Utah tweaks its proposed medical marijuana rules to let out-of-state businesses claim cannabis growing licenses

(Trent Nelson | Tribune file photo) Keith Keyser, founder of Moon Lake Farms, working with hemp seedlings in North Salt Lake on Friday July 12, 2019.

The state has scrapped a proposed residency requirement for Utah cannabis cultivation, to the dismay of some local farmers.

The Utah Department of Agriculture and Food, which is in the process of crafting rules for the state’s emerging medical marijuana program, concluded that residency restrictions could run afoul of federal law, an agency spokesman said. The agriculture department is holding a public hearing Wednesday on the latest draft of its cannabis cultivation rules.

Tom Paskett, executive director of the Utah Cannabis Association, said local farmers were in favor of a rule that guaranteed the cannabis cultivation licenses would go to businesses located inside the state.

"But I think at the end of the day, most people realized that it wasn't something that was going to stand up as a policy," Paskett said. "It was just a quagmire that the state was trying to avoid."

Eighty-one businesses have applied for one of 10 cannabis growing licenses, and the state is currently evaluating the submissions. The agriculture department had originally expected to award the licenses Monday but announced over the weekend it would need until late July to read through and consider the lengthy applications.

The state didn’t limit the field to in-state businesses but is giving credit to applicants that can demonstrate “positive connections to a local community” or can detail their plans to establish these ties. Jack Wilbur, spokesman for the agriculture agency, said eight of the 81 applicants reported out-of-state addresses. That doesn’t mean the other 73 are all rooted in Utah, though, he said.

"You might suspect ... some of the other 73 are also largely out-of-state interests and just have a Utah address to give or are working with a Utah landowner," Wilbur said.

The state accepted bids for the cannabis growing licenses before finalizing the cultivation rules in part because of the state’s aggressive timeline for launching its medical marijuana program, Wilbur said. Nothing in the application process was affected by revisions to the drafted rules, he said.

The agricultural agency is also moving forward with guidelines for cannabis quality assurance testing and independent testing laboratories and has scheduled an Aug. 8 public hearing for those drafted rules.