Megan is an experienced employment law attorney who works in Harris Bricken's Portland office. Her practice is focused on employment advising, employment and labor litigation, and business litigation.

equal pay oregon marijuana employmentIn 2017 Oregon passed sweeping Equal Pay Legislation. Towards the end of August, Oregon Bureau of Labor and Industries (BOLI) issued draft rules implementing the Oregon Equal Pay Act. This series of post is exploring those new rules and how they will affect cannabis businesses. In my last post, I unpacked the definition of “compensation” under the Equal Pay Act and the proposed rules. This week I’ll discuss “work of a comparable character.”

The Oregon Equal Pay Act prohibits employers from paying wages or other compensation to “any employee at a rate greater than that at which the employer pays wages or other compensation to employees of a protected class for work of a comparable character.” To put it simply, cannabis businesses need to pay employees doing the same work the same pay. But what is “work of a comparable character?”

Work of a comparable character is not determined simply by job title alone. Two cannabis workers who have the same job title but perform different tasks are not necessarily performing “work of a comparable character.” Similarly, two cannabis workers that perform essentially the same tasks but have different job titles may be performing work of a comparable character.

According to the BOLI draft rules, to determine if different jobs constitute “work of a comparable character” the employer must consider whether the jobs require “substantially similar knowledge, skill, effort, responsibility, and working conditions.” No one factor is determinative. Meaning, an employer should balance the factors against each other to determine if employees are performing the same work and therefore should be receive equal pay. The proposed BOLI rules further define each factor.

  • Knowledge. When considering whether two jobs require similar “knowledge,” the employer should consider whether the jobs require similar education, experience, or training.
  • Skill. Things to consider to determine if two jobs require the same “skill” include the ability, agility, coordination, efficiency or experience required to perform the job.
  • Effort. Considerations to determine the “effort” of a job include the “amount of physical or mental exertion needed; amount of sustained activity; or complexity of job tasks performed.”
  • Responsibility. To determine if responsibility of two positions are “similar,” an employer should consider the “accountability, decision-making discretion, or impact of an employee’s exercise of their job functions on the employer’s business; amount, level, or degree of significance of job tasks; autonomy or extent to which the employee works without supervision; extent to which the employee exercises supervisory functions; or extent to which an employee’s work or actions expose an employer to risk or liability.
  • Working conditions. Finally, to determine if employees are working in similar “working conditions” an employer should consider the “work environment; hours; time of day worked; physical surroundings; and potential hazards.”

Determining how to pay your employees is not an easy task. The Equal Pay Act, while it has good intentions, may make that task even more difficult. Regardless, now is the time to analyze how you are paying your cannabis employees. Now is the time to look at the jobs that are being performed, identify work of a comparable character, and adjust wages accordingly. If you’re unsure whether two workers should be receiving equal pay, you should contact an employment attorney.

The Equal Pay Act pay provisions are effective on January 1, 2019. Again, now is the time to ensure compliance before BOLI starts handing out penalties next year.

oregon marijuana equal pay

Back in 2017, the Oregon legislature passed equal pay legislation prohibiting employers from asking applicants about compensation history. The law is known as the Equal Pay Act. This law, like other employment laws, applies to cannabis businesses. The equal pay provision of the law goes into effect on January 1, 2019. Oregon Bureau of Labor and Industries (BOLI) was tasked with drafting rules implementing the Equal Pay Act and recently released draft rules. This series of posts will unpack the new rules and explain the impacts on your cannabis business.

The Equal Pay Act prohibits employers from paying disparate compensation for work of a comparable character. The Equal Pay Act defines compensation as “wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.” What this means is each of these taken in total is an employee’s compensation. The proposed BOLI rules provide clarification to each of the words that make up “compensation.”

