MAY 2025 | 11 THE OKLAHOMA BAR JOURNAL Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff. By reforming and establishing a uniform regulatory framework for cannabis processing terms, Oklahoma can create a more consistent and predictable compliance environment. This will not only protect consumer safety but also promote industry growth and regulatory adherence. REGULATORY GAPS AND COMPLIANCE CHALLENGES Oklahoma’s cannabis processors face numerous regulatory challenges stemming from legislative gaps, overlapping jurisdictions and financial burdens. Navigating state, federal and municipal requirements presents significant barriers to operational stability and long-term success. While Oklahoma state law primarily regulates the distance between dispensaries and sensitive locations, municipal regulations further complicate processing compliance, as local governments impose zoning restrictions, additional permitting requirements and operational limitations. Certain municipalities have enacted local buffer zone restrictions specifically for cannabis processing facilities – for example, the city of Purcell requires a 1,000-foot buffer between processing facilities and schools; a 750-foot buffer from places of worship, libraries, museums and childcare centers; and a 200-foot distance from residential zones.47 Other cities may have similar restrictions, requiring processors to carefully review local zoning laws before establishing operations. Financial constraints further hinder processors’ ability to operate properly. Due to federal prohibition, cannabis businesses have limited access to banking services, often requiring them to operate as cash-only entities.48 This increases security risks and complicates payroll, tax compliance and vendor payments.49 Additionally, IRS Code 280E prohibits cannabis businesses from deducting standard operating expenses, resulting in disproportionately high tax liabilities.50 Many processors face effective tax rates of up to 70%, making profitability an ongoing challenge.51 Without federal legalization or reclassification, businesses remain restricted from traditional financing and interstate commerce, limiting growth opportunities. Regulatory inconsistencies exacerbate compliance difficulties. Oklahoma law does not clearly define distinctions between cannabis products and extraction methods, as noted previously, leading to discrepancies in product classification and labeling requirements. This lack of standardization results in enforcement inconsistencies, creating legal uncertainty for businesses (and attorneys) attempting to comply with shifting regulations. Further, laboratory testing inconsistencies pose a serious problem, as processors receive conflicting potency and contaminant test results from different labs, increasing the risk of mislabeling. These major discrepancies undermine regulatory enforcement and heighten the risk of unintentional noncompliance and the risk of product recall. LEGISLATIVE SOLUTIONS AND THE PATH FORWARD Bridging Regulatory Gaps With Targeted Reforms and Unified Regulatory Framework While defining key industry terms is a crucial first step in resolving regulatory ambiguities, broader reforms are necessary to create a functional and sustainable cannabis processing framework in Oklahoma. The current fragmented regulatory structure, in which multiple agencies impose overlapping and sometimes conflicting requirements on processors, presents one of the most significant challenges to industry stability. Presently, cannabis processors are subject to regulations from multiple state and municipal agencies, each overseeing different facets of compliance, from product testing and safety standards to environmental and fire safety regulations. However, there is no centralized system ensuring uniformity in enforcement, leading to regulatory inefficiencies, delayed approvals and unnecessary financial strain on businesses. The absence of a coordinated compliance structure not only complicates regulatory adherence but also deters investment and innovation within the industry. To address these challenges, Oklahoma lawmakers should consider the establishment of an interagency task force – a coordinated body composed of representatives from OMMA, the OBNDD, OSHA, the OSDH, the ODAFF, the OSFM, the DEQ and the LPG (and the Oklahoma Tax Commission and more), as well as industry stakeholders and legal professionals. This task force would be responsible for: Standardizing enforcement policies across agencies Clarifying jurisdictional authority to eliminate redundant or conflicting regulations Creating a unified compliance framework that
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