved application summary on training programs, curriculum, etc.
The last presenter in this session, Peter Gertenrich, discussed the overall process to obtain HECC licensure for new school applicants. This license is for private career schools to enlist in a curriculum regarding psilocybin. As the primary contact person for this process, he identified seven (7) steps on how a New School Application is put together: (1) enrollment agreement; (2) school catalog; (3) school owner and school structure information; (4) school syllabus; (5) school employee policies; (6) school student record requirements; and (7) education curriculum.
In the second to last session for the day, Oregon Environmental Laboratory Accreditation Program (“ORELAP”) discussed the accreditation process for testing laboratories. The presenter addressed the following of the “TNI Standard” by the NELAC Institute which is a national consensus-based standard for environmental laboratory accreditation. ORELAP is actively working on administrative rules regarding accreditation of psilocybin testing laboratories such as potency, PCR testing, residual solvents, and random and representative sampling. Next, the Oregon Department of Agriculture discussed their role in assisting with psilocybin businesses, specifically pesticides, weights and measures, food safety, and water quality. Under Oregon’s rules, no pesticides are allowed on fungi or growing medium. Those working with psilocybin should invest in a legal for trade scale, as well as a scale inspection/license. The Department of Agriculture addressed that homemade psilocybin in a residence is not permitted as they control the making and selling of edible food or drink. Lastly, they addressed that those wishing to enter this industry should be fully aware of the water quality rules as well as in compliance with the agricultural water quality plan for the locality they work within.
As the Forum was coming to an end, attendees’ last session to participate in was regarding lessons learned from the cannabis industry from those who have been working with Oregon’s Marijuana Programs. To further detail the similarities and differences between these two industries, the presenters identified that in contrast to the cannabis industry’s focus on products, the psilocybin industry will be developed more around the services it provides. Further, unlike cannabis businesses, the products sold at the Service Centers cannot be taken off the property to be ingested. The State of Oregon wants the communities to treat the psilocybin businesses as health policy reform – similar to ketamine treatment centers – instead of drug policy reform that is highlighted in state cannabis industries.
Although there are some differences, psilocybin and cannabis businesses face the same obstacles in regard to municipality opt-in and opt-out restrictions, as well as heavy regulations and formalities that come from operating businesses in heavily-regulated markets. Further, there are similar transparency requirements in the application process such as ownership interest, financial records, etc., as well as the importance of tracking regulation changes.
The OPS conducted a thorough and knowledgeable business forum to help those begin the process of compiling a state-of-the-art application to enter the first-of-its-kind psilocybin industry. As we await more regulations to come, now is the time to work with a Team of experts to develop a robust application to be one of the first to acquire a psilocybin license. Contact one of us today at email@example.com