BOLI defines benefits as:

“the rate of contribution that an employee makes irrevocably to a trustee or to a third person under a plan, fund or program; or the rate of costs to the employer in providing benefits to an employee beyond what is required by federal, state or local law pursuant to an enforceable commitment to carry out a financially responsible plan or program which is committed to the employee affected including but not limited to the following: medical or hospital care; pensions on retirement or death; compensation for injuries or illness resulting from occupational activity; insurance to provide any of [the above]; unemployment benefits; life insurance; disability insurance; sick leave pay; accident insurance; vacation or holiday pay; or defraying costs of other bona fide fringe benefits.”

But what does this long-winded definition actually mean? As an example, if you have two extraction technicians that perform substantially the same work, you need to provide them the same benefits, otherwise you will be in violation of the equal pay laws. If you provide one health insurance, you need to provide the other the same level of health insurance. Etc.

Bonus, similarly has been given a long definition. Bonus is defined as:

“an amount that is paid or something of monetary or quantifiable value that is given to an employee by an employer in addition to the employee’s regular rate of pay, typically as a means of encouragement or in recognition of superior performance. Bonuses include but are not limited to the following: signing or job acceptance bonuses; attendance bonuses; loyalty bonuses; performance bonuses; and productivity bonuses.”

Again, if you provide a performance bonus to one extraction technician, you must provide a bonus on the same terms to any other extraction technician. A future post will discuss in detail exactly what the “same terms” means.

Finally, “salary” is defined as a predetermined amount constituting all or part of the employee’s compensation paid for each pay period of one week or longer. And “wages” means all compensation for performance of service by an employee for an employer. Your extraction technicians need to be receiving the same salary or wages otherwise, you’ll be in violation of the rules.

All of the above definitions need to be considered in total when setting compensation for your employees. Remember–work of a comparable character must be paid the same. And yes, a future post will explore what “comparable character” means.

The Equal Pay portion of the Equal Pay Act officially goes into effect on January 1, 2019. Now is the time to get familiar with the law and its implementing rules, and to ensure you are paying your cannabis employees in accordance with the requirements. If you are unsure, consult an attorney to review your pay practices. Non-compliance will come with hefty fines.

marijuana canada vancouver police
New rules at the Vancouver P.D.

Despite a few employee victories across the country, states continue to allow employers to punish employees for off-work use of marijuana—even if they are medical marijuana users. Oregon and California tried and failed to pass legislation to protect off-work use of marijuana. The federal government even tried to protect off-work use for medical marijuana. Despite the efforts, a majority of states with legal marijuana allow employers to terminate employee for off-work marijuana use. Our neighbors to the north, however, seem to be moving in the opposite direction.

Canada legalized the sale and use of marijuana earlier this year and is set to begin legal sales on October 17. It’s only the second country to fully legalize at the national level. Along with Canada’s progressive views on marijuana, comes progressive views on public employees’ use of marijuana. To wit, the Vancouver Police Department (“VPD”) has officially approved off-work marijuana use.

Initially, back in early August, the VPD proposed a 24-hour pre-shift period of abstinence. Instead of immediately accepting or rejecting the proposal, the VPD did its research. The VPD issued a report noting that cannabis can affect individuals to different degrees and THC remains in an individuals system despite the individual no longer feeling the effects. Specifically the VPD rejected any pre-shift abstinence period, finding that:

specifying a time frame can create an implicit approval that that this period of abstinence is all that’s required to ensure fitness for duty…This can lead to unnecessary labour conflicts where employees are fit for duty but have consumed cannabis within this time frame, or where employees are not fit for duty but mistakenly believe they are as they consumed outside this time frame.”

The VPD, much like it does with alcohol, will require officers to refrain from partaking prior to the start of their shift and present “fit-for-duty.” The VPD will also allow officers to possess cannabis during working hours so long as the substance is stored in its original, sealed, and unopened package.

