Oregon Cannabis: OLCC No Longer Tolerating Rules Violations?

A couple of months ago, the Oregon Liquor Control Commission (OLCC), for the first time, rejected a settlement offer from a licensee who had violated OLCC rules. At the time, we speculated the OLCC was done with settling and moving towards stricter compliance requirements. It seems, along with more stringent review of applications, the OLCC is doing exactly what we predicted and either rejecting settlement agreements or negotiating tougher settlements that result in licensees voluntarily giving up their licenses.

On September 21, the OLCC approved an administrative law judge’s (ALJ) order to temporarily suspend the marijuana license of the Corvallis Cannabis Club. Typically, a licensee is allowed to continue to operate as normal after receiving a charging document from the OLCC pending the outcome of a settlement or hearing. However, the Corvallis Cannabis Club was under investigation from the federal DEA and the OLCC agreed with the ALJ that a temporary suspension was necessary.

That same day, the OLCC also cancelled High Cascade Farms license after determining the licensee had violated 13 OLCC rules including transporting marijuana to an off-site location and intentionally misrepresenting to the OLCC what happened to the plants.

On October 26, 2018, the Oregon Bud Works agreed to surrender its license to the OLCC after committing 10 OLCC rule violations including changing the licensed premises without approval from the OLCC, failing to keep required surveillance video, and misrepresenting data in METRC.

I have spoken with several people at the OLCC recently about these developments. They all have the same message: now more than ever, it’s time to ensure compliance with the rules. The OLCC believes there has been sufficient time since legalization and the rules have rolled out for licensees to understand and abide by the rules. They are no longer willing to consider settlements that allow licensees to keep their licenses when there are multiple rule violations or especially egregious rule violations.

It unlikely that the OLCC will ever go back to reduced penalties for egregious violations or multiple violations. The agency seems less interested in teaching compliance at this point, than culling the herd. So what can you, an OLCC licensee do?

First and foremost, get familiar with the rules. Undoubtedly, the rules are expansive and overwhelming. They also change frequently. However, if you want to preserve your license, one of the most important assets you can have is a compliance person whose job it is to know the rules and ensure that your company complies at all times. On this point, make sure all of your employees are familiar with the rules, as well. The fact that an employee has a marijuana worker permit is not enough– your business is on the hook for any violation they may commit.

Second, when you have questions about whether a step or process is correct, specialized cannabis business attorneys are a great resource to assist. If you can have person dedicated to ensuring compliance and an attorney to help with interpretation when necessary, hopefully your licensed business will avoid a charging document from the OLCC. Those documents are looking more and more dangerous, and contesting them can be quite a process.