Since the passage of State Question 788, which legalized medical cannabis, Oklahoma’s cannabis industry has exploded. Oklahoma is currently home to 1,811 dispensaries and 3,029 grow facilities.[1] It has the most cannabis dispensaries per capita of any state: 36 dispensaries for every 100,000 residents.[2]

When State Question 788 was passed in 2018, there was a lack of comprehensive regulatory framework and government resources to manage the cannabis boom. Medical cannabis quickly became a billion-dollar industry in the state, second only to oil and natural gas. Now, after thousands of licenses for dispensaries and grow facilities have been issued, the Oklahoma Medical Marijuana Authority is struggling to manage and keep up with the industry.

OMMA enforces cannabis regulations through its administrative rules and procedures found in Title 442 of the Oklahoma Administrative Code. The rules govern licensure and disciplinary proceedings before OMMA, which are conducted by administrative law judges from the Oklahoma attorney general’s office. The rules have constantly been in flux since OMMA became an independent state agency in 2022.[3] In fact, OMMA has operated under five distinct sets of successive rules in the last year alone.

This article examines the potential due process implications of recent rules and actions by OMMA. While OMMA is tasked with the important and difficult job of managing the cannabis industry, its regulations and enforcement actions are required to uphold the fundamental constitutional due process rights of Oklahoma citizens.

DUE PROCESS

“No person shall be deprived of life, liberty, or property, without due process of law.” (Okla. Const. Art. 2, §7).

Procedural due process is a cornerstone of American constitutional law.[4] The words “life, liberty, or property, without due process of law” appear twice in the United States Constitution, in the Fifth and 14th amendments, evidencing their importance. Oklahoma’s own due process clause is even more protective than its federal counterpart.[5]

“Due process” may sound like an esoteric platitude, largely irrelevant, even to lawyers. It also doesn’t help that due process is more of a concept, rather than a clear legal standard. However, it is imperative for preserving basic constitutional liberties from governmental encroachment in all areas of life.

Due process requires that, before the government can deprive a citizen of their rights, the government must provide “adequate notice and a realistic opportunity to appear at a hearing in a meaningful time and in a meaningful manner.”[6] Due process is not only about the fairness of outcomes but also the fairness of the procedures by which decisions are made. The “due process clauses of the State and Federal Constitutions afford protection against arbitrary and unreasonable administrative actions.”[7] It sets a minimum standard of fairness that government agencies must follow if they seek to act against an American citizen, and it applies to criminal, civil and administrative matters. In a nutshell, due process is a safeguard against injustice, ensuring that every individual is treated with dignity and respect within the legal system.

DUE PROCESS APPLICABILITY

Case law is clear that the due process clause of both the Oklahoma and the United States constitutions apply to administrative hearings where the loss of a property right is at stake.[8] This includes both business licenses and professional licenses.[9] The rationale is that when an administrative agency acts in a quasi-judicial manner, including the authority to adjudicate the rights of an individual, that agency is required to provide due process similar to civil courts.[10] Courts consider the balancing of three factors to determine whether due process was afforded in administrative actions: “First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.”[11]

Here, OMMA has the authority to suspend and revoke business licenses, fine license holders and, as discussed below, “embargo” and destroy product. Therefore, OMMA acts in a quasi-judicial manner, and its proceedings must comport with due process guarantees. OMMA must balance the interests of individuals and procedural safeguards in protecting constitutional rights. Unfortunately, at least three OMMA rules raise serious due process concerns: summary suspension, discovery and summary order of destruction.

DUE PROCESS CONCERNS

Summary Suspension

Oklahoma Administrative Code (OAC) Section 442:1-1-7 provides that if OMMA “finds that the public health, safety, or welfare requires emergency action,” then the “summary suspension of any licensee may be ordered pending proceedings for revocation.” The licensee may then request a hearing on the suspension, but “the burden [is] on the licensee to show good cause why the suspension should be set aside.”[12] This rule places the burden of proof solely on the licensee.

When the government initiates legal proceedings against a private individual or company, the government bears the burden of proving it is justified in taking adverse action.[13] If the government claims someone violated the law and seeks to punish the individual, the government must meet the applicable standard of proof showing the evidence of the violation. Even with a show-cause order issued on a temporary employment license suspension, the burden of proof remains on the accusing party, the government, to produce evidence supporting its accusations.[14] Not only does the law clearly place the burden on the government, but arguably, the standard of that burden should be clear and convincing evidence in order to ensure due process.

