The Executive Director of the Oregon Liquor Control Commission is spreading good cheer this holiday season by issuing a “Winter Holiday Checklist” to all recreational marijuana licensees. The Checklist includes a list of regulatory violations that the OLCC is seeing on a regular basis, and a reminder of the OLCC’s enforcement authority to address these violations. One might criticize the Director for being a bit of a Scrooge by warning licensees that they are subject to investigation and enforcement action (which can include license revocation) for violations of OLCC rules. However, the Director is actually providing an early holiday gift with this Checklist, because he is providing all licensees with advance notice of those areas where the OLCC is going to pay particular attention to confirm compliance. Those areas include the following
- Outdoor Producers - The OLCC is reminding outdoor producers that as they get near the end of the 45-day harvest packaging window, they must repackage their marijuana flower and record the weight in CTS. The OLCC will be analyzing CTS data to capture those harvests that aren’t repackaged and recorded within 45 days.
- Video Security Compliance – the OLCC will be stepping up its efforts to check for compliance with video security requirements, including the requirement of a backup video from video surveillance systems. The Director reminded licensees that “failure to produce backup video is a Category I violation under which a licensee could conceivably lose their license and investment…”
- Minors on the Premises – the OLCC suggest retailers ”double their efforts” to make sure no one under 21 (or under 18 with a medical card) enters retail dispensaries.
- Daily Purchase Limits – the OLCC will be paying particular attention to confirm retail dispensaries are not selling to individual customers more than the allowable daily limit under OLCC rules.
- Worker Permits – The OLCC has issued marijuana worker permits to 19,000 people. The OLCC has also approved permits for about 9,000 applicants, but those permits have not been issued because the applicants have not paid the permit fee. After December 15, 2017, approved workers who have not paid the permit fee and been issued a permit may no longer work in a licensed premises.
Noting that the OLCC has licensed over 1600 marijuana businesses in the last year, the Director has taken this opportunity to alert licensees about compliance issues in the key areas noted above. All licensees would benefit from reading the Director’s full “Winter Holiday Checklist,” which can be found below:
Outdoor Producers & Metrc Compliance
For outdoor producers we want to remind you that as you get near the end of the 45 day harvest packaging window that you repackage your marijuana flower and record the weight in CTS so we won’t have to take compliance action. We’ll be analyzing CTS data to capture those harvests that aren’t repackaged and recorded within 45 days, and licensees can expect us to be issuing violations.
Video Security Compliance
Our compliance team will soon begin spot compliance checks on our licensees. Checking that our licensees are complying with security requirements will be a key focus, especially ensuring that there’s backup video from video surveillance systems. Failure to produce backup video is a Category I violation under which a licensee could conceivably lose their license and investment by not producing the backup video for OLCC; this is regardless of whether or not any other violation have been proven. Rather than finding out how your system works when an inspector shows up, you should establish best practices and have procedures in place to ensure your cameras are providing coverage where they’re supposed to, and that the video system is working properly.
Retailers and Minors on Premises Compliance
With the holiday season upon us retailers will be preparing for shoppers looking for gifts. Another preparation step is to re-double your efforts to make sure no one under 21 (or under 18 with a medical card) is entering your licensed retail licensed premises. Failure to identify the age of a minor is a serious violation. In December the OLCC will begin Minor Decoy Operations at licensed marijuana retailers around the state. Now would be a good time to make sure you have good age verification procedures in place. Education on minor decoy detection is available from the OLCC, including ID checking classes. Also, please remember that a licensee’s own minor children are not permitted to be on the licensed premises for any reason.
Retailers and Daily Purchase Limits
We’ll also be checking to make sure that retailers aren’t selling to individual customers more than the allowable daily limit under OLCC Rules 845-025-2800. You can also download this poster listing the daily limits from the OLCC website.
Marijuana Worker Permit Compliance
In August 2017 the OLCC allowed growers to hire employees who had an application for a worker permit in process with the OLCC. That exception comes to an end on December 15, 2017. After that date all employees must have a worker permit if they are handling marijuana.
- The good news is that we have approved a workforce of 19,000 people who have been issued their worker permits.
