Oregon Ballot Measure 109, passed by voters in 2020 to legalize psilocybin services in the state starting in 2023, provides a mechanism for local governments to hold elections to opt-out of measure 109 (i.e., not allow service centers or manufacturing businesses within their jurisdiction). The Linn County Board of Commissioners recently decided to refer opting-out of Measure 109 to local voters this coming November. Deschutes County recently indicated interest in referring the issue to voters at the next general election as well, and the same goes for Malheur County.
This blog post will discuss where else in Oregon opt-out elections may occur, why some local governments are deciding to remove themselves from Oregon’s revolutionary psilocybin program, and how opt-outs will impact access and equity.
Possibility of More Opt-Out Jurisdictions
The League of Oregon Cities recently published model ordinances and ballot measures for local governments wanting to opt-out of Measure 109. Many localities in Oregon voted against Measure 109 in the 2020 election, with the following counties voting against the measure: Baker, Coos, Crook, Douglas, Grant, Gilliam, Harney, Jefferson, Josephine, Klamath, Lake, Linn, Malheur, Marion, Morrow, Polk, Sherman, Umatilla, Union, Wallowa, and Wheeler. August 19 is the deadline for counties to file an opt-out ballot measure with their county clerk in order to refer the issue to local voters at the next general election on November 8.
Prospective business owners looking to purchase real estate to open a psilocybin service center or manufacturing facility should accordingly look at the voting results of the county where their prospective property is located. Even in counties that supported the measure, still unknown local time/place/manner (TPM) regulations are variables that may mean it is best practice to wait before investing in real estate.
Why are Counties Opting Out?
Rural counties like Linn were bound to opt-out of Measure 109 simply because residents do not support the measure. Some of the motivation behind the opt-outs are traditional and unfounded War on Drugs talking points that ignore the structure and regulations of Measure 109. While prohibition hysteria may partially explain the motivation behind the surge in opt-outs, the main motivation relates to local government’s ability to adopt TPM restrictions.
Most of the rules regulating psilocybin service centers are not set to begin rulemaking until September of this year with final rules adopted sometime in December. Developing TPM restrictions can take local governments several months. Leaving local governments with a choice of either waiting until December to see what the Oregon Health Authority will adopt for TPM regulations or use the November election as an off ramp to take themselves out of a program with unknown regulations.
Measure 109 is by design not a retail dispensary model we see with cannabis. Meaning there are unlimited potential business models for placing and structuring service centers and manufacturing facilities. This potential, while enticing to creative entrepreneurs, creates many variables that are leading local governments to forego involving themselves with Oregon’s novel psilocybin experiment.
Another reason we may see many counties opt-out is that unlike cannabis, Measure 109 explicitly forbids local government from imposing local taxes. Some Oregon counties that border neighboring states opted into cannabis legalization because local governments could levy taxes that are largely paid for by out of state consumers coming from states like Idaho where cannabis is still illegal. Without the incentive of leveraging local taxes, many eastern Oregon counties like Malheur will likely opt-out of Measure 109 because there is no benefit for local tax revenue.
One can only speculate the number of jurisdictions that will opt-out of Measure 109. Some opt-out counties may include a two-year sunset provision that allows them to jump back into the psilocybin services act by 2024. However, it is worth noting that many counties in Oregon are still opt-outs for marijuana dispensaries, and the last city in Orgon to end alcohol prohibition did not do so until the beginning of the 21st century.
A surge in city and county governments opting-out of Measure 109 will significantly hinder access for rural Oregonians. Most of the counties east of the I-5 corridor voted against Measure 109, and if all those counties opt-out many rural Oregonians will need to travel hundreds of miles to access psilocybin services. The cost of travel and lodging will simply price out most lower and middle-income clients. Psilocybin is legal only at service centers, meaning that a wave of opt-outs will cause many Oregonians to revert to the illicit market where products go untested and law enforcement is waiting in the backdrop.
While there is likely some local economic value in opting into Measure 109, the developing psilocybin industry is presenting regulatory and capital barriers that are already pricing out small and medium sized businesses. Creating a situation where only the most well capitalized businesses can enter the industry. Therefore, many local governments will not opt into an industry that could become dominated by a few well financed companies and multinational corporations who will find a work around to Measure 109’s residency requirement through complicated business structuring.
You can contact Brett Mulligan at firstname.lastname@example.org or 503-488-5424.