The Oklahoma Supreme Court has previously addressed the standard of proof required to meet due process in administrative proceedings. In Johnson v. Board of Governors of Registered Dentists of State of Okla., a dentist petitioned the Supreme Court of Oklahoma to review an administrative disciplinary action imposed against the dentist by the Board of Governors of Registered Dentists.[15] The court emphasized the importance of the right to a fair hearing because of the “possible loss of a constitutionally protected property right, the loss of a livelihood, and the loss of a professional reputation.”[16] As part of that fair hearing, the Supreme Court of Oklahoma took issue with the standard of proof – reasoning the government should have had a higher standard of proof: “The proper standard of proof in disciplinary proceedings against a person holding a professional license is clear and convincing evidence.”[17] The court invalidated the underlying administrative rule establishing “preponderance of the evidence” as the standard.[18]

The Johnson case emphasized that because the defendant faced “the possible loss of a constitutionally protected property right, the loss of a livelihood, and the loss of a professional reputation,” due process demands the government meet a clear and convincing evidence standard. Although Johnson involved a professional dental license, its reasoning applies equally to a general business license.[19]

The OMMA summary suspension rule goes far beyond imposing a lower standard of proof in suspending a business license. It would seem to remove any burden at all from the government, placing the burden solely and squarely on the licensee. Under this rule, OMMA merely needs to allege that “health, safety, or welfare” requires suspension. Essentially, a licensee who has invested time and money in obtaining a business license may have that license summarily suspended, and then the licensee has to obtain a hearing and prove the suspension is not valid. Someone defending themselves from government action generally is entitled to assess the evidence and claims of the government and then prepare a defense. This begs the question: How is a licensee supposed to defend against claims and evidence the government has not presented?

A licensee can always challenge license revocations and suspensions in district court, and practitioners should be aware of available appellate options.[20] Such a process, however, can be time-consuming and expensive, especially when the licensee has been temporarily put out of business. The lack of procedures at the agency level thus raises serious due process concerns.

Discovery

Many agencies, like the Oklahoma Corporation Commission, have detailed discovery rules that allow interrogatories, document production and depositions and provide that discovery on some dockets is governed by the Oklahoma Discovery Code.[21] But OMMA has not adopted the Discovery Code as set forth in the Oklahoma Rules of Civil Procedure, nor has it adopted any other discovery framework. The only discovery rule is OAC Section 442:1-1-10, but it merely allows OMMA to place limits on potential discovery.[22]

OMMA rules do not prescribe the manner or method to obtain discoverable information. The Oklahoma Administrative Procedures Act, to which OMMA is subject, allows limited subpoenas and depositions, but it does not confer any individual rights to discovery in administrative actions.[23] Because there are no methods for discovery or rules governing discovery, there is no rule-based mechanism in which to enforce fair discovery in OMMA proceedings.

Due process, at its core, requires the right to obtain discovery, including the right to “information concerning the claims of the opposing party, reasonable opportunity to be heard, and the right to confront the unfavorable witnesses.”[24] In criminal cases, defendants have a due process right to discover exculpatory evidence. While an administrative OMMA hearing need not go that far, due process would seem to require OMMA, at a minimum, to disclose its evidence and findings. This is particularly true when OMMA places the burden of proof on the individual to defend themselves. “The crux of the matter is that democracy implies respect for the elementary rights of the person, however suspect or undeserving, a democratic government must practice fairness – and fairness can rarely be obtained by secret, one-sided determination of facts and decisive rights.”[25]

In Greene v. McElroy, the United States Supreme Court reversed an administrative revocation of a security clearance because the appellant “was denied access to much of the information adverse to him and any opportunity to confront or cross-examine witnesses against him.”[26] The court held that where “governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue.”[27] The appellant “was denied access to much of the information adverse to him and any opportunity to confront or cross-examine witnesses against him.”[28] As a result, the court reversed the actions of the administrative agency.

