Oregon Cannabis Roundup: Fall 2026

It’s been a while since we wrote a round-up post on Oregon cannabis. Here are some items of note, as we head into the fall. Gather ‘round!

Proposed THC cap and packaging requirements

On August 19th, the Oregon Capital Chronicle ran an article featuring a renewed push by Sen. Lisa Reynolds (D-Portland) to cap individual edibles at 10 milligrams of THC. This would be a reprisal of failed Senate Bill 1548, which we covered in February at the start of the 2026 legislative session. SB 1548A passed the Oregon Senate, but died in the House Committee on Economic Development, Small Business and Trade, following industry opposition.

Related to the THC cap, SB 1548A contained newly restrictive packaging proposals (i.e., a requirement for individually packaged servings; added warnings). The packaging component likely did more damage to the bill’s chances than the actual serving limits, seeing as non-medical THC is already capped at 10mg THC/serving. As I explained in February, “the industry argument here is that cannabis packaging requirements generate tremendous waste, and are an affront to sustainability. It’s a good argument.”

It’s worth noting that SB 1548A contained an additional public health prong, restricting dispensary siting requirements. I wouldn’t be surprised to see this provision removed on re-introduction, because the big target here is serving limits. But it’s hard to say at this point. As I explained in March, “SB 1548A could always pop up again next session, as a stand-alone bill or in some other format.”

Reynolds did say that she will be hiring a lobbyist this time around. We’re also scheduled for a six-month session beginning in February (as opposed to the 35-day session of 2026), which means Reynolds’ proposal will get a real look.

Bottom line: this isn’t going away, and industry will need to gear up for another fight.

Tax Enforcement

Portland’s Willamette Week ran a story on August 23rd, titled “Owner of La Mota Issued $7.9 million in liens.” The story describes five tax liens issued to Aaron Mitchell “and dozens of his LLCs” for unpaid taxes going back to 2020.

A client sent me this story, and asked how Mitchell and La Mota are still running around in the OLCC space. I directed him to what I wrote back in December of 2024: “The answer is simple: La Mota probably reached a deal on payment plan with the Department of Revenue.”

If those payment plans are also now in default, with liens assessed, the jig may finally be up for Mitchell and La Mota. Or, maybe not! According to a 2023 story in the same publication, by the same reporter, Michell, his partner “and the many companies they control have been issued over $1.8 million in tax liens in recent years by the state.”

Elsewhere, OLCC and DOR do continue to enforce the tax payment rules caused by the far-reaching La Mota scandal. That is to say, retailers must obtain a certificate of tax compliance in order to renew or transfer a license, showing they are current on state taxes or operating under an approved DOR payment plan.

New CTS protocols

Compliance Education Bulletin CE2-2601 takes effect next week, on September 1st, 2026. The bulletin defines a new CTS process for entering compliance test results in Metrc on secondary lab sample packages. This development succeeds from the 2024 crackdown on THC inflation and testing labs. (In all, we still have 10 licensed labs, down from 11 when this story broke.)

CE2-2601 is not a rule per se, but licensees need to comply with the bulletin. OLCC emphasizes that “failure to adhere to the new process after September 1, 2026 will result in missing test results for the source package.” No one wants that, obviously.

Dreary forecast for industry growth

Two days ago, on August 26^th, Oregon’ Chief Economist released the state’s Q3 Economic and Revenue Forecast. A key takeaway includes “marijuana forecast profile revised substantially,” and not for the better. The forecast includes a $14 million reduction in tax revenue in the current biennium (two-year period), as compared to last quarter’s forecast for the same period.

As I’ve highlighted in successive “State of the State” posts, marijuana sales revenues have dropped each year from 2022 to 2025. This means less tax collected. The state is predicting this trend will continue, with lower prices and stagnant demand. This means more squeeze on producers, which means more diversion activity, probably. It also means less money for schools, police, public health, cities and counties. We would love to see this trend reverse, or even just relent. There are no easy answers, unfortunately.

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Five Bills Every California Cannabis Operator Needs to Track in 2026

Five Bills Every California Cannabis Operator Needs to Track in 2026: AB 1826, AB 1965, AB 2249, AB 2532, and AB 2537

Five separate bills are moving through the California legislature at the same time, and together they touch nearly every part of a licensee's compliance program; (1) how the Department of Cannabis Control (the “DCC”) investigates and penalizes violations, (2) what gets tested and disclosed at retail, and (3) what a products can look like on the shelf.

