Hear up mates. The Oregon Liquor and Hashish Fee (OLCC) plans to drop the hammer on unhealthy actors within the regulated Oregon market. Or so the Fee introduced in a stern news release on Friday, July 29 (the “Launch”). The Launch is titled “Commissioners plan to tighten ‘change of possession’ possibility.” For good impact, it’s subtitled “Unhealthy actors gained’t get a straightforward off-ramp to promote their enterprise.” Sounds fairly critical.
We’ve been ready for this launch to drop. Over the previous 12 months or so, we’ve watched OLCC case presenters take extra aggressive positions in settlement talks following any discover of proposed license cancellation. The Fee can also be giving stronger scrutiny lately to so-called “give up to promote” transactions, particularly the place the vendor will maintain any type of monetary curiosity within the purchaser licensee after closing (notice: “monetary curiosity” on this context is construed extra broadly than in common outdated licensing).
For anybody unfamiliar with how “give up to promote” transactions work, the OLCC traditionally has allowed a licensee charged with critical offenses to “promote” their license curiosity to an unrelated third celebration– if sure standards are met. The mechanics are easy. The OLCC and the topic celebration enter a stipulated settlement settlement, the place the topic celebration provides up its proper to an administrative listening to and accepts sure deadlines to discover a alternative licensee (a purchaser). If a purchaser is discovered, legal professionals like me could also be known as upon to draft up an asset buy settlement and associated sale paperwork. And if the customer’s utility is profitable, the “unhealthy actor” will get paid on their method out the door.
For now, it’s essential to notice that the Launch isn’t a brand new rule. It’s a coverage thought, or directive. The important thing sentence is buried towards the underside third of the discharge, which supplies that “The Fee directed the OLCC’s Administrative Hearings Division to contemplate the restricted ‘no change in possession’ strategy in licensee violations going ahead.” Basically the Fee is telling AHD to get more durable in settlement talks. Or “to contemplate” getting more durable.
I’ll have an interest to see how trade feels about this coverage change. On the one hand, the Oregon market is struggling mightily. Flower costs are depressed attributable to manufacturing overcapacity and declining retail gross sales. Inflation is taking a toll on all the things from wages to funding, and the traditional struggles round taxation, banking, and so on. proceed unabated. All of this makes for a particularly aggressive atmosphere. As such, an extra culling of licenses would serve the non-bad actors.
Then again, you may have trade mistrust round regulatory flex. Licensees solely not too long ago loved enforcement reform positive aspects at the legislative level, in addition to administrative packages like “repair it or ticket” and Verification of Compliance (VOC). These modifications had been borne of trade complaints that licensees “should be handled like companies to be regulated, not criminals to be caught.” In a broader sense, many licensees is not going to welcome OLCC bearing down.
Our basic recommendation — after all, as at all times — is to observe the principles. In case you don’t plan to do this, the OLCC market isn’t the best atmosphere for what you are promoting (and neither is medical marijuana; and neither is hemp). In case you observe the principles, you actually don’t have to fret about OLCC compliance packages and pronouncements. Identical deal in case you’re actually large– at the least on this author’s opinion. However that’s a narrative for an additional day.
If you end up within the OLCC crosshairs, give us a name. We’ve been doing these things ceaselessly.
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