More than half of the registered hemp fields tested in Southern Oregon this summer are actually growing THC-rich cannabis as regulators admit they lack the resources to eliminate the still-thriving illicit market that threatens the state’s legal adult-use industry.
The Oregon Liquor and Cannabis Commission (OLCC) adopted temporary rules in July to allow the agency to work with the Oregon Department of Agriculture (ODA) to test registered hemp fields across the state to determine if the farmers are growing legal hemp (containing less than 0.3% THC) or illegal cannabis (containing more than 0.3% THC).
The emergency rules stemmed from the implementation of House Bill 3000, which aimed to regulate cannabis intoxicants (including delta-8), curb the illegal production of cannabis, bring Oregon into compliance with the 2018 Farm Bill, and establish a task force to address the regulation and marketing of cannabis cultivation in the state.
That task force was deployed at the end of July for “Operation Table Rock,” which saw agents from the OLCC, the ODA and local law enforcement set out to test the THC content of plants at the 335 registered hemp grow sites in Jackson and Josephine Counties. The emergency rules set a THC limit of 5% for these farms.
RELATED: Oregon Launches Hemp Field Inspections to Crack Down on Illicit Cannabis Operations
During a Sept. 23 OLCC meeting, Rich Evan, senior director of licensing and compliance, said regulators had visited a total of 316 of the 335 locations to date. Test results were available for 212 of those 316 locations, Evan said, and 114 of the 212 farms tested had plants containing more than 5% THC.
“This is surprising everyone right now that I’ve been talking to that the number was that high,” Mason Walker, CEO of East Fork Cultivars, told Cannabis Business Times and Hemp Grower. East Fork grows both cannabis and hemp at its operation in Josephine County. “We all expected … a couple dozen, maybe, to come out of that action. It’s pretty wild that it was virtually half of the farms inspected that were growing high-THC [cannabis].”
Walker said “there are a lot of bad actors” in Southern Oregon.
“If you drive around Southern Oregon near our farm, it is full of illicit cannabis—just everywhere,” he said. “It always has been, but it’s always been family-scale. … What’s different this year over any year is it is very clearly not family-scale illicit cannabis. It is commercial-scale, organized illicit cannabis.”
The highest level of THC revealed during the hemp field inspections was 32.9%, Evan said, adding that the statistics announced during the OLCC’s Sept. 23 meeting were accurate as of Sept. 16.
“We actually have people going out today and following up on some of these issues,” he told commissioners during the meeting. “There are 104 other locations. Twenty of them are in the process of being tested. Fifty-nine of the locations were not growing anything—it was just bare fields.”
At East Fork, Walker said the team was happy to show agents around when they arrived to test the plants. The company’s farm director accompanied regulators as they took cuttings from several plants to gather a “random sampling” for testing.
“They took a robust sampling from across our fields, and then we didn’t … get confirmation that our field had passed or was fine until maybe a week later,” Walker said.
An Ongoing Investigation
Regulators are still working through Operation Table Rock nearly three months after launching the hemp field inspections.
Sixteen farms denied agents entry, Evan said during the OLCC’s Sept. 23 meeting, and regulators have not been able to contact nine of the locations at all.
Under ODA rules, regulators must now apply for an administrative search warrant to enter these operations to conduct testing.
“One of the tactics that was used or that we heard is … some growers … said, ‘I’m out of town for three or four weeks in Disneyland. I can’t be back until Sept. 20.’ So, it’s more of a soft refusal instead of, ‘No, you can’t.’ We did have those, but there were a lot of folks who said, ‘Oh, I’m in California’ or ‘Oh, I’m in some other location. I’ll be back in two weeks. Can you wait until then?’ Obviously, under the growing conditions, some of that stuff ended up being harvested before we could get there.”
It can take up to 10 days to serve an administrative warrant, Evan said. As of Sept. 16, regulators had served 10 of these warrants, and plants at all those operations tested above the 5% THC limit.
