In November 2022, the OLCC adopted and amended a set of cannabis rules that became effective January 1, 2023. You can download the changes here And read our previous coverage of many of these changes hereAnd hereAnd hereAnd here. Now that Oregon’s new cannabis rules are in effect, let’s look at some of the significant changes to the rules governing the Oregon industry.
Change in business structure
Oregon Cannabis mergers and acquisitions continue at a decent pace despite their relative proportion sluggish 2022 in terms of sales to consumers. Our M&A practitioners remain heavily involved in many major transactions. New OLCC rule changes affect how marijuana businesses are bought and sold.
- The rules governing giving notice and receiving approval of changes have been moved from OAR 845-025-1160 to 845-025-1165.
- Through March 31, 2023, the notification requirements for the addition or person who will be the “applicant” remain the same. Licensees must submit a notice form to the Authority prior to making any change in business structure.
- As of April 1, 2023, licensees must obtain approval Before add or Removing a person who meets the qualifications of the applicant. The licensee receives it automatically Conditional approval After five days if the decision is still pending. This amendment is a significant change in the way marijuana buyers and sellers have conducted their business over the past few years. Our thoughts (good and bad) here. (Note: This link relates to a draft rule before the OLCC added conditional approval language “after five days” to the proposed rule; but several other issues we identified remain in the rule as adopted.)
Violations of the rules governing the marijuana industry in Oregon are identified by the “class” of violation that ranges from Class I to V. For several years, many rules did not specify the exact category of rule violation. OLCC has now assigned a violation category to each rule to increase transparency.
The OLCC also amended a rule (OAR 845-025-8590) that identifies factors that may exacerbate or mitigate a presumptive punishment for violating a given rule. These changes are important to be aware of in any case where a licensee has, or may have, violated a rule that could lead OLCC to issue a shipping document.
The OLCC has made several modifications to OAR 845-025-57690 to direct licensees more specifically about cannabis product reporting, enforcement, and management. As the OLCC explained in a recent publication:
A licensee may conduct a recall of cannabis products that may pose a threat to public health and safety, that violate administrative rules, or for quality assurance purposes. Licensees must notify OLCC of the recall within 24 hours of the start of the recall. During the redemption, the licensee making the redemption is required to notify the licensees who have implemented the product(s) in their inventory about the concern; The recall licensee must also provide affected licensees with information on the next steps to isolate the product from further distribution or retail sale, whether that is returning it to the manufacturer, destroying it, or otherwise.
The new rules clarify several things, including but not limited to:
What information should be included in recall notices to assist affected licensees in collecting data and details when a recall is reported;
What information must be reported on the licensee’s distribution list to the companies that own the recalled product;
no later than 48 hours after the recall notice is issued, affected retail licensors must notify consumers of the recall process; And
Licensee recalling Products shall continually check in with Licensees who own the recalled Product to ensure that notice of the recall has been received and that an appropriate recall response has been followed.
Stay tuned for more discussions about the new cannabis rules in Oregon and their impact on the local industry. Meanwhile, here’s a file Link to a red-lined document showing each of the changes that have been made to the rules and regulations governing marijuana in Oregon. Finally, for an overview of the many changes that have occurred, have a look at: Oregon’s proposed cannabis rules: A mixed bag