The Oregon Liquor and Hashish Fee (OLCC) commonly engages in new rulemaking and this yr isn’t any completely different. The OLCC has a proposed a slate of rule adjustments it deigns as aware of implement 2022 laws and technical updates. However this spherical of rulemaking has quite a few substantial revisions to the foundations that aren’t required by laws. These guidelines go far past mere technical adjustments.
This publish considerations a major change to guidelines that might dramatically affect 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 essential to notice {that a} vendor doesn’t promote its license, although folks generally speak in regards to the sale or “buy of a license.” As an alternative, an OLCC applicant purchaser should apply for and be granted a brand new license by the OLCC in reference to an accredited sale and license give up by the outbound licensee vendor.
When a purchaser wishes to maneuver the placement 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 completely new rule, OAR 845-0240-1170 (“Proposed Rule 1170”), titled Change of Possession. Suggest Rule 1170(6)(a) supplies as follows:
A change of possession software could also be submitted for a proposed licensed premises at a special 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 workers member following OAR 845- 025-8750, understanding that the license give up request might be processed even when the change of possession software will not be accomplished;
Within the context of the acquisition and sale of a marijuana enterprise the place the purchaser wishes to maneuver to a brand new location, Proposed Rule 1170(a)(6) means a licensed purchaser might 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
It is a big danger for sellers. Virtually which means sellers must require the deal shut on the present location and go away it to the customer to vary the placement afterward. Or, alternatively, that the vendor change the placement 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 apply within the Oregon marijuana business.
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 might be on the OLCC places of work in Portland and on-line from 10:00 – 11:00 am
(Yeah, only one hour!). The final day to touch upon these guidelines is Halloween, October 31 at 12:00 p.m. Contact info is within the hyperlink above.
Hat tip to Alex Berger of Emerge Regulation on this concern. Additionally, try our current Oregon posts for extra on current state hashish licensing tendencies and OLCC updates.