olcc marijuana alcohol

Why is the OLCC throwing the book at me? This is a question we hear a lot these days from our Oregon cannabis clients in reference to the OLCC’s recent more aggressive approach to enforcement. As we’ve explained, the OLCC has tightened the reins on marijuana applications and rule violations. This has made the prospects of a favorable settlement seem increasingly out of reach for Oregon cannabis businesses that find themselves the subject of an OLCC investigation or receive a proposed notice of cancellation.

Although the OLCC Commissioners have said they are looking for partners in the cannabis industry, it doesn’t always seem that way. This is particularly true when a cannabis business takes reasonable and necessary steps to ensure compliance with the rules only to have an employee violate a rule, whether purposefully or inadvertently. Without fail (in our experience), the OLCC imputes liability for the employee’s actions to the business and the entity finds its license – and its entire business – at risk. Compounding this problem is that for many of regulations, neither the intent of the employee nor the licensee much matter.

The OLCC does not seem to go after holders of liquor licenses with such force.  Here are a just a few such matters that the OLCC has settled in the past few months, on the liquor side:

  • Failing to verify the age of a minor – $1,485 civil penalty or a nine-day suspension
  • Licensee permitted employees to sell alcoholic beverages for off-premises consumption without providing proper training – $1,815 civil penalty or a ten-day suspension
  • Licensee permitted employee to serve alcohol without a valid service permit – $1,485 civil penalty or a nine-day suspension
  • Licensee permitted unlawful activity by employees including the sale or distribution of controlled substances – $1,485 civil penalty or nine-day suspension
  • 41 documented incidents in 29 months described as “serious and persistent” – surrender of license

It is hard to imagine an entity with a recreational marijuana permit settling similar violations in a similar manner (e.g. failing to verify the age of a minor is a Category I violation) much less that the OLCC would tolerate 41 serious incidents over 29 months, or a licensee distributing controlled substances on premises.

So what gives? Although we understand the OLCC’s desire to maintain the integrity of Oregon’s recreational marijuana industry, we believe that as the industry matures the OLCC should treat violations of the rules governing recreational marijuana more like alcohol, not less. This kind of change likely needs to come from the OLCC or the Oregon Legislature.

The State of Washington is contemplating a wholesale revision of its rules governing the enforcement of the recreational marijuana rules because some of the issues described here. Look for a comprehensive post on this blog tomorrow.

As for businesses caught in the OLCC’s web, you can get some idea of what you’re in for here and here. And you should attend the free webinar Cannabis Agency Litigation Next Tuesday, April 23rd that you can register for here.

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Photo of Jesse Mondry Jesse Mondry

Jesse has an extensive domestic and international litigation background. He has represented clients in a wide range of industries, including construction, retail, manufacturing, real estate, and banking. His analytical mind, excellent writing skills, and steady presence allow him to find unique solutions to…

Jesse has an extensive domestic and international litigation background. He has represented clients in a wide range of industries, including construction, retail, manufacturing, real estate, and banking. His analytical mind, excellent writing skills, and steady presence allow him to find unique solutions to complicated domestic and international dispute resolution issues.

In every dispute, it is Jesse’s goal to find the best and most cost-effective solution for his clients. He has a natural ability to convey his clients’ interests to judges, juries, mediators and arbitrators, but he also puts in the time to ensure the best attainable result in any given matter.

Jesse graduated magna cum laude from the University of Minnesota Law School and held a highly competitive federal court clerkship with the Honorable Myron H. Bright of the Eighth Circuit Court of Appeals. Before that, he also served as a law clerk to Honorable Thomas J. Kalitowski in the Minnesota Court of Appeals. Prior to joining Harris Bricken, he spent seven years practicing complex commercial litigation at a large firm in Minneapolis, Minnesota.

In his spare time, Jesse likes to sail and spend time with his family.