As of mid-August 2026, AB 1826 and AB 2537 remain in the Senate Appropriations suspense file, while AB 1965, AB 2249, and AB 2532 have advanced further along the legislative process. None of these bills exist in a vacuum, and operators who wait until they finally pass to start adjusting internal procedures will be playing catch-up.

AB 1826: due process for recalls, embargoes, and destruction

Under the current framework, the DCC has broad authority to issue recall and embargo notices, and licensees have limited formal rights to contest the underlying findings before product must be destroyed. AB 1826 changes that dynamic in several ways.

The bill would create a new "administrative error" category so that certain technical issues—such as nonconforming labeling, track-and-trace clerical mistakes, or minor potency variances—no longer automatically count as adulteration or misbranding. It would also require the DCC to include supporting documentation with any notice of adulteration, misbranding, or embargo, rather than a bare conclusion.

Perhaps most significantly, AB 1826 would require the DCC to offer licensees a mandatory meet-and-confer opportunity within five business days of a notice, and would prohibit destruction of the product until that process concludes or the licensee declines to participate. The bill sets firm timelines throughout: a final determination within 15 calendar days of the informal conference, embargo tag removal shortly after a no-violation finding, and an expedited hearing process for perishable products such as flower and live plants. It also bars the DCC from conditioning any relief, corrective plan approval, or embargo removal on a licensee waiving its right to a hearing or appeal.

For operators, this means building internal protocols now for responding within these compressed timelines, training compliance staff to demand supporting documentation the moment a notice arrives, and factoring the new hold-don't-destroy framework into inventory and cash-flow planning during any dispute.

AB 2537: a risk-based enforcement framework

AB 2537, the Cannabis Enforcement Accountability and Public Health Prioritization Act, requires the DCC to adopt a risk-based enforcement framework starting January 1, 2028, prioritizing material threats over minor technical or administrative violations. The DCC would be required to publish an enforcement policy explaining exactly how it plans to triage violations by risk level.

The bill is not purely about leniency, however. It also extends the statute of limitations for MAUCRSA citations to three years after the violating act and adds a right to an informal hearing tied to citations. Operators should read this as a philosophical shift toward proportionality at DCC, paired with a longer window during which historical compliance gaps remain exposed. Risk-based enforcement is not an excuse to relax recordkeeping discipline.

AB 1965: testing, quality assurance, and retail disclosure

AB 1965 focuses on what happens in the lab and at the point of sale. It requires cannabis products to be tested and retested in their final consumable form, and changes how DCC selects batches for that testing. Retailers and other retail-authorized licensees must provide a certificate of analysis to a customer on request, and DCC must be able to obtain off-the-shelf product for unmodified lab testing. The bill also clarifies that onsite quality-control testing does not substitute for certified lab compliance testing, and requires labs to cooperate with DCC evaluation requests.

Retailers need point-of-sale or back-office systems capable of producing a COA on demand without delay. Manufacturers and distributors—particularly those working with edibles or other infused products—should expect closer scrutiny of final-form testing. This is an area that has historically created gaps when formulations change after initial testing.

AB 2249 and AB 2532: a packaging and labeling overhaul

Two separate bills would reshape packaging and labeling requirements, and operators need to track both to avoid falling through the gap between them.

AB 2249 prohibits cannabis products, packaging, or labeling that is "attractive to children" under a newly defined standard. It requires DCC to adopt, by July 1, 2027, a standardized rubric identifying prohibited design elements, along with a voluntary pre-clearance process that lets licensees obtain a written determination on proposed packaging or labeling before bringing it to market. Industry groups have already pushed back on proposed amendments that would restrict vape cartridge labels referencing flavors or strain names, arguing the language is overbroad, so the final scope of the rubric remains in flux. This bill was passed by the Assembly and is currently sitting on Gov. Newsom's desk to be signed into law.

AB 2532 takes a more direct approach, establishing uniform, mandatory packaging and labeling requirements across the board: tamper-evident and child-resistant packaging, resealable packaging for multi-serving products, and a DCC-issued unique identifier on every package. It sets detailed label content rules covering government warning language, product type, packaging date, cannabinoid content per serving and per package, allergen warnings, and net weight for dried flower. Edibles would be limited to generic food names rather than fanciful branding on ingredient lists, and vape cartridges could not claim to be disposable or suggest disposal in the trash. The bill also contains a built-in trigger that if the U.S. Attorney General formally determines cannabis is no longer a Schedule I substance. At that point, the required Schedule I warning statement would automatically drop from labels.

