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Jesse Mondry
The Oregon Liquor and Hashish Fee (OLCC) repeatedly engages in new rulemaking and this yr is not any totally different. The OLCC has a proposed a slate of rule modifications it deigns as conscious of implement 2022 laws and technical updates. However this spherical of rulemaking has quite a few substantial revisions to the principles that aren’t required by laws. These guidelines go far past mere technical modifications.
This put up considerations a big change to guidelines that may dramatically impression sellers of marijuana companies, associated to “change in location” gross sales. The present guidelines that apply to sellers are typically present in OAR 845-0240-1160 (“Notification of Modifications”).
First, it’s crucial to notice {that a} vendor doesn’t promote its license, although folks generally discuss in regards to the sale or “buy of a license.” As a substitute, an OLCC applicant purchaser should apply for and be granted a brand new license by the OLCC in reference to an accepted sale and license give up by the outbound licensee vendor.
When a purchaser needs to maneuver the situation of the licensed enterprise, a part of the transaction consists of requesting a change in location from the OLCC. If the deal falls by, the vendor sometimes retains its license and carries on. However OLCC is proposing to take away that safeguard.
The proposed rule for OLCC “change in location” gross sales
To wit, OLCC proposes so as to add a wholly new rule, OAR 845-0240-1170 (“Proposed Rule 1170”), titled Change of Possession. Suggest Rule 1170(6)(a) gives as follows:
A change of possession software could also be submitted for a proposed licensed premises at a distinct location than the present licensed premises if the present licensee or laboratory licensee:
(a) Requests to give up their license previous to being assigned to a Fee employees member following OAR 845- 025-8750, understanding that the license give up request will probably be processed even when the change of possession software shouldn’t be accomplished;
Within the context of the acquisition and sale of a marijuana enterprise the place the purchaser needs to maneuver to a brand new location, Proposed Rule 1170(a)(6) means a licensed purchaser could park its license at a brand new location provided that: a) the vendor requests to give up its license earlier than the change of possession is assigned to an investigator, and b) the vendor loses its license if the deal falls by for any purpose. (E.g. the purchaser not making the cost.)
The potential fallout of the brand new rule
This can be a large threat for sellers. Virtually which means that sellers should require the deal shut on the present location and depart it to the client to vary the situation afterward. Or, alternatively, that the vendor change the situation previous to the change of possession. Neither of those workarounds helps create an environment friendly market. Every constitutes a radical sea change from established merger and acquisition follow within the Oregon marijuana trade.
Public listening to and remark deadlines (quickly!)
A public listening to is scheduled on this proposed change in location rule, and different proposed guidelines, on October 25, 2022. The listening to will probably be on the OLCC workplaces in Portland from 9:00 – 10:00 a.m. (Yeah, only one hour!) The final day to touch upon these guidelines is Halloween, October 31 at 12:00 p.m. Contact data is within the hyperlink above.
Hat tip to Alex Berger of Emerge Regulation on this subject. Additionally, take a look at our recent Oregon posts for extra on latest state hashish licensing developments and OLCC updates.
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