OLCC Steps Up Enforcement Actions

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On February 10, 2017, the Oregon Liquor Control Commission (“OLCC”) announced that it was beginning to transition from an emphasis on getting recreational marijuana producers licensed to ensuring they comply with the myriad laws and administrative rules applicable to those producers, with a particular emphasis on the “seed-to-sale” inventory tracking system.

While the OLCC’s enforcement target in their recent announcement is limited to those who hold producer licenses, other OLCC recreational marijuana licensees would be well-advised to take note of the subtext: OLCC is signaling that they are gradually transitioning away from educating and counseling businesses as to the laws and rules, towards a more traditional adversarial agency.

Most businesses’ first interaction with OLCC is during the application and inspection process, and most report generally positive experiences with their assigned investigators. However, do not let that front-end experience lead you astray – when the OLCC comes knocking a few months or years later, they are doing so because they have a suspicion, whether reasonable or not, that you have violated a law or rule applicable to your license type. In such situations, the OLCC investigators may even lead you to believe that they are simply trying to help you reach compliance and not necessarily looking to impose a penalty or even revoke your license. However, like any other law enforcement agency, the OLCC is legally authorized to mislead in order to gain potentially incriminating statements and information.

The OLCC could target your business for many reasons. For example, the OLCC could suspect the business has one or more owners who haven’t been disclosed, or that you have not updated your CTS system in conformity with the OLCC rules, or that you otherwise are not complying with the letter or spirit of the OLCC rules and regulations.

The OLCC has many methods of investigating your business in order to confirm or disprove their suspicions. The OLCC may send inspectors to your business location to ascertain whether, for example, the actual operation of the business is in conformity with the operating plan submitted to the OLCC as part of the business’s application. These investigations may – and indeed most likely will – involve undercover investigators.

While the OLCC has broad investigatory powers, licensed businesses are not without rights; however, the OLCC investigators are not required to advise you of those rights. Thus, in order to ensure that you and your business do not involuntarily waive your rights, it is important that you seek competent, experienced legal advice at the earliest opportunity. That means, as soon as you receive telephone, email, or in-person contact from a person identifying themselves as an OLCC investigator, you should ask them politely what they’re inquiring about and then let them know you are contacting your lawyer.

Ideally, the inspector will view this as a prudent move by a licensee; however, the inspector may insist or strongly imply seeking legal advice will be viewed as evidence of non-compliance. However, a brief delay while you seek legal advice will in most circumstances not be held against you.

Have you been contacted by OLCC recently regarding alleged compliance issues? If so, click here to contact Oregon Cannabis Law Group’s Administrative Law specialist, attorney Kevin J. Jacoby.