- We have also approved permits for about 9000 applicants, but those applicants have not been issued their work permits because they have not paid the permit fee of $100 dollars. If these workers pay for their permits the regulated industry will have an approved workforce of nearly 30,000 people.
- An additional 9000 applicants are under review and have not been issued their permits.
- After December 15, 2017 approved, but not paid applicants and applicants awaiting approval, can no longer work in the licensed premises of an OLCC licensee until they have a Marijuana Worker Permit. Now is the time to ensure your workforce will be compliant to avoid violations after December 15.
We bring these reminders to your attention because they’re important to the integrity of properly operating our regulated marijuana industry. With each passing day OLCC licensees are seeing and hearing about increased OLCC enforcement activity. During recent actions, we immediately suspended two licenses, are now routinely issuing and settling violations, and now have several priority investigations under way and are routinely issuing and settling violations. Compliance is critically important in building this industry so you need to take action to prepare for the increasing likelihood you may be inspected in the field and that your CTS data will be scrutinized.
The recent out-of-state arrest of one of our licensees was certainly a setback for the integrity of the Oregon marketplace all of us have worked to create. Like me, I know that many of you were embarrassed by this incident. There is no place for those that seek to cut corners in the Oregon system and OLCC will do all we can to ensure the integrity of the Oregon marketplace and its competitive fairness for all you who follow the rules. I am confident we can achieve this aim with the help of our licensees.
As this year closes, the OLCC remains committed to your success in our system and working with you and Oregon’s leaders to improve it.
A check list has been put together to help licensees make sure they're in good standing this holiday season:
45 Day Harvest Packaging Reminder:
Outdoor producers who’ve completed their 2017 fall harvest need to make sure they’ve segregated their harvest lots of dried flower to ensure compliance with OLCC Division 25 Rules 845-025-2080. Each harvest lot needs to be packaged separately with a CTS (Metrc) User Identification Tag linked to each plant and recorded in CTS within 45 days of harvest.
30 Day Video Backup Reminder:
All OLCC marijuana licensees are required to have off site (away from the licensed premises) back up recordings from their video surveillance system for a minimum of 30 days. You can do this by uploading to the cloud or to a physical location away from the licensed premises. OLCC Division 25 Rules 845-025-1450.
No Minors on the Licensed Premises Reminder:
No one under the age of 21 is allowed on a licensed premises. That means if someone’s under 21(or under 18 if they have a medical card) they can’t be in a licensed retail operation. Period. OLCC Division 25 Rules 845-025-1230.
Daily Purchase Limit Reminder:
There’s a daily limit to the amount of recreational marijuana that a retailer can sell to an individual customer. OLCC Rules 845-025-2800
Avoid Marijuana Worker Permit violation Reminder:
After December 15, 2017 all workers are required to have an issued marijuana Worker permits or licenses will be subject to violations of the rules. Refer to Compliance Education Bulletin CE2017-11. The exception allowing OLCC applicants for worker permits to work on a license facility expires December 15, 2017.
Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances. Penalties for violating federal drug laws are very serious. For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million. In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice (DOJ) recently rescinded its guidance regarding prioritization of criminal prosecutions of individuals and entities operating in compliance with effective state regulatory systems, DOJ left in place long standing guidance to federal prosecutors regarding how to exercise this discretion. Individuals and companies are cautioned to consult with experienced attorneys regarding their exposure to potential criminal prosecution before establishing business operations in reliance upon the passage of state laws which may decriminalize such activity. Federal authority to prosecute violations of federal law as crimes or through seizures and forfeiture actions is not diminished by state law. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.
Foster Garvey’s Cannabis practice group comprises a premier legal counsel team who provides a full range of legal services such as regulatory compliance, marijuana licensing, business finance, contracts, labor and employment, health care, real estate, intellectual property, litigation and dispute resolution, technology and tax. Our team possesses deep and diverse industry experience and has counseled clients across virtually all industry sectors. We understand the inherent challenges that licensed marijuana and ancillary businesses in Washington state, Oregon and Alaska are burdened with in this highly regulated industry as they deal with onerous state and local regulations as well as uncertainty resulting from federal law.
We are committed to helping our clients achieve their business goals while navigating the intricacies in this rapidly changing area of law. We prize innovation and entrepreneurship, and closely monitoring industry trends.