Oklahoma Officials Crack Down on Illegal Marijuana Licensing Schemes Photo: Robert Linder/Unsplash
August 2, 2022

The Oklahoma Medical Marijuana Authority (OMMA) has reduced the number of cultivator licenses by 21.8% since December 2021 as OMMA cracks down on improper licensing, including those licenses that failed to fill out a foreign ownership attestation.

The number of licenses is again dropping, with the state’s Attorney General charging two Tulsa lawyers with a “ghost ownership” scheme wherein law firm employees were signed up as owners of cannabis firms in which they had no actual ownership interest. The lawyers have been charged with a variety of crimes related to the scheme, including conspiracy to cultivate a controlled substance, cultivation of a dangerous substance, and “a pattern of criminal offense,” among other charges.

The Tulsa World reports the lawyers “directed medical marijuana businesses to sign consulting agreements with law firm Jones Brown’s employees to act as ‘ghost owners’ of the medical marijuana operations.” The report notes that “over 400 marijuana growing operations in the state listed the Jones Brown law firm employees as the 75% owners.” The lawyers charged $3,000 for each “ghost license” taken out in an employee’s name so the actual owners could bypass state residency requirements. The executive director of the Oklahoma Bureau of Narcotics and Dangerous Drugs Control said the actual owners were “national and international organizations” and noted there are “hundreds of cases going on.”

The state attorney general weighed in as well saying that “more than 80% of the marijuana grown in the state” is illegally exported to other states. He also claimed that “Oklahoma is now the number one supplier of marijuana in the United States,” which is likely hyperbole.

How the crackdown on businesses that improperly secured Oklahoma medical cannabis licenses might impact supply and price in the state remains to be seen. At the most basic level, a reduction in the number of growers could reasonably be expected to tighten supply and provide upward price pressure. However, if significant portions of the production of the licensees under discussion were indeed being diverted out of the legal medical market, the impact of shutting down those growers could end up being much smaller.