In OMMA hearings, OMMA has no obligation under its own rules to produce any information adverse to the licensee. OMMA may withhold even basic information, including the complaint and evidence that led to the OMMA investigation, OMMA investigative findings and body camera footage from OMMA investigators. To ensure compliance with recordkeeping and tracking of product, OMMA requires licensees to pay for and use a “seed to sale” program called “Metrc.”[29] Yet, OMMA can, and has, prohibited licensees from accessing their own business records. This is particularly problematic when OMMA accuses the licensee of failing to comply with Metrc records.

Licensees are put in a difficult position by bearing the burden of disproving OMMA’s allegations but not having the evidence or basic information needed to protect their constitutionally protected property interests. To make matters worse, the administrative hearing officers conducting OMMA hearings have no authority to compel OMMA to produce exculpatory evidence, leaving a licensee powerless to defend itself in the administrative hearing.

The only real recourse for licensees to protect themselves against arbitrary and capricious actions is to seek declaratory relief from civil court. Again, however, this can be time-consuming and expensive, especially when the licensee has been temporarily put out of business.

Summary Order of Destruction

In July 2024, OMMA promulgated a new rule, Section 442:1-1-12, “Summary order for destruction,” which allows OMMA to destroy any product if it asserts “the public health, safety, or welfare requires emergency action.” Like with the summary license suspension rule discussed earlier, this rule places the burden of proof on the licensee to show that the licensee’s private property should not be destroyed. Not only does this raise due process concerns, but this rule also appears to go well beyond the scope of the limited embargo authority granted to OMMA by the Legislature.^[30]

The Legislature gave OMMA the authority to destroy product through one method only: an action in district court.^[31] Presumably, the Legislature understood the severity of government agents destroying private property and, thus, required a court’s approval. After all, civil court judges are entrusted to safeguard due process guarantees. The Legislature gave licensees the protection of the civil court before an administrative agency could destroy a private citizen’s agricultural products.

However, OMMA created its own “summary order of destruction” rule outside the existing legislative framework of 63 O.S. §427.24(B). The Oklahoma Supreme Court has repeatedly held that administrative agencies may not make law or go beyond legislative authority.[32] Therefore, OMMA’s “summary order for destruction” may exceed, if not contradict, its statutory authority, in addition to raising due process concerns. Yet, a licensee faced with a summary destruction order may have few options other than to seek a writ of prohibition or other extraordinary relief from a civil court in order to prevent summary destruction of its property – an expensive and time-consuming endeavor without the guarantee of success.

CONCLUSION

While OMMA has an extraordinarily important and difficult job of regulating the cannabis industry, accountability to the people of Oklahoma should be the foundation of its activities, especially when constitutionally protected rights are at stake.

If lawyers were subject to rules like this, there would likely be outrage. OMMA may be dealing with a seedy industry (pun intended), but due process guarantees apply equally to cannabis licensees – Oklahomans who entered this business as a means of livelihood and with dreams of becoming successful entrepreneurs. The Oklahoma voters overwhelmingly approved the legalization of medical marijuana in 2018. Accordingly, the rights of cannabis business license holders are constitutionally protected to the same extent as any other protected interest.

Surely, OMMA can do both – effectively enforce and regulate the industry while doing so in a manner consistent with fundamental due process rights. It must do both.

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ABOUT THE AUTHOR

Nada N. Higuera is a solo practitioner at Higuera Law PLLC. She practiced constitutional law on the state and federal levels in California for eight years before moving to Oklahoma in 2022. She can be contacted atnada@higuera-law.com.

 

 

 

 

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ENDNOTES

[1] “Licensing and Tax Data, OMMA Dashboard, Licensing Reports and Tax Revenue Reports,” Oklahoma Medical Marijuana Authority, https://bit.ly/4h7lmGo (last visited Dec. 19, 2024).

[2] “2024 Marijuana Industry Statistics & Data Insights,” Flowhub, https://bit.ly/3QK5QW0 (last visited Dec. 19, 2024).

[3] OMMA was previously under the Oklahoma State Department of Health until it became a stand-alone agency on Oct. 31, 2022.

[4] Due process includes both "procedural due process" (the required legal steps) and "substantive due process" (protecting fundamental rights from government overreach). See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 541, 105 S. Ct. 1487, 1492, 84 L. Ed. 2d 494 (1985) (holding that “minimum [procedural] requirements [are] a matter of federal law, they are not diminished by the fact that the State may have specified its own procedures that it may deem adequate for determining the preconditions to adverse official action.”); See also, Baby F. v. Oklahoma Cty. Dist. Court, 2015 OK 24, ¶16, 348 P.3d 1080, 1085-86 (holding that “the substantive component of the due process clause bars certain governmental action despite the adequacy of procedural protections provided.”).

