Photo: Agence Olloweb/Unsplash
The Oregon Liquor and Cannabis Commission (OLCC) issued a press release regarding the sale of cannabis businesses last week. According to the statement, the OLCC is looking to take steps to limit the ability of some cannabis business owners to “monetize” their licenses. The Commission is interested specifically in targeting cannabis businesses trying to sell their business through the “change of ownership” process when they are facing license cancellation due to various OLCC rule violations and / or law-breaking.
Currently, cannabis business owners facing criminal charges for selling into the illicit market or selling cannabis to minors are still able to avail themselves of “change of ownership” sales of their businesses. While the OLCC cannot stop the sale of a cannabis business even if the owner is facing criminal charges, they can deny a license to the new owner, throwing a large wrench in the gears of the transaction as the value of the business of course depends on the ability of the new owner to gain licensure.
The OLCC has directed its Administrative Hearings Division to “consider the ‘no change of ownership’ approach in licensee violation cases going forward.” Under the current moratorium, “change of ownership” of cannabis businesses is allowed and licenses are typically granted to those who receive a new ownership.
To discover more on this topic, Cannabis Benchmarks spoke to Bryant Haley, OLCC Spokesperson. Haley said the July 21, 2022 hearing in which “bad actors” selling their cannabis business was discussed is just the tip of the spear; it is not yet “policy” per se, but “issue signaling.” That is, OLCC meetings are not setting policy to stop the sale of cannabis businesses wherein the owner has been criminally charged. Instead, they are signaling what they think about whatever issue is before them to convey their concerns to the public and the legislature.
Issues such as this one, Haley said, where ideas about how to deal with “bad actors” in the system are discussed, do not automatically translate to OLCC policy, but bring up issues of concern to the Commission. He says setting policy is an administrative function that typically takes four to six months to come to fruition. So, at this time, those criminally charged can still sell their businesses and the new owners will become licensed with the purchase of the business as a matter of course.
Haley also answered questions surrounding Oregon’s endemic oversupply situation and efforts to curb the “cartel-owned” illicit market, which not only violates cannabis laws but includes a human trafficking element that is a “huge problem.” In other remarks about the illicit market, he noted that illegal grow sites pollute water used for other agriculture and that much of the oversupply is from illicit producers, with some portion of that supply being sold into nearby states where there is no legal adult use cannabis market.
Regarding the current license moratorium, Haley said “people asked for the second moratorium,” but acknowledged there were those who did not support it. He pointed out that before the implementation of the second moratorium, there were “a lot of discussions about limiting licensing.” There are currently just under 2,800 cannabis business licenses across the state’s supply chain. There are 786 retail licenses, which amounts to about one store for every 3,000 people.
Haley emphasized that policy discussions in OLCC become law only with the imprimatur of the legislature and after public comments and hearings. Public comments recorded during the second license moratorium debate can be found here. Haley said at the end of the day, when initiating policy discussions, the OLCC’s job is to balance public safety and business concerns.