OKLAHOMA CITY — A lawsuit challenging the constitutionality of a new law that greatly increased licensing fees for medical marijuana businesses in Oklahoma was filed last Friday.
The petitioners are Jed Green, founder of Oklahomans for Responsible Cannabis Action; Pharside LLC, a marijuana grower and processor in Lexington; Oklahoma Natural Cures LLC, a medical marijuana dispensary in Warr Acres; and Bingo 101, a medical marijuana processor in Oklahoma City. Collectively they sued the Oklahoma Medical Marijuana Authority.
All four contend they “stand to suffer economic harm with the increased license fees/taxes imposed” by House Bill 2179, which the Legislature passed, and Gov. Kevin Stitt signed last year but did not go into effect until June 1 of this year.
The complainants ask the Oklahoma Supreme Court to assume original jurisdiction and nullify the statute.
The petitioners contend HB 2179 raises state revenue by “substantially increasing licensing fees” for medical marijuana growers, dispensaries, processors, and laboratories.
Prior to June 1, 2023, they relate, the licensing fee for medical marijuana companies was $2,500.
HB 2179, though, “imposes a tiered licensing fee scheme” for growers and processors. The amount of their license fee is determined by the tier the applicant “falls into.”
Licensing tiers for growers are distinguished by two categories: indoor, greenhouse or light deprivation, and outdoor. The initial license fee will be calculated based on the total amount of square feet of canopy or acres the grower estimates will be harvested for the year, and the annual license fee will be based on the total amount of square feet of canopy the grower harvested during the previous year.
Growers who use both indoor and outdoor growing facilities must obtain separate licenses for each type of operation.
A grower applying to renew its license “could fall into a Tier 7 category and have to pay a $50,000 license fee,” 20 times more than before HB 2179 went into effect, the petitioners complain.
The statute separates the medical marijuana processor license into tiers based on pounds of cannabis biomass and liters of cannabis concentrate. A processor who previously paid a flat $2,500 license fee “could fall into a Tier 3 category and have to pay $10,000” – four times as much – for that license, the petitioners point out.
For dispensaries, the initial license fee is $2,500. The annual license fee for a dispensary will be calculated at 10% of the sum of the combined state sales taxes and state excise taxes that the dispensary collects in a 12-month period; that fee will be a minimum of $2,500 and a maximum of $10,000, the new law stipulates.
The new license fee for a marijuana testing laboratory will be $20,000 – “eight times what it was before HB 2179,” the petitioners note.
Oklahoma had 6,563 marijuana growers, 2,852 dispensaries, 1,801 processors, and 27 marijuana testing laboratories on June 3, according to the OMMA.
Passage of HB 2179 violated SQ 640, petitioners contend
Passage of HB 2179 violated two provisions in Article V, Section 33, of the Oklahoma Constitution – created by statewide voter approval of State Question 640 at a special election in 1992 – the petitioners argue.
• HB 2179 did not pass by a “super majority” of three-fourths of the members in both legislative chambers. It cleared the state Senate with precisely the requisite number of “aye” votes: 37-7. But the bill passed the state House of Representatives on a 60-16 vote; a three-fourths majority requires 76 votes in the 101-member House.
• The Legislature passed HB 2179 during the last five days of the 2022 regular session. Article V, Section 33, decrees: “No revenue bill shall be passed during the five last days of the session.”
“Despite its concern with licensing ‘fees,’ HB 2179 raises revenue by imposing a tax in the strict sense of the word,” the petitioners assert. The measure “imposes a revenue-raising tax disguised as a fee.”
The public has “a strong interest” in resolving this issue because it involves a new law that “raises revenue by imposing increased fees,” and the Supreme Court must intervene “to prevent the State from enforcing an unconstitutional law.”
Tulsa attorney Stephen L. Cale represents the complainants.
HB 2179 was authored by Rep. Scott Fetgatter (R-Okmulgee) and Sen. Jessica Garvin (R-Duncan).