Oregon Cannabis: New Rules, Part 5 – License Cancellation Criteria

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This post focuses on recent changes to OAR 845-025-8590, which addresses when the Oregon Liquor & Cannabis Commission (“OLCC”) may cancel or suspend a marijuana business license. It continues our discussion of recent OLCC changes to the regulations governing marijuana in the State of Oregon. You can review the changes to OAR 845-025-8590 and all other rules here.

The new rule applies to marijuana license cancellations under ORS 475B.256(1)(a)

So what conduct falls under this statute?

The text of the statute includes a wide swath to conduct. It provides that OLCC may revoke, suspend, or restrict a license, or require a licensee to or licensee representative to undergo training if the OLCC finds or has reasonable grounds to believe that the licensee or licensee representative:

(A)        Has violated a provision of ORS 475B.010 (Short title) to 475B.545 (Severability of ORS 475B.010 to 475B.545) or a rule adopted under ORS 475B.010 (Short title) to 475B.545 (Severability of ORS 475B.010 to 475B.545).

(B)       Has made any false representation or statement to the commission in order to induce or prevent action by the commission.

(C)        Is insolvent or incompetent or physically unable to carry on the management of the establishment of the licensee.

(D)       Is in the habit of using alcoholic liquor, habit-forming drugs, marijuana or controlled substances to excess.

(E)        Has misrepresented to a customer or the public any marijuana items sold by the licensee or licensee representative.

(F)        Since the issuance of the license, has been convicted of a felony, of violating any of the marijuana laws of this state, general or local, or of any misdemeanor or violation of any municipal ordinance committed on the premises for which the license has been issued.

ORS 475B.256.  As should be apparent from this language, the statute gives the OLCC wide latitude in the exercise of its enforcement powers. However, the new rule cabins this power in some respects.

The new rule allows the OLCC to cancel a marijuana license only when the conduct poses a significant risk to public health and safety

The new rule is found in OAR 845-025-8590(2).  It states that the Commission may cancel a license under the statute cited above “only when the conduct poses a significant risk to public health and safety.”

Conduct that constitutes a “significant risk” to public health and safety includes:

(a)        Exercising licensed privileges while the license is suspended, or in violation of restrictions imposed on the license;

(b)        Allowing minors at a processor license;

(c)        Prohibited conduct involving a deadly or dangerous weapon or conduct that results in death or serious injury;

(d)        Prohibited use of pesticides, fertilizers and agricultural chemicals;

(e)        Diversion of marijuana, inversion of marijuana, or other conduct described in ORS 475B.186;

(f)         Transferring or providing adulterated marijuana or hemp items to a licensee or consumer;

(g)        Prohibited conduct by laboratory licensees as described in OAR 845-025-5075;

(h)        Failure to meet testing requirements as described in OAR 845-025-5700, 333-007-300 to 333-007-0500 and 333, division 64;

(i)         Intentionally destroying, damaging, altering, removing or concealing potential evidence, or attempting to do so, or asking or encouraging another person to do so.

Importantly, this list is not exclusive. So there may be other kinds of conduct that also poses a significant risk to health and safety.

The new rule is a good change for OLCC licensees

This language ought to be seen favorably for licensees facing cancellation. That is because the new language means that a mere violation of the ORS 475B.256(1)(a) is not enough. The OLCC must also establish that the conduct poses a significant risk to public health and safety. This changes part of the OLCC’s attempt to shift from enforcing the rules strictly (some may say punitive) manner, to more of a partnership approach with licensees. (See Oregon Marijuana: OLCC to Adopt “Fix-it or Ticket” Approach for Some Rule Violations). Let’s hope the OLCC sees it that way too as we move into 2022.

For previous posts in this series, check out the following:

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