Because AB 2249 works through a rubric and pre-clearance process while AB 2532 imposes a hard content mandate, a packaging design that satisfies one bill will not necessarily satisfy the other. Design and compliance teams should build in lead time for DCC's 2027 rubric rollout and plan to use the voluntary pre-clearance process once it becomes available.

How these five bills fit together

AB 1826 and AB 2537 reform how DCC investigates and penalizes violations. AB 1965 changes what gets tested and disclosed. AB 2249 and AB 2532 change what a product can look like on the shelf. A licensee could be fully compliant with every packaging requirement and still face an embargo over a testing or track-and-trace discrepancy, which means compliance programs need to treat these five bills as interlocking pieces of one system, rather than five separate checklists.

Operators that start adapting now, rather than waiting for final enactment and DCC's inevitable emergency rulemaking, will be far better positioned when these changes take effect.

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For more updates on recent marijuana legislation, including rescheduling and the DEA rulemaking process, please check out these recent posts:

• What California Medical Operators Must Do After Rescheduling: DEA Registration, License Operation, and 280E
• The Quietest Fight of DEA’s Life: Reflections on the Marijuana Rescheduling Hearing
• Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
• Would Cannabis Rescheduling Help Businesses in Unified Markets? Washington Weighs In
• The Motion to Stay DEA’s Schedule III Rule: Strong Enough to Stick?
• Standing Is Everything: Three States Join the Medical Marijuana Rescheduling Fight
• Medical Marijuana Rescheduling Q&A: Cutting Through the Noise
• A Calculated Bet: DEA Registration is Open, and the Clock is Ticking
• Marijuana Rescheduling and Income Tax
• The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck

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Bring your next smoke sesh into the future with the fully automatic dry herb combustion device, the EZ-UP Aurora

Cannabis technology has come a long way from rolling papers and hand-packed bowls. Edibles, vapes, and dosed beverages have already proven that consumers want options that fit their lifestyle, not just tradition for tradition’s sake. But until now, that innovation has largely bypassed dry herb. Enter the EZ-UP Aurora from Boston-based Spark Perceptions Technology: The […]

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California Cannabis Contracts After Rescheduling: Why Your Contracts Need a Second Look

Rescheduling did not just change tax treatment and licensing options for cannabis operators. It also changed the assumptions baked into thousands of existing cannabis contracts. Supply agreements, licensing arrangements, and investment documents drafted before April 2026 were built around a world where cannabis was federally illegal in every respect. That world no longer exists for qualifying medical activity, and many of those older contracts were never written to handle the change.

This creates a quiet, but serious, risk. A contract that looked airtight eighteen months ago may now contain gaps, outdated assumptions, or ambiguous triggers that leave one party exposed. Before signing a new deal or relying on an old one, California operators should take a hard look at how rescheduling, DEA registration, and DCC license restructuring interact with their existing contracts.

Why legacy California cannabis contracts are suddenly at risk

Most cannabis agreements were negotiated under the premises that cannabis is a Schedule I substance. Representations, warranties, and compliance covenants were built around that reality, focused almost entirely on state-law compliance because federal legality was never on the table.

Rescheduling changes that baseline for qualifying medical activity, and DEA registration and DCC license restructuring add new categories of regulatory status that many contracts never anticipated. A supply agreement that only asks a counterparty to comply with "all applicable state cannabis laws" may be silent on whether that counterparty is DEA-registered, whether its license structure supports a medical channel, or whether its own upstream suppliers meet that same standard. The result is a contract that technically still applies, but no longer captures full risk exposure.

Supply agreements: where the biggest exposure is hiding

Supply agreements deserve close look, because they sit at the center of the medical versus adult-use distinction discussed in earlier posts on this blog; HERE and HERE.

Representations tied to old premises.

Many supply contracts include reps and warranties drafted narrowly around state-law compliance, without addressing DEA registration status at all. If a counterparty becomes DEA-registered, or fails to, the existing language may not say anything meaningful about that fact, leaving a gap exactly where the parties need protection.

Sourcing and counterparty registration.

If an operator's restructuring and Schedule III compliance depends on sourcing from suppliers with a distinct medical license structure or DEA registration, existing supply contracts should require and verify that status, not just assume it. Without a specific covenant and audit right, an operator has no reliable way to confirm that its supply chain actually supports the medical positioning it is relying on for tax or regulatory purposes.

Change-in-law and force majeure clauses.

Many agreements include change-in-law provisions that were drafted with vague, future hypotheticals in mind. Rescheduling is no longer hypothetical. Operators should review whether these clauses were written broadly enough to address rescheduling, new DEA rules, or DCC license restructuring, and whether triggering them now would produce the outcome the parties desire, such as renegotiation, termination, or price adjustment.