Walker said “there is some nuance” to Operation Table Rock and that some of the hemp fields that tested positive for high-THC cannabis may not have had malicious intent.
“I think that there could be some bad seed that was purchased—hemp seed that ran hot,” he said. “We’ve seen that happen every season, and usually good hemp farmers are really upset by that because then they have a crop they have to destroy. There still is a lot of bad seed out there because there’s not a good seed registry or regulations around seed markets. … I think there’s a good percentage of the growers who did test hot who thought they were growing hemp, … but how many that is, I’m not sure.”
“[Five percent THC] would be 15x the legal limit [of 0.3%],” Walker added. “Even if the equipment they’re using is not perfectly calibrated, that should really catch less of the accidents and more of the malicious, high-THC grows.”
Further supporting the idea of malicious intent are reports of growers harvesting crops before regulators could test them.
“We got numerous phone calls from licensees and neighbors saying that in the middle of the night, trucks were showing up and marijuana was disappearing, or hemp was being harvested in the middle of the night and things were disappearing,” Evan said during the Sept. 23 OLCC meeting.
At the start of Operation Table Rock, he said there was a lot of confusion among regulators and law enforcement about which department is responsible for each type of cannabis cultivation in Oregon. At the OLCC’s Sept. 23 meeting, Evan reiterated that adult-use cannabis falls under the OLCC, medical cannabis falls under the Oregon Health Authority (OHA) and industrial hemp falls under the ODA.
“The elephant in the room is just the illegal grows that are out there that nobody in the state has responsibility for,” Evan said. “I believe, from my experience down there, there are more illegal grows than there are registered grows under our program or under the hemp program. I get calls from legislators almost on a daily basis, asking about locations, and a lot of those are not registered under any state program. They’re just, frankly, growing marijuana out in front of everybody and their brother, hoping that law enforcement doesn’t have enough criteria or experience or resources to get to them.”
There are roughly 500 licensed adult-use cannabis cultivation operations in Jackson and Josephine Counties, Evan said, and in their travels, regulators saw many illicit grow operations that were outside of the scope of their investigation.
“They’re just, frankly, growing marijuana out in front of everybody and their brother, hoping that law enforcement doesn’t have enough criteria or experience or resources to get to them.”
-Rich Evan, Senior Director of Licensing and Compliance,
Oregon Liquor and Cannabis Commission
H.B. 3000 gave regulators the authority to go onto the premises of licensed hemp operations, test the plants and leave—anything else is beyond their jurisdiction.
Evan said other violations were in plain sight during the hemp field inspections—such as issues with water rights and unfit living conditions for employees—and these violations were referred to local law enforcement.
“We saw folks that were living in tents in the greenhouses, laying sleeping on the ground with a pad, sleeping in tractor sheds, cooking off of primitive camping stoves, and [there was] not enough food and water for the employees to sustain [them]—no bathrooms,” Evan said. “Some of the pictures are very disheartening of what we saw. Some of the living conditions of these employees are, frankly, pretty disturbing.”
Evan noted that agents received four OSHA labor complaints and two animal abuse complaints during the course of the hemp field inspections, and these matters were also turned over to local law enforcement.
Agents received complaints from all over the state about illicit cannabis operations, including one about a large outdoor grow in Tillamook County, but Evan said Operation Table Rock only has the authority to focus on Jackson and Josephine Counties.
“They’re popping up all over the state and, frankly, they’re uncontrolled,” Evan said. “Law enforcement will tell you in Josephine and Jackson Counties, with their full teams, they can go to one, maybe two of these search warrants a week … They do a more complete investigation and, frankly, the referrals that we gave them, they were not able to keep up. … Some of those [fields] ended up being harvested because of the lack of resources.”
Ultimately, the state’s inability to eliminate illicit cannabis cultivation is a threat to Oregon’s regulated adult-use market, Evan said.