[5] Messenger v. Messenger, 1992 OK 27, N. 42, 827 P.2d 865.

[6] Jackson v. Indep. Sch. Dist. No. 16 of Payne Cty., 1982 OK 74, ¶10, 648 P.2d 26, 30 (holding that due process is violated by the mere act of exercising judicial power upon process not reasonably calculated to apprise interested parties of the pendency of an action and are afforded the opportunity to present evidence and argument, representation by counsel, if desired, and information concerning the claims of the opposing party with reasonable opportunity to controvert them).

[7] Lindsey v. State ex rel. Dep't of Corr., 1979 OK 35, ¶17, 593 P.2d 1088, 1093 (reasoning that disciplinary action against an individual without due process “is not a matter of administrative discretion. It is a matter of constitutional rights.”).

[8] Bowen v. State ex rel. Oklahoma Real Est. Appraisers, 2011 OK 86, 270 P.3d 133; Johnson v. Board of Governors of Registered Dentists of State of Okla., 1996 OK 41, 913 P.2d 1339.

[9] State ex rel. Oklahoma State Board of Embalmers and Funeral Directors v. Guardian Funeral Home, 429 P.2d 732, 733, 736 (Okla. 1967) (“where it is necessary to procure a license in order to carry on a chosen profession or business, the power to revoke a license, once granted, and thus destroy in a measure the means of livelihood, is penal and therefore should be strictly construed.”).

[10] Bowen v. State ex rel. Oklahoma Real Est. Appraisers, supra note 8.

[11] Daffin v. State ex rel. Oklahoma Department of Mines, 2011 OK 22, 251 P.3d 741, 748, citing Mathews v. Eldridge, 424 U.S. 319, 334-335 (1976).

[12] Okla. Admin. Code §442:1-1-7(c) (2024).

[13] Johnson v. Board of Governors of Registered Dentists of State of Okla., supra note 8 (holding that the administrative board improperly established the burden on the government lower than required for due process).

[14] Thompson v. State ex rel. Bd. of Trustees of Oklahoma Pub. Employees Ret. Sys., 2011 OK 89, ¶7, 264 P.3d 1251, 1254-55.

[15] Johnson, supra, at ¶19.

[16] Id.

[17] Id. at ¶20.

[18] Id. at ¶26.

[19] See, e.g., State ex rel. Oklahoma State Board of Embalmers and Funeral Directors v. Guardian Funeral Home, supra at n. 9.

[20] See Okla. Admin. Code 442:10-2-5(j).

[21] Okla. Admin. Code §165:5-11-1.

[22] Okla. Admin. Code §442:1-1-10 states in its entirety: “Discovery shall not be commenced unless a scheduling order is entered in the case and the tribunal determines that discovery is necessary for the resolution of the issues. Discovery shall be completed in accordance with the scheduling order entered in the case. The tribunal may set the total permitted number of written discovery including interrogatories, requests for production and requests for admission based on the needs of the case. The tribunal may limit the frequency, scope, and manner of depositions based on the needs of the case.”

[23] Okla. Stat. tit. 75 §315(b).

[24] State ex rel. Oklahoma Bar Ass'n v. Maddox, 2006 OK 95, 152 P.3d 204, 210.

[25] Jackson v. Indep. Sch. Dist. No. 16 of Payne Cty., supra at n. 6.

[26] Greene v. McElroy, 360 U.S. 474, 496 (1959) (holding that no person may be deprived of the right to follow their chosen profession without full hearings where accusers may be confronted and cross-examined).

[27] Id.

[28] Id.

[29] See Okla. Admin. Code 442:10-4-5(d), (e).

^[30] Compare Okla. Admin. Code 442:1-1-12 with Okla. Stat. tit. 63 §427.24.

^[31] Okla. Stat. tit. 63 §427.24(B).

[32] See Indep. Sch. Dist. No. 12 of Oklahoma Cty. v. State ex rel. State Bd. of Educ., 2024 OK 39, ¶39 (holding that the State Board of Education was without statutory authority to exercise discretionary power over the local school board under promulgated administrative regulation).