Licensing agreements: aligning contracts with DCC license restructuring

DCC's rules allowing license designation changes and A/M splits outside the renewal cycle creates new possibilities for operators, but they also create blind spots in existing licensing agreements, brand licensing deals, and management agreements.

Operators should ask a few direct questions about every active licensing contract:

• Does the agreement assume a specific license type, such as adult-use only or a combined A/M structure, that may now change?
• Does the agreement say who bears the cost, delay, or risk if one party decides to pursue a license conversion?

If the answers are unclear or silent, that silence is not neutral. It usually means the party with less leverage will absorb the cost of any future conversion dispute. Proactive amendments, even short ones, are far cheaper than resolving that ambiguity in litigation later.

Investment and M&A agreements: new risks and new opportunities

Deal documents deserve particular attention because they tend to rely heavily on defined terms and broad references to "applicable law."

Representations about regulatory status.

Purchase agreements, subscription agreements, and credit agreements often include representations about compliance with applicable law that were treated as boilerplate in a Schedule I world. Post-rescheduling, that phrase carries more weight. Diligence checklists should now expressly cover DEA registration status, supply-chain registration, and how a target company is positioning itself for I.R.C. 280E purposes.

Valuation and earnout provisions.

If 280E relief materially changes a company's effective tax rate for medical activity, historical financials used to calculate earnouts or purchase price adjustments may need a second look. Deals negotiated before rescheduling could produce disputes if one side argues the numbers should be recalculated to reflect the new tax reality, while the other side insists the original figures control.

Indemnification and escrow considerations.

Existing indemnification baskets and survival periods were built to cover a narrower set of known risks. New deals should include specific indemnities addressing DEA registration compliance, license conversion missteps, and supply-chain misrepresentations, rather than relying on generic compliance language to catch issues it was never designed to catch.

Common pitfalls to avoid with California cannabis contracts

Operators often make three mistakes when updating cannabis contracts. First, they rely on outdated template language without addressing what has actually changed since rescheduling. Second, they update contracts in isolation, without coordinating with parallel efforts around license restructuring or DEA registration, which creates inconsistencies between what the paperwork says and what the business is actually doing. Third, they assume counterparties will voluntarily disclose changes in their own registration or compliance status, when in reality that disclosure needs to be a contractual obligation, not a courtesy.

Action checklist

• Add or strengthen DEA registration and supply-chain compliance covenants in supply agreements.
• Review licensing agreements for silence on license conversion or A/M split scenarios, and amend where necessary.
• Update M&A and investment diligence checklists and deal documents to reflect new tax and regulatory realities.
• Treat contract review as part of the same strategy as DEA registration, license conversion, and 280E planning, not a separate project handled after the fact.

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For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:

• What California Medical Operators Must Do After Rescheduling: DEA Registration, License Operation, and 280E
• The Quietest Fight of DEA’s Life: Reflections on the Marijuana Rescheduling Hearing
• Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
• Would Cannabis Rescheduling Help Businesses in Unified Markets? Washington Weighs In
• The Motion to Stay DEA’s Schedule III Rule: Strong Enough to Stick?
• Standing Is Everything: Three States Join the Medical Marijuana Rescheduling Fight
• Medical Marijuana Rescheduling Q&A: Cutting Through the Noise
• A Calculated Bet: DEA Registration is Open, and the Clock is Ticking
• Marijuana Rescheduling and Income Tax
• The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck

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Breaking Point in Phoenix: Inside Grow Sciences’ desert wonderland

Lindsay MaHarry visits Grow Sciences in Phoenix to get an inside look at Breaking Point, a standout hybrid bringing gas to the coffee shop.

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Texas government outlaws THC—confuses country, consumers, and themselves

The Lone Star mess gives us a preview of the upcoming nationwide hemp ban, with a long-stalled ruling effectively banning hemp THC in the state.

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DCC license conversions after rescheduling: how and when to split A/M licenses in California

When obtaining a California cannabis licenses, operators had to decide whether to operate under an adult-use license, a medicinal license, or a combined A/M structure. However, what once looked like a routine licensing question with a simple answer now affects tax planning, federal compliance, and supply-chain viability. For some businesses, converting or splitting licenses may help align their operations with Schedule III medical activity and better 280E positioning. For others, rushing into a conversion could create new compliance problems.

Why license structure matters now

The federal government’s April 2026 rescheduling action created a path for qualifying medical cannabis activity to move outside the full reach of Internal Revenue Code Section 280E. Adult-use activity, however, remains subject to the same punitive tax treatment. That makes the distinction between medical cannabis and adult-use cannabis more important than before.

