Oregon Legislature Approves Landmark Cannabis Bill
SALEM, OR — The Oregon Legislature has successfully passed House Bill 3001, a significant piece of legislation poised to fundamentally restructure the state’s regulated cannabis market. The comprehensive measure addresses key components of the industry’s operational framework, specifically targeting the long-standing limit on cannabis producer licenses and making an adjustment to the statewide excise tax rate.
Abolishing the Producer License Cap
One of the most impactful provisions of HB 3001 is the elimination of the cap on cannabis producer licenses. For years, Oregon has limited the number of licenses available for businesses growing cannabis, a policy initially intended to prevent market oversaturation. However, critics argued this cap stifled competition, potentially favored established players, and hindered new market entrants, including those from communities disproportionately impacted by past drug laws. The removal of this cap signals a shift towards a more open market, allowing more cultivators to participate in the legal industry. Proponents argue this could lead to increased competition, potentially lower consumer prices over time, and provide opportunities for a broader range of entrepreneurs, aligning with social equity goals. The change is expected to simplify the licensing process for new producers, subject to meeting all other regulatory requirements enforced by the Oregon Liquor and Cannabis Commission (OLCC).
Adjusting the Statewide Excise Tax
In addition to the licensing reform, HB 3001 also includes a modification to the state’s cannabis excise tax. The current statewide tax rate of 17% levied on the retail sale of recreational cannabis will be marginally increased to 18%. While a one-percentage-point increase might seem minor, it represents a direct financial impact on consumers and the supply chain. This tax adjustment is not immediate; the legislation mandates that the new 18% rate will take effect on January 1, 2026. This provides businesses with over a year to prepare for the change and adjust pricing strategies accordingly. The statewide tax is separate from any local taxes that individual cities or counties in Oregon may impose, meaning the total tax burden for consumers can be higher depending on the location of purchase.
Allocation of New Tax Revenue
A key aspect of the tax increase within HB 3001 is the specific allocation of the additional revenue generated. The bill mandates that a percentage of the funds collected from the new 18% excise tax rate be directed towards two specific state accounts. A portion will be earmarked for the Cannabis Equity Fund, which is dedicated to supporting individuals and communities adversely affected by the historical enforcement of cannabis prohibition. This includes funding for grants, technical assistance, and other programs aimed at lowering barriers to entry into the legal cannabis industry for eligible applicants. Another portion of the new revenue is designated for the Drug Prevention & Treatment Services Account. This allocation underscores the state’s commitment to addressing public health concerns associated with substance use, providing resources for prevention programs, treatment services, and harm reduction initiatives across Oregon. This targeted approach to revenue allocation aims to balance market liberalization with investments in social justice and public health.
Legislative Journey and Vote
House Bill 3001 navigated the legislative process through both chambers of the Oregon Legislature. Following its earlier approval by the House of Representatives, the bill proceeded to the Senate for consideration. The final vote in the Senate occurred on Thursday, June 5th, where HB 3001 successfully passed with a vote of 18-10. The comfortable margin in the Senate indicates significant, but not unanimous, support for the package of reforms contained within the bill. The legislative approval marks a critical milestone for the measure.
Heading to the Governor’s Desk
With passage secured in both the House and the Senate, House Bill 3001 now advances to the desk of Governor Tina Kotek for her signature. The Governor has the authority to sign the bill into law, veto it, or allow it to become law without her signature. Her decision will finalize the fate of these proposed changes to Oregon’s cannabis framework. While the bill received legislative approval, it moves to the Governor amidst mixed reactions from industry stakeholders. Many producers and prospective entrepreneurs welcome the removal of the licensing cap, viewing it as an opportunity for growth and increased market access. However, concerns have been raised regarding the increase in the statewide excise tax, with some businesses arguing that higher taxes can strain profitability, potentially encourage consumers to seek out the illicit market, and add another layer of cost in an already competitive and sometimes challenging economic environment for cannabis operators.
The outcome of Governor Kotek’s review will determine the specific trajectory of Oregon’s cannabis market structure in the coming years, impacting everything from cultivation capacity and market competition to tax revenue allocation and consumer costs, starting with the tax change effective January 1, 2026.
