Cannabis News

No New Cannabis Licenses: Oregon Pulls the Plug – Cannabis Business Executive

by Vince Sliwoski, attorney at Harris Bricken

The Oregon Senate passed HB 4016 yesterday afternoon, enacting a sweeping moratorium on new cannabis licenses in the state. The law will go into effect on an “emergency” basis after Governor Brown signs it, or in 30 days if she doesn’t veto it (and she won’t). The industry got what it wanted here; the walls go up.

HB 4016 has evolved since I previewed the bill at the start of this short session last month. Much of the original text was deleted or incorporated into other bills, but today I want to focus on the additions. The two most important of these include:

  • Through March 31, 2024, law gives OLCC discretion to refuse to issue new processor, wholesaler, and retailer licenses, while extending Senate Bill 218 moratorium on producer licenses . It seems certain that the OLCC will exercise this discretion and refuse to accept all such applications or issue new licenses for the foreseeable future.
  • The law eliminates requests submitted after January 1, 2022, retroactively, and the OLCC has no discretion here. Section 1(5) categorically provides that the OLCC “shall inactivate a license application…that was received after January 1, 2022”.

Yes, there will be disputes. Hundreds of new license applications were submitted after January 1, 2022, and people invested time and money in these applications in the reasonable expectation that their applications would be processed. What a mess.

We’ve already had a few nervous customers ask if the new moratoriums will affect ownership location changes or location change requests. The answers are “no” and “no”: all applications submitted before January 2, 2022 will be considered, provided an approved Land Use Compatibility Statement (LUCS) is submitted in a timely manner. However, Section 1(4) provides that such applicants cannot change: (a) the location for which the application was submitted, or (b) “51% or more of the ownership”. This is an effort to limit the secondary market to issued licenses, essentially.

If the bill ended there, I would call it another failure for social equity in Oregon’s cannabis industry. These moratoriums make entry much more expensive, limiting access to the secondary market. However, Section 4 contains an interesting provision on “qualified candidates”. It provides that the OLCC may award “expired, discontinued, or otherwise suspended” licenses to such applicants. It is our understanding that “qualified candidates” refer to candidates for social equity, but the term is not defined. The OLCC has a lot of leeway here, it seems.

Finally, the OLCC now has the ability to allow an approved retailer to relocate if the OLCC discovers the retailer is within 1,000 feet of a pre-existing school. This uncontroversial provision migrated from HB 4074, which will also pass this session.

I’ll be back next week after the session ends with a full report on all the cannabis coming out of Salem, including the fate of the proposed hemp licensing moratorium and the controversial marijuana sales tax increases. Stay tuned.

Republished with permission from Harris Bricken and Canna Law’s Blog

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