What does this mean for the rest of North America? Not a lot exactly. Canada’s laws, rules, and policies have zero effect in the U.S. or elsewhere. But perhaps Canada’s policies will trickle down. U.S. lawmakers seem to be unable to draft a bill that garners enough support to protect employees’ off-work use of marijuana. Many states, like Oregon, fail because the marijuana remains a controlled substance federally. Unless marijuana is de- or rescheduled, states will continue to struggle to protect employees off work use.

At most, Canada’s legalization may show the United States a way forward. If Canada’s legalization goes smoothly, perhaps federal U.S. lawmakers will realize it can be done and will not continue to cleave to the failed policies of prohibition. At the state level, maybe jurisdictions like Oregon and California can look to Vancouver for guidance on protecting employees’ rights to use marijuana off-work.

VPD has taken a reasonable approach to off-work marijuana use: don’t show up to work impaired. This is the same standard we use with other substances, so why not marijuana? As Canada moves forward with its legalization, let’s hope the U.S. and its states look north for guidance in areas such as employee rights.

OLCC marijuana license employment
Your license transition plan should consider employees.

You’re new to the Oregon cannabis scene and quickly realize you won’t be able to open a newly licensed cannabis retail store due to the Oregon Liquor Control Commissions (OLCC) pause on issuing new licenses that went into effect on June 15. But what about purchasing an existing retail store from a licensee?

It is possible to purchase a retail marijuana business and receive a license from OLCC. However, no money or control of the store can take place until the OLCC vets the new ownership to ensure compliance with the marijuana rules and statute. Typically, the seller and buyer enter into binding agreements to sell the store (technically, an asset or stock purchase) pending approval from the OLCC of the change in ownership. As we recently wrote, the OLCC recently increased scrutiny on these applications and can take up to 3-6 months to approve. During that time, your dreams of owning a retail cannabis store are paused. However, based on our recent discussions with the OLCC, there is a legal way to start the transition to the new owner without violating the rules: through employees.

Employees are a key part of any business. Employees keep the day to day operations of business running smoothly. In a retail store, they are the face of the company. It’s important to select people you trust and will work hard for your company. One way to begin control of the new company is to enter into an agreement with the seller to hire certain employees. There are a lot of things to consider when doing this—so it’s important to do it right.

First, it’s probably best to mention this when you first begin sale negotiations. Let the seller know you’d like to immediately “place” employees of your choice, who will be hired by the seller, prior to OLCC approval of the change in ownership. It’s best to be up front with these things rather than watch your deal fall apart later because you failed to mention your intentions.

If the seller agrees, the seller will need to hire the employees. Remember: You the purchaser cannot have a financial interest or control in the company until the OLCC approves. The employees will either need to be hired on a short term employment agreement to terminate when the sale is finalized, or enter into an employment agreement that will be assignable to the new entity once the sale is finalized. This would be a great time to talk with an Oregon cannabis employment attorney  to ensure everything is done correctly.

You’ll also want to be super clear with the employees about the arrangement. Again, you don’t want your employment relationship with the individuals to fall apart because you weren’t clear that the employee’s boss or employment status will change once the OLCC application is approved.

Assuming all of that goes smoothly, what kind of employees should you hire? For the transition period, its best to hire those that will exhibit decision making powers such as managers and supervisors. Qualified people in higher up positions tend to be more difficult to find. Get them in early and the transition will be even easier.

You might not be able to run the business the way you want during the period the OLCC is reviewing the change in ownership application, but you may be able to instill employees that can start the transition for you.

noncompete marijuana cannabis
Noncompetes aren’t always enforceable.

Marijuana has been legal in Oregon for about three years now. Employees with specialized skills are starting to jump ship and head to competitors. What do you do, as an employer, if a candidate for employment shows you a non-competition agreement they signed with their former employer? Typically, the former employer will go after the employee to enforce the non-competition agreement, but the former employer may seek an injunction against your business to prohibit you from hiring the candidate.  Is there a way around this? Perhaps.

