The Oregon cannabis industry is bracing for a transformative year in 2025, marked by significant regulatory shifts, new environmental compliance obligations, and ongoing economic pressures stemming from market oversupply. As the state navigates these complex changes, businesses are adapting to stringent rules on product safety, packaging, and market access, making this a critical juncture for the sector.
Tightening Controls on Cannabinol (CBN) Products
A significant regulatory update impacting both the marijuana and general hemp markets takes effect on July 1, 2025. New rules from the Oregon Liquor and Cannabis Commission (OLCC) mandate that artificially derived Cannabinol (CBN) products must meet federal standards to remain on shelves. Manufacturers of these products, often found in sleep-focused edibles and tinctures, must now demonstrate a Generally Recognized as Safe (GRAS) determination or have submitted a New Dietary Ingredient Notification (NDIN) to the U.S. Food and Drug Administration (FDA) with no objections. Products failing to meet these criteria, which are designed to bolster consumer safety and establish uniform benchmarks, must be removed from sale statewide by the deadline. This compliance pivot will require manufacturers and retailers to meticulously review their product formulations and supply chains.
Extended Producer Responsibility for Packaging
Oregon’s Recycling Modernization Act, effective July 1, 2025, introduces Extended Producer Responsibility (EPR) mandates that extend to cannabis and hemp packaging. This landmark legislation requires producers of covered products, including most forms of packaging, to take greater financial and reporting responsibility for the recycling of their materials. Companies that manufacture, import, or sell packaged goods into Oregon must register with a Producer Responsibility Organization (PRO), such as the Circular Action Alliance (CAA), or develop their own compliance plan. This means the cannabis industry must not only adhere to OLCC’s strict labeling and child-resistance packaging rules but also integrate sustainability into their packaging design and management, reporting on packaging types and volumes used. The law aims to reduce waste and pollution by incentivizing more sustainable packaging choices.
Legislative Reforms Shape the Market
The 2025 legislative session brought forth several key bills altering the operational landscape for Oregon’s cannabis businesses. Senate Bill 162, a comprehensive cannabis omnibus bill, introduces significant changes. It empowers the OLCC to potentially extend marijuana license terms from one year to up to five years for renewals, offering businesses more stability and cost savings. The bill also streamlines law enforcement provisions, authorizing the destruction of “hoop houses” used in illegal marijuana cultivation during warrant execution. Furthermore, SB 162 includes a crucial “grandfather clause” for existing retailers, protecting businesses licensed before January 1, 2025, from being forced to relocate due to new proximity rules concerning schools. This aims to resolve issues where businesses might be inadvertently impacted by later discovered school locations.
Another notable legislative update is House Bill 3274, which revises advertising standards. The focus shifts from prohibiting ads merely “appealing to minors” to banning those “likely to cause minors to unlawfully possess or consume” marijuana items, demanding clearer, objective criteria for marketing materials from the OLCC.
Economic Headwinds: Persistent Oversupply Crisis
The Oregon cannabis industry continues to grapple with a severe oversupply problem, driven by a record-breaking harvest of 12.3 million pounds in 2024. Despite stable consumer demand, the sheer volume of product has led to plummeting prices, with the median retail price per gram of flower dropping to an all-time low of around $3.51-$3.75 by late 2024. This surplus is squeezing profit margins, forcing some businesses to sell at a loss or consider exiting the market. The lack of federal interstate commerce pathways exacerbates this challenge, trapping excess product within the state and limiting potential revenue streams. Industry experts predict continued market consolidation and potential business closures as margins become unsustainable.
Navigating Zoning and Licensing
While legislative changes in SB 162 address some aspects of the dispensary-to-school distance regulations by repealing prohibitions near pre-K and kindergarten facilities, the industry remains vigilant about zoning compliance. The “grandfather clause” included in SB 162 provides a crucial safety net for established businesses, ensuring they are not immediately displaced by updated interpretations or regulations.
Additionally, the Oregon Department of Agriculture (ODA) implemented a new hemp vendor license requirement, effective July 1, 2024. Retailers and wholesalers handling industrial hemp or hemp items for resale must obtain this $100 annual license. While marijuana licensees are exempt from this specific requirement, it adds another layer of compliance for those operating across both markets.
As Oregon’s cannabis industry moves through 2025, these overlapping regulatory changes and economic realities present a complex operating environment. Businesses that can adapt to stricter product safety standards, embrace new environmental responsibilities, and navigate the volatile market conditions will be best positioned for resilience and future success.
