Oklahoma Medical Cannabis: Blossoming Legal Market or Black Market Hotspot?

The Oklahoma medical cannabis industry in 2021 is one of the hottest cannabis markets in America. The lack of regulations and cheap startup costs has made the medical market in Oklahoma grow significantly since its inception, with almost 2,400 cultivation licenses issued in 2020 alone. But how sustainable is Oklahoma’s success?

The Rise of Oklahoma Medical Cannabis

Since Oklahoma passed their medical cannabis laws in June 2018, they have courted many cannabis investors all across the US to participate with great success. Their “Open Borders” policy has allowed cannabis operators to hold multiple licenses, have minimal start-up fees for each license, and pay affordable taxes for their operations. 10,000+ cannabis operators have entered the medical program in the state in the past three years. Since the cost to obtain a license is only around $2,500, many of these shops are small businesses and entrepreneurs looking to get their start in the industry.

Many locals participate in the blossoming market – with almost 1 in 10 residents having an Oklahoma Medical Card. Cannabis consumption is allowed in any public area where tobacco use is permitted and there are minimal qualifications to obtain a medical card compared to other more stringent medical cannabis programs, like Texas.

Cannabis Tax Revenue

Business may be great for the operators and customers, but the State of Oklahoma is not generating the tax revenue they expected. Some data suggests that out of all states with legal cannabis programs, Oklahoma generates the least amount of tax revenue in total from its operators, though it has more cannabis operators than any other state. In 2020, Oklahoma brought in over $800 million in cannabis sales, but cannabis retailers only generated about $70 million in tax revenue.

Black Market Hot Spot

Another growing concern in Oklahoma is the presence of out of state customers and local operators that are illegally reselling medical cannabis. Some believe that the low-cost barrier to entry and the loose legal guidelines have attracted illegal operators. In July 2021, Oklahoma Senator Jim Inhofe requested $4 million in federal assistance to be used by the Oklahoma Bureau of Narcotics and Dangerous Drugs to work with local sheriffs to combat illegal cannabis operations.

Additionally, the state has recently started implementing METRC, a cannabis track and trace system, in order to curb the amount of cannabis moved illicitly out of the state. That effort is currently being challenged in the courts by a group of legal operators in Oklahoma arguing that the costs of the track and trace systems is putting an undue burden on their existing businesses.

Future of Oklahoma Cannabis

In June 2021, Oklahoma signed into law SB 1033 with overwhelming support, initiating changes to some of the state’s cannabis laws. Some of the changes introduced by this bill aim to curb the black market activities in the state by allowing the Oklahoma Medical Marijuana Authority to work with the Oklahoma Bureau of Narcotics and Dangerous Drugs to crack down on illegal businesses.

Additionally, this bill allows the Oklahoma Tax Commission to collect a fee from the cannabis operators for audits. The bill also allows for license transfers in the event of a change in ownership, and limits the number of plants a caregiver can grow to five plants for medical patients.

It is likely that Oklahoma will continue to pass legislation aimed at curbing the black market in the state and that new restrictions will be placed on the legal market. Though previous legislation has failed, the state has already attempted to put a cap on legal licenses. It is possible that another attempt to limit the number of cannabis businesses in the state could pass in the future. No matter the changes to Oklahoma cannabis laws, hiring an expert is a great way to ensure compliance and success in the state.

How Can Sapphire Risk Help?

Tony Gallo and the team of experts and consultants at Sapphire Risk Advisory Group have conducted risk assessments for high-risk businesses, including dispensaries, pawn shops, jewelry stores, and other businesses. Follow us on social media to stay up to date with more security best practices and cannabis industry updates!