First, you should consider whether the non-competition agreement is enforceable. As we’ve previously discussed, non-competition agreements in Oregon are highly disfavored. Non-competition agreements in Oregon are only enforceable if the employee was making at least the median income of a family of four at the time of termination and the employee was given the non-competition agreement at least two weeks prior to the commencement of employment, or if the non-competition agreement was entered into as a part of a bona-fide advancement with the employer. If these factors are not met, the agreements are not enforceable.

However, this does not automatically invalidate the agreement. The Oregon Court of Appeals ruled in Bernard v. S.B., Inc. that the employee must take affirmative steps to invalidate or void the obligation of the non-competition agreement. Meaning, they need to send a written notice to the former employer that they intend to void the agreement. Have an attorney review the agreement to determine if its enforceable in the first place, if it’s not, it may be easy for the potential employee to void the agreement and make it safe for you to hire the individual.

Second, some employees may have entered into non-competition agreements in other states. Those agreements may be entirely enforceable under choice of law provisions in the agreements. What then? It’s time for negotiation skills. Some companies may not want to deal with the hassle of attempting to enforce a non-competition agreement and may agree to sign a waiver releasing the former employee from their obligations under the agreement. Others may truly want to enforce the non-competition agreement and refuse to release the employee from the agreement. At that point, you may want an attorney on your side to review the non-competition agreement and see if there is a way to avoid violating it. Perhaps the agreement only prohibits the employee from working with edibles, but you plan on utilizing the employee’s skills to clone plants, for example. Further, an attorney may be able to work with the former employer to convince them to waive the non-competition agreement.

Non-competition agreements can be a good tool to protect your investment in your employees and to protect trade secrets. Alternatively, they can be a pain when you are attempting to hire. Whatever side you’re on, it’s always best to have an attorney on your side to review the agreement and ensure your company is protected to the fullest extent.

marijuana cannabis employment discrimination
Nice job by the court.

As a general rule of thumb, employers are not allowed to discriminate against employees with disabilities. Both federal and state laws provide this protection. This means that an employer cannot take an adverse employment action against an employee because of the employee’s disability. Again, this is a “general” rule of thumb: In the cannabis context, things are always a bit different.

Some states have passed legislation protecting medical marijuana users off work marijuana use. Employers in those states cannot terminate an employee or refuse to hire an applicant because of their off-work medical marijuana use. Historically, however, the big problem with these laws is that state and federal courts have readily determined the Controlled Substance Act (CSA) preempts state law, and that employers may terminate medical marijuana patients for off-work use. Recently, for the first time, a federal court sided with an employee who brought a claim against her employer for termination for off-work use of marijuana.

According to the lawsuit filed in Connecticut, Katelin Noffsinger is a registered medical marijuana user. In 2016, Noffsinger applied for a job with Bride Brook Nursing & Rehabilitation (“Bride Brook”). Bride Brook offered her the job contingent on passing a pre-employment drug test. Noffsinger informed her potential employer that she was a medical marijuana patient and likely would not pass the drug test. Noffsinger took the drug test which confirmed the presence of THC. Bride Brook rescinded its job-offer. Noffsinger brought a claim against Bride Brook alleging Bridge Brook had violated the anti-discrimination provision of the Connecticut Palliative use of Marijuana Act (PUMA). Bride Brook attempted to dismiss the case, asserting the claim was preempted by the CSA, the Americans with Disabilities Act (ADA) and the Food, Drug and Cosmetic Act (FDCA).

The federal court first addressed the CSA preemption claim. The Court held that the CSA did not prohibit employers from employing marijuana users. Meaning, if state law prohibited employers from discriminating against medical marijuana users, it would control.

The Court next determined that the ADA did not preempt PUMA because the ADA explicitly allows employers to prohibit illegal drug use at the workplace but does not authorize employers to take adverse employment action based on drug use outside of the workplace. Finally, the Court determined the FDCA does not regulate employment and therefore was inapplicable in the current case.

The Court did not rule on the substance of Noffsinger’s claim–meaning it has not determined if Noffsinger was discriminated under PUMA. That decision is still pending a jury trial.