Many businesses have treated A, M, and combined A/M designations as mostly administrative. After rescheduling, those choices may affect whether a company can credibly position part of its business as medical, whether it can support a future DEA registration, and whether its books and records can sustain a defensible allocation between medical and adult-use activity.

What changed under the DCC rules

As mentioned in our prior post, the DCC’s 2026 emergency regulations allow operators to revisit license designations outside the annual renewal cycle and restructure existing operations more easily. For businesses holding combined A/M licenses, that creates an opportunity to separate adult-use and medicinal activity more clearly and efficiently.

In the right case, a cleaner split can support better accounting, stronger compliance controls, and a more coherent medical-only posture.

Why some operators should consider conversion or splitting

The strongest reason is tax planning. If a meaningful part of the business may qualify as medical under the new federal framework, a clearer medicinal structure may help support that position. That does not guarantee 280E relief, but it puts the operator in a better position than a business trying to claim medical treatment while maintaining a blurred structure.

Operators considering DEA registration should be asking whether their business actually looks like a medical operation. A separate medicinal license, distinct inventory controls, and medical-specific procedures can bolster your position.

A distinct medicinal structure may also help with patient branding, financings, or sale transactions where buyers want cleaner separation between medical and adult-use operations.

The supply-chain issue operators cannot ignore

If a retailer wants to truly create a split between its medical and adult-use operation, the same logic should apply upstream: cultivators, manufacturers, and distributors should also have an isolated medical license or a medical operation clearly separate from adult-use activity. A strategy for a medicinal retailer is harder to defend if the product moves through businesses that blur medical and adult-use operations at every step along the supply chain.

This creates a chain-wide segregation issue. A retailer may split its licenses, but if cultivators, distributors, or manufacturers do not separate medical product, maintain distinct records, and structure their licenses accordingly, the medical model may exist only at the point of sale. That weakens both the compliance and the tax posture as a medical-only operation.

For California businesses, conversion analysis should include a full supply-chain audit. Before restructuring around a medical-only strategy, operators should identify which partners down the supply chain can support a separate medical channel and which cannot. If the answer is very few, a premature conversion may create complexity without much benefit.

Common pitfalls

The first mistake is treating conversion as purely a tax move. Yes, 280E matters, but weak operations can turn a good theory into audit risk. The second mistake is assuming a medicinal license alone solves the DEA issue. It does not; federal alignment depends on how the business actually operates and how product moves through the supply chain.

Another common problem is failing to align local permits, leases, and vendor contracts with the new structure.

Who should move now, and who should wait

Operators with real medical patient volume, serious interest in DEA registration, and a supply chain that can align with the medical only framework are the strongest candidates for immediate action. The same is true for businesses preparing for financing, sale, or restructuring.

By contrast, purely adult-use retailers with little medical demand may be better off waiting. So may businesses whose suppliers lack medical operations, and businesses that lack the internal systems needed to support clean separation of medical and adult-use activity.

Practical next steps

Before pursuing a conversion or split, licenses California cannabis businesses should ask:

• Does the business have enough genuine, medical cannabis activity to justify a medicinal strategy?
• Can accounting, inventory, and SOPs support a defensible separation between medical and adult-use activity?
• Is the supply chain capable of moving toward medical cannabis only?
• Do local permits, leases, and contracts support the proposed change?

If the answers are favorable, a conversion may be worth pursuing now. If not, prepare first and file later. Businesses most likely to benefit from rescheduling will treat licensing, tax, and supply-chain analysis as one strategy.

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For more on marijuana rescheduling and the DEA rulemaking process, please check out these recent posts:

• What California Medical Operators Must Do After Rescheduling: DEA Registration, License Operation, and 280E
• The Quietest Fight of DEA’s Life: Reflections on the Marijuana Rescheduling Hearing
• Law and Politics: Why Marijuana Rescheduling’s One-Sided Hearing Matters
• Would Cannabis Rescheduling Help Businesses in Unified Markets? Washington Weighs In
• The Motion to Stay DEA’s Schedule III Rule: Strong Enough to Stick?
• Standing Is Everything: Three States Join the Medical Marijuana Rescheduling Fight
• Medical Marijuana Rescheduling Q&A: Cutting Through the Noise
• A Calculated Bet: DEA Registration is Open, and the Clock is Ticking
• Marijuana Rescheduling and Income Tax
• The U.S. Opens Its Medical Marijuana Market to Global Trade (For Now); Broader Marijuana Rescheduling on Deck

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