Senate votes to strengthen regulations against straw owners in marijuana industry

OKLAHOMA CITY – Further major reforms to address illegal marijuana grows and other activities moved through the Senate this week. Senate Bill 475 by Sen. Lonnie Paxton, R-Tuttle, seeks to stop the industry’s proliferation of illegal “straw owners”, sets business restrictions for revoked registrations, and empowers the director of the Oklahoma Bureau of Narcotics and Dangerous Drugs Control (OBNDD) to suspend suspected fraudulent businesses and assess fines.

“We worked with both the attorney general’s office and the Bureau of Narcotics, not to go after the medical marijuana industry, but to go after the bad actors who’ve been manipulating the process,” Paxton said.  “This bill tackles specific issues, like straw owners, so that OBNDD and prosecutors can address the problems we’re having much quicker.”  

SB 475 defines “straw person or party” as a third party who is put up in name only to take part in a medical marijuana business transaction. It provides that if the OBNDD director revokes a registration, the registrant of the land will be required to hold any controlled dangerous substances not impounded or preserved by the agency. None of the held substances can be purchased, distributed, sold, or transferred. If the revocation is finalized, all such controlled dangerous substances will be forfeited to the state or otherwise considered waste and submitted to a licensed waste disposal service.

The bill also authorizes the director to issue a written order to be served on the parties before annulling, conditioning, suspending, or revoking any registration that is believed to be operating inconsistent with current requirements. The written order must specifically state the nature of the violation or basis for the action. The period a registrant has to appear before the director disputing the registration annulment will be increased from 30 to 60 days. All proceedings will be conducted in accordance with the Administrative Procedures Act and the rules and OBNDD regulations without regard to any criminal prosecution or other proceeding.

Finally, the director may issue an order immediately suspending a registration, without notice or a hearing, when there is cause to believe there is imminent danger to public health or safety. They are further authorized to levy a $5,000 per day fine for any violation of federal or Oklahoma law relating to controlled dangerous substances, or rules implemented by the bureau. Upon a registration annulment, revocation, or denial, the director may prohibit the registrant or applicant from reapplying for registration for a period up to five years following the date of the final order.    

SB 475 will next be considered in the House of Representatives.  The House principal author is Rep. Jon Echols, R-Oklahoma City.

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For more information, contact:  Sen. Paxton: (405) 521-5537 or Lonnie.Paxton@oksenate.gov