The Noffsinger case is important. It’s the first case of its kind to determine that marijuana’s illegality under federal law does not bar an employment claim based on state law. State courts, such as the Oregon Supreme Court, have expressly held that the CSA preempts state medical marijuana laws—meaning employers in the State of Oregon, for example, may still terminate an employee for off-work marijuana use.

The decision in the Noffsinger case is not binding in other jurisdictions, but it could indicate a significant shift in federal courts’ view on medical marijuana. Perhaps this court’s sound reasoning will influence other federal judges to provide equal protections to medical marijuana patients until marijuana is de- or rescheduled under the CSA.

OLCC marijuana cannabis oregon
The new OLCC rules won’t really solve the problem.

New Oregon Liquor Control Commission (OLCC) rules affecting outdoor recreational growers went into effect on September 1, 2018. It’s likely that the rules are in direct response to concerns expressed by Attorney General Jeff Sessions and, more recently, Oregon US Attorney Billy Williams, over Oregon’s marijuana industry. As we’ve previously reported, Attorney Sessions is not a fan of marijuana and Williams has expressed concern over Oregon’s marijuana overproduction and black market.

Significantly, the new OLCC rules: 1) severely curtail the amount of marijuana flower that medical marijuana cardholders are allowed to purchase in a day, from 24 ounces to 1 ounce; and 2) require recreational outdoor marijuana grows to notify the OLCC prior to harvest. Both rules were issued with the stated intent to reign in diversion outside of the OLCC system. The purchase limit rule is “temporary”, meaning it expires in six months and could be modified or rescinded after investigations are completed. The harvest notification rule is permanent, and discussed in detail below.

Under the harvest notification rule, outdoor growers are now required to report all harvests to OLCC no later than 9 a.m. on the date of the harvest. The purpose of the rule is to keep a better track of the harvests, where they are going, and to combat transporting weed out of state. Failing to comply is a Category III violation for each day the violation occurs.

The new tracking requirements will also come with audits from the OLCC. OLCC investigators will make sure plant counts and harvest amounts match whats in the system. If it doesn’t, the OLCC could issue the outdoor licensee a charging document, alleging a violation of the OLCC rules and threatening suspension, license revocation, or a civil penalty.

Right now, there are 23 inspectors statewide to audit and inspect the state’s 397 outdoor grows. Most of the outdoor grows are located in Jackson and Josephine counties (and won’t be going anywhere anytime soon.) The OLCC has readily admitted it is overworked and understaffed. This begs the question: Will the OLCC even have time to implement the new audit program? Only time will tell.

The more important question, though, is whether the new rules will actually stop Oregon marijuana from crossing state lines. It seems unlikely that the new rules will help. First, as any licensee knows, its expensive to be regulated as much as the marijuana industry is. Licensees invest significant money into required security systems, tracking requirements, general compliance costs, in addition to the costs of running a business. It seems ridiculous that any business in Oregon that has spent significant amounts of money just to be compliant and licensed would risk losing its license and livelihood by diverting marijuana out of state.

Additionally, the feds have been cracking down on out-of-state Oregon marijuana trafficking. Most of that seized marijuana is being grown illegally and not from the regulated industry. In other words: stricter regulation of OLCC licensees isn’t likely to move the needle much on diversion into unregulated markets.

So, again, what’s the point of the new rules? They really do seem like an attempt to appease US Attorney Billy Williams, who has been vocal about his dissatisfaction with the Oregon system. Perhaps by regulating the industry more, Mr. Williams will trust that Oregon is doing what it can to keep legal weed within its state lines.

For more on Oregon cannabis and the oversupply issue, check out the following:

oregon marijuana OLCC cannabis
OLCC may be getting strict.

A violation of the Oregon Liquor Control Commission (“OLCC”) recreational marijuana rules can land you in hot water. I’ve previously written about rule violations and the administrative process, including settlements. It’s been our experience that the OLCC is open to settlement agreements for licensees who violate rules, and we regularly help settle these cases. Some are easier than others.

