Vince Sliwoski
We have now been working with the Oregon Liquor and Hashish Fee incessantly since 2015, when rulemaking commenced for the grownup use program. Over time, we’ve handled many, many compliance-related points, together with Notices of Proposed License Cancellation to licensee shoppers from OLCC. We’ve additionally seen the Fee change its place and philosophy drastically on enforcement.
Within the early days, OLCC emphasised “instructing compliance” and dealing with licensees who made errors—actually or in any other case. We later noticed a transition towards heavy-handed enforcement, because the Fee labored with the legislature in an effort to cull licenses.
The issue is, OLCC treats small companies a lot in another way than larger outfits. We’ve been saying this on the weblog for some time now (see here and here for instance). And once I say “OLCC” please notice that I’m not speaking about particular OLCC personnel. There are some nice individuals on the Fee who’re good, work laborious, and actually care. This put up isn’t for them.
Current OLCC liquor and hashish scandals
This yr, OLCC and the hashish business are at a nadir with two-bit scandals. Issues kicked off with stories of a shady land deal and escalated with revelations that the Government Director, legislators and others had been hoarding rare bottles of bourbon for themselves. The latter felt particularly small-time and chumpy.
Extra not too long ago, Sophie Peel of the Willamette Week has led a barrage of investigative reporting of La Mota, Oregon’s second-largest dispensary chain. OLCC continued to subject licenses to that rogue retailer even supposing La Mota had been: a) saddled with thousands and thousands of {dollars} in state tax liens, b) sued greater than 30 occasions by unpaid distributors, mistreated workers and others, and c) charged with attempted diversion of 148 pounds of cannabis inventory, amongst different critical no-nos, in a case that settled in early 2020.
OLCC and the massive hashish retailers, going again
The La Mota “diversion” case went on for a few years. We had shoppers watching carefully, together with one bigger outfit that was able to pounce. A normal assumption was that, given the character of the costs and proof, La Mota was cooked and people shops can be up for grabs. It didn’t end up that approach, in fact: La Mota paid some fines and returned to enterprise as common. Over that very same interval, OLCC revoked the licenses of many smaller outfits, typically for lesser costs. A few of them couldn’t afford to battle.
Throughout all of that, we settled one significantly fascinating case with OLCC. Our licensee consumer was referred to as Rose Metropolis Buds & Flowers. It was a small retailer owned by a girl who had agreed to promote to Nectar, the state’s larges retailer. Previous to looking for OLCC permission, as required, Nectar successfully purchased the shop however refused to share income with Rose Metropolis. Nectar then dedicated a sequence of additional OLCC violations on the retailer that accrued to our consumer’s license. The Fee determined to license Nectar and approve the transaction regardless, throwing the e book at our consumer on the way in which out the door. (Nectar subsequently refused to pay Rose Metropolis for the shop; our consumer was forced to sue.)
Mockingly, the published settlement between Rose Metropolis and OLCC ran alongside stipulated settlements between OLCC and Nectar for different violations, elsewhere, together with a sequence of Class I, II and III violations. And people weren’t the primary allegations or slap-on-the-wrist settlements between OLCC and the chain. A yr later, the Fee and Nectar settled an avalanche of 28 new costs the place once more, many business watchers thought a distinguished chain can be cooked. These violations occurred up and down the Nectar provide chain from issues like delivering hashish to unlicensed residences (“diversion”; maybe the strictest no-no), to not conserving required surveillance at licensed premises. The fees principally arose from a “routine site visitors cease” by police, which turned out to be an unmarked, un-manifested U-Haul truck, operating Nectar hashish.
The newest settlements occurred in Might of 2020. Since then, OLCC has been talking tough about “dangerous actors” (their phrases), however utilizing its cudgel to beat down small operators. No massive outfit has had its license revoked. A beatdown might are available in a wide range of methods: typically, a Notice of Proposed License Cancellation is sufficient, as many within the struggling industry don’t have the wherewithal to battle.
We’ve additionally seen OLCC bend and break its personal purported “insurance policies” round infractions and settlement. In a single significantly irritating case, our consumer self-reported a violation of offering actually one marijuana merchandise, off-site, to a minor. This was wrongful habits to make certain, however nothing compared to the aforementioned circumstances. OLCC doggedly tried to cancel his licenses earlier than we helped the consumer attain a settlement which allowed him to promote his farm and retailer. OLCC then went darkish through the purchaser approval course of, for a lot of months, successfully killing the sale.
In the end, the Fee cited a “coverage” round monetary pursuits throughout settlement to justify the result. Not solely was this place opposite to the spirit of the settlement; it was inconsistent with the Fee’s “coverage” actions on issues my legislation agency had not too long ago dealt with. However the consumer right here was completed. He was not a big chain like La Mota, diverting taxpayer cash to battle the method. And he went stomach up.
Two units of OLCC hashish guidelines and insurance policies
Oregon hashish is a large number proper now. It’s unhappy. We have now nice shoppers who’re exasperated with the La Mota story specifically. That rogue outfit moved in down the road from one in all them not too long ago, in a smaller neighborhood. The consumer requested me in a name: “How can we compete with that? We pay our distributors. We pay our taxes. We give our workers medical health insurance and all the remainder… La Mota doesn’t pay anybody. They will drag costs right down to $2/gram subsequent door, and we’ll get killed.”
Nectar, too, is as much as its previous methods. We had been concerned in a sale that closed final yr the place Nectar once more used its “services agreement on steroids” maneuver to successfully buy a retailer previous to OLCC approval. Why sellers proceed to fall for this kind of factor could be very complicated; to wit, not a penny of revenue was ever paid by Nectar through the “companies” interval. (To be truthful, it’s attainable that OLCC wasn’t conscious of what had occurred in that exact deal. However if you see the larger chains function constantly with impunity, it’s straightforward to get cynical.)
All of that is exacerbated by the truth that the OLCC is underneath media scrutiny and appears to be in a state of fixed personnel flux. Previous to the Government Director resigning underneath scandal, different high-ranking positions on the hashish facet – e.g. Director of Licensing and Director of Compliance – have turned over repeatedly lately. Typically, these and different key roles have additionally gone unfilled. The group is off-track in composition and orientation.
From my chair, once I hear the phrase “OLCC coverage”, that’s merely code for “what we need to do right here.” After I hear the phrase “for all licensees” meaning “for all licensees besides massive licensees.” So I suppose I’m glad I’m not a licensee– particularly a smaller one. And whereas I want to see the rash of scandals subside, I might additionally prefer to see this highlighted and glued. We want one algorithm and insurance policies for everybody in Oregon hashish.