“Our [licensed] recreational grows are competing with leasing property,” he said. “They’re competing with labor. They’re competing with raw skills, water rights, all these things. … If you’re playing by the rules under our recreational market, you’re playing behind the evil.”
If more than half of registered hemp farms in Southern Oregon are actually growing high-THC cannabis, Walker wonders if the amount of hemp grown nationwide is much lower than the amount reported to state departments of agriculture each year.
“Those numbers are gold for understanding the macro market,” he said. “My mind has immediately gone to, ‘Oh my goodness, how much of this data is actually junk if there’s all this hemp acreage in Oregon that’s not actually growing hemp?’ Do we actually have less hemp planted this year than we thought? … I always look at those numbers to understand what the supply is going to be like in the market and how that will influence commodity pricing. … If this is uniquely an Oregon thing, then that’s one thing, but if other farmers across the country are using hemp licenses to disguise high-THC cannabis at a meaningful level, are we overreporting the domestic hemp acreage because a lot of it is actually high-THC cannabis?”
Some unique conditions in Oregon may have led to more illicit production in that state specifically, Walker added.
“It’s historically been a basket of illicit cannabis here,” he said. “It’s the workforce, it’s the land, it’s the water, it’s the culture [and] it’s the lax local law enforcement that has allowed mass illicit cannabis cultivation to happen [in Oregon] for decades. … In North Carolina, there’s probably a little bit more hardball local law enforcement squashing illicit cannabis cultivation, whereas in Southern Oregon, law enforcement doesn’t spend any resources going after an illegal cannabis garden like that. That would be a huge waste of their time.”
‘Strapped’ Law Enforcement vs. Illicit Cannabis
Now that regulators have determined that more than half of the registered hemp farms in Jackson and Josephine Counties are growing illicit THC-rich cannabis, what comes next?
Evan announced during the OLCC’s Sept. 23 meeting that there are two ways the illegal plants will be seized. If the OLCC refers the case to law enforcement, they will open a criminal case to get a court order that will allow them to seize and destroy the illicit cannabis. Or, if the case goes through the ODA’s process, that department will issue an embargo on the crop and go through a legal process that could take up to 12 weeks before agents can seize and destroy the plants.
“The problem with that is that some of the crops have disappeared while the embargo is on,” Evan told commissioners at the meeting. “A lot of that marijuana is hitting the streets unless law enforcement actually comes out and does a warrant and seizes it.”
“It’s historically been a basket of illicit cannabis here. … In North Carolina, there’s probably a little bit more hardball local law enforcement squashing illicit cannabis cultivation, whereas in Southern Oregon, law enforcement doesn’t spend any resources going after an illegal cannabis garden like that.”
-Mason Walker, CEO, East Fork Cultivars
Another layer of complication, Evan added, is the fact that some locations have registered hemp crops on the same lot as licensed medical or adult-use cannabis grows.
“It is not against the rules to have medical marijuana sprinkled into your hemp fields,” he said. “There are no rules against that, so the defense has been, ‘Hey, you tested medical marijuana plants that were in my hemp field and that’s why they came back positive.’”
Evan, who told commissioners during the meeting that he has 34 years of experience in law enforcement in Oregon, said that if the state cracks down on illicit cannabis in one area of the state, as it did in Jackson and Josephine Counties during Operation Table Rock, the illegal activity will simply move to a different part of the state where enforcement is less robust.
“Law enforcement is strapped, and they don’t have enough resources,” he said. “If you push on a certain area, it’ll move. You need the resources statewide to battle the illegal marijuana grows, whether they’re a flat-out illegal grow or … someone is diverting from [the regulated] recreational marijuana [market]. You need a statewide program.”
“Until there are enough resources in the state, the recreational market’s always going to be in danger because you are going to be at an extreme disadvantage on prices,” Evan added before he opened the Sept. 23 OLCC meeting up to questions from commissioners. “If someone is playing outside of the market, they have a huge financial advantage against you. … Until we control the illegal market in the state of Oregon, our recreational market will always be at risk.”