Settlement agreements generally save time and money related to administrative litigation costs for both licensee and the OLCC. Based on our review of the OLCC News Releases, the OLCC has approved settlement agreements with approximately 20 licensees and had never rejected a settlement agreement proposed by its staff. That all changed last week.

The OLCC alleges Black Market Distribution LLC (“Black Market”) violated 10 OLCC rules. On August 23, 2016, the OLCC was presented with a settlement agreement that would have allowed Black Market to pay a $16,335 civil penalty or serve a 99 day license suspension. The OLCC rejected the proposed settlement agreement because it determined the violations were egregious enough that a suspension or fine would not result in the licensee taking the necessary corrective action to come into compliance. Black Market will not automatically lose its license but instead will now proceed to an administrative hearing to fight to keep its license.

How does this compare to past settlement agreements? Here are the three most relevant examples:

  • Queen Bee Distribution was able to reach a settlement agreement with the OLCC after it was charged with 12 violations. Queen Bee Distribution’s violations included exporting marijuana out of state and having a large quantity of marijuana go missing under suspicious circumstances. Queen Bee Distribution surrendered its license only after transferring ownership of the business. Meaning, while Queen Bee Distribution no longer has a license it was allowed to transfer its business to another party.
  • CBD Oil agreed to let its processor license expire and accepted a Letter of Reprimand for four violations. CBD Oil’s violations included transferring marijuana other than as allowed by its license, including to non-licensed retailers.
  • Medigreen Collective agreed to surrender its retail license upon the transfer of ownership after suffering three Category I violations in three years.

What do these settlement agreements tell us? In the past, for egregious violations, the OLCC had agreed to settlements that resulted in license forfeiture in some form. In the Black Market case, maybe the OLCC is or was looking for license forfeiture given the number of violations Black Market is accused of. Alternatively, the OLCC may be shifting to stricter enforcement of its rules in general.

In the August 23, 2018 News Release, the OLCC made it clear that the agency expects licensee to be compliant and law-abiding and intends to strengthen its action against rule breakers. Only time will tell if the OLCC intends to move away from settlement agreements with licensees. In the meantime, the best way to avoid a civil penalty, suspension, or license revocation is to ensure you and all of your employees are compliant with all the OLCC rules. Because there are so many rules, and because those rules continue to evolve, that can be a tall order. If you are unsure about anything, one of our talented Oregon cannabis attorneys can assist with compliance questions. And if you find yourself in the OLCC’s cross-hairs, we may be able to help with that too.

washington family medical leave cannabis

The Washington Family and Medical Leave Act (“WFMLA”) is getting some major changes beginning in 2019. Why does this matter to Washington cannabis businesses? Because all of those businesses, regardless of type or size, will be required to collect and pay premiums under the revised law beginning January 1. These companies will also be required to provide wage replacement for eligible employees beginning in 2020.

Last year, the Washington legislature became just the fifth state to approve paid family and medical leave. Paid family and medical leave is a statewide insurance program that will provide eligible employees with partial wage replacement while on qualifying leave. Paid family and medical leave will be paid from a state fund, funded by premiums collected by employers. Premium collection begins January 1, 2019. The premium is equal to 4% of an employee’s wages, and the burden is shared between the employer and the employee.

Like with FICA and federal income tax, the employer is responsible for collecting the employee’s portion of WFMLA tax through payroll. If you want to be a model cannabis business, the law allows employers to cover the employee portion of the premium. Note that employers with less than 50 employees are not required to pay their portion of premium, but must still collect the employee’s portion and remit it to the state.

Employees become eligible for paid family leave once they have worked 820 hours for a Washington-based employer during the previous year. Employees can take paid leave for their own medical condition, bonding with a child, caring for family members, and certain military-related events. Eligible employees can receive up to 12 weeks of wage replacement with a weekly minimum of $100 and a weekly maximum of $1,000. The amount of wage replacement the employee receives is based on the employee’s earned wages, the state median income, and other factors. Employees can begin applying for benefits on January 1, 2020.

But what about the paid sick leave marijuana employers are required to provide in Washington? The WFMLA does not affect the requirement for employers to provide paid sick leave to employees in Washington.  Paid sick leave, unlike paid medical and family leave, does not require the payment of premiums. Further, employees accrue at least one hour of paid sick leave for every 40 hours worked under the Washington sick leave law.

Cannabis businesses should get ready for the new premium assessments beginning January 1, 2019, and budget for those new costs now. If you’re worried about compliance, our cannabis business and employment attorneys here at Harris Bricken can help you formulate a plan to ensure you comply with WFMLA and related laws.

olcc violation marijuana cannabis
Settling alleged OLCC violations is often possible.

Back in February, I discussed administrative litigation in Oregon and the types of violations Oregon cannabis businesses can be hit with. But what about settlement? Like in civil litigation, administrative litigation can be settled with the right tools and right team of lawyers on your side.

As a quick refresher, the Oregon Liquor Control Commission (OLCC) is the agency tasked with implementing and enforcing the recreational marijuana rules. The OLCC can and does conduct random inspections of marijuana licensees. These inspections sometimes lead citations for rule violations. These rule violations may then lead to a charging document outlining potential penalties– sometimes several months after the problematic inspection occurred.

A charging document is only the beginning. Depending on the category of the violation(s) assessed, and whether they are grouped together as single violation or listed as separate infractions, the charging document will allow the licensee to either: 1) waive its right for a hearing and pay a reduced fine or serve a reduced suspension, 2) request an administrative hearing, or 3) pay the full fine or serve the full suspension. If the licensee receives a Category I violation, the licensee will only have the option to request a hearing or surrender the license. You can view a table of violations and their categories here.

In order to enter settlement negotiations with the OLCC, you must request an administrative hearing prior to the relevant deadline. After an administrative hearing is requested, the matter will be referred to the OLCC “Administrative Policy and Process Division” and a staff member will be assigned to the case. Typically the staff member will reach out to the licensee (or their representative) but the licensee can also contact the OLCC and find out who is the assigned staff member. The OLCC staff member is the person the licensee will enter into settlement negotiations with.

According to my latest communications with OLCC staff, the agency has standard settlement agreements they enter into for Category II through V violations. Whether the OLCC will agree to a standard settlement is dependent on the number of violations cited and the number of violations the licensee has committed in the last two years. This means the staff member has the power to enter into the settlement agreements without approval from higher-ups. However, the OLCC does not have standard settlements for Category I violations. If a Category I violation is to be settled, it will take a lot of finesse, and ultimately, any Category I settlement must be approved by the OLCC director. We have settled all categories of violations on behalf of licensees.

Once a settlement agreement is reached, it has to be approved by the OLCC Board of Commissioners. The Board meets once a month and the pending settlement agreements are offered to them at the meeting. The Board then votes on the agreement and if approved, the licensee will then have to adhere to the terms of the settlement through either a penalty payment or temporary license suspension.

Administrative settlement is similar to civil litigation settlement. It involves the negotiation of two parties to reach a mutual agreement. One of the key differences with administrative litigation and settlement is that typically, the administrative body–in this case, the OLCC–holds most of the power. This is especially true with Category I violations. The fact that OLCC has leverage does not mean, however, that the OLCC will not enter settlement; it just means some more work and skill is necessary to reach an agreement.

Because an OLCC license is the lifeblood of an Oregon cannabis business, it is always best to adopt a compliance program and avoid alleged violations entirely (and remember– you are on the hook even for unauthorized actions of employees). If you do find yourself on the other side of a charging order, make sure you work with someone familiar with system and OLCC personnel, in order to give yourself the best possible shot at saving your license.