Revoked_License

Oregon Growers Lose License for Multiple Regulatory Violations

The Oregon Liquor Control Commission (OLCC) revoked the licenses of two growers for multiple regulatory violations. Green T Farms and Green Acre Blend surrendered their licenses and any marijuana items remaining.

OLCC staff allege that Green T Farms utilized a trailer to store marijuana. The trailer did not meet the security requirements, and was not within the coverage of the video surveillance camera. The video equipment was not sufficient to ensure back up capability, and could not notify Green T of a breach. Green T Farms is in the process of selling its business.

The proprietors of Green Acre Blend are involved in a marital dispute that resulted in the issuance of a restraining order. The status of the owner’s relationship prevents the entity from complying with the OLCC regulations.

Municipal Risk: A Problem Without a Near Term Solution

State cannabis laws can provide counties or local jurisdictions with the ability to determine whether to permit cannabis activity, and to mandate the place, time and manner in which a cannabis business can operate. There is risk though, that a county or city can change its mind.

This occurred recently in Mountain View California. The new city council voted to repeal an ordinance that permitted four cannabis dispensaries. Over 130 local residents spoke at the four hour meeting. The new mayor lost the vote to repeal the cannabis ordinance. The city council’s action raises a red flag for businesses relying on a local jurisdiction for a cannabis permit. Ten businesses that were vying for the city’s four spots invested capital and time. The risk associated with starting a business in a city changes along with administration.

The power a city or county holds over a cannabis license was also highlighted in a recent court of appeals decision in Oregon. The state granted a production license, which could not be used due to local ordinances prohibiting cannabis production. The Oregon Appeals Court sided with Kittitas county, and indicated that under current Oregon law, a cannabis license is useless without a local zoning law permitting the activity.

Municipal risk can delay the application process at any stage with resulting litigation due to local scoring methodologies and transparency requirements. Cities are also increasing this risk by rethinking how social equity programs fit into the permit allocation process as they are handing out licenses using other methodologies. Businesses seeking permits should consider local politics, stability of past city councils, and formal process setting procedures when deciding where to spend capital on license applications. A safer approach may be to purchase a license holder in a city that has stabilized, and established a track record of supporting the cannabis industry.

Oregon Revokes 2 Testing Licenses for Regulatory Violations

The Oregon Liquor Control Commission (OLCC) revoked the cannabis testing licenses for Evio Labs Bend and Evio Labs Eugene / Oregon Analytical Services for allowing employees to take home cannabis samples intended for retesting. Laboratories test a sample of cannabis and retain a portion from the same batch in case of a retest. Under state law, the remaining cannabis must be destroyed. Evio violated OLCC regulations by providing employees with the cannabis, failing to document this transfer in the state’s inventory tracking system, and for destroying evidence and encouraging employees to lie to investigators. Evio initially requested a hearing but decided to enter into an agreement with the OLCC to settle the claims.

Oregon Cancels Cannabis License for Regulatory Violations Discovered After Burglary

The Oregon Liquor Control Commission (OLCC) recommended the cancellation of Greenway Venture’s cannabis license after an OLCC visited following a reported burglary on February 2, 2018. An employee of Greenway Venture’s also failed to promptly provide local law officials with evidence related to the burglary. The OLCC discovered many regulatory violations including the

  • inaccurate entry of cannabis inventory;

  • failure to adequately securely store cannabis product;

  • failure to ensure that surveillance cameras captured all areas

  • lack of a security system that could detect an unauthorized entry;

  • failure to capture the date and time on surveillance recordings;

  • failure to notify the OLCC of a system outage greater than 30 minutes; and

  • substantial alteration of licensed premises.

As a part of the stipulated settlement, Greenway Ventures must surrender 21 totes of cannabis to the OLCC for destruction. Greenway Ventures has until March 30, 2019 to surrender its license or transfer ownership in the license.

Washington State Revokes 2 Cannabis Licenses for Black Market Activity

The Washington State Liquor Control Board (WSLCB) immediately suspended North Coast Concentrates cannabis licenses on November 2, 2018 after discovering untraceable cannabis product and text messages indicating that the product was to be sold on the black market. The WSLCB is seeking a permanent revocation of the licenses.

During a traffic stop, Lower Elwha police discovered that an employee of North Coast Concentrates was, without a shipping manifest, transporting cannabis products including 112 grams of concentrates that was traceable through the Washington seed-to-sale system, and a large amount of dried flower cannabis that was not traceable. The employee’s text messages showed that North Coast Concentrates was aware that the cannabis products were being diverted for sale on the black market. The police discovered after an investigation that the cannabis flower originated from the licensee’s grow operation, and a retailer had returned the concentrate to North Coast Concentrates a few weeks earlier. Upon serving the suspension notice, police seized an additional 556 pounds of dried cannabis flowers, 24 lbs. of cannabis oil and 204 plants from two locations.

Whistleblowers Responsible for 5 out of 6 Oregon Cannabis Enforcement Actions

The Oregon Liquor Control Commission (OLCC) entered into six (6) stipulated agreements against cannabis licensees for a total of roughly $35,000 in penalties or 182 days suspension and one recommendation to cancel a cannabis license. Licensees should note that five (5) of the actions were started by whistleblower including neighborhood watch groups and employees.

The trend in enforcement proceedings over the prior year has been fines for failing to retain video footage. The OLCC will need to assess whether the current penalty structure provides enough deterrence for firms to retain surveillance recordings as retention can provide further evidence of additional violations.

The summary of each stipulated agreement includes:

  • CO2 Company Auction House, LLC d/b/a CANNABIS & CO. :

    • Surveillance Recordings: Failed to retain 90 days of surveillance recordings

    • Compliant Source: Portland Neighborhood Involvement

    • Fine: $4,950.00 civil penalty OR serve a 30-day license suspension

  • TopShelf Garden Centre, LLC d/b/a HEAD STASH HORTICULTURE

    • Surveillance Recordings: Failed to retain 90 days of surveillance recordings

    • Complaint Source; Complaint of On Site Consumption

    • Fine: $4,950.00 civil penalty OR serve a 30-day license suspension

  • Cannabis Corner, LLC CANNABIS CORNER

    • Surveillance Recordings: Failed to retain 90 days of surveillance recordings

    • Complaint Source: Former Employee (illegal sales; unsanitary conditions; unreported theft)

    • Fine: $4,950.00 civil penalty OR serve a 30-day license suspension

  • CO2 Company Auction House, LLC d/b/a HEADWATER (Wholesaler)

    • Surveillance Recordings: Failed to retain 90 days of surveillance recordings

    • Inventory Storage:

      • Failed to keep inventory in enclosed room

      • Failed to use steel door or commercial grade locks

    • Complaint Source: Portland Neighborhood Involvement

    • Fine: $6,105.00 civil penalty OR serve a 37-day suspension

  • Pacific Partners RTG, LLC d/b/a WAY HIGH 101

    • False Statement - Denied on site consumption, which regulators later identified in video recordings

    • Consumption While on Duty

    • Failure to Enter Inventory into Seed-to-Sale System

    • Fail to Use Hygienic Practices when Handling Marijuana

    • Complaint Source: Former employee

    • Fine: $9,075.00 civil penalty OR serve a 55-day suspension

  • Oregon Bud Works, LLC d/b/a Oregon Bud Works

    • Approval of Premises Structure:

      • Unapproved construction of a new building, and

      • Use of conex storage bins

    • Seed-to-Sale Tracking System

      • Failure to enter inventory

      • Intentional misrepresentation of data

      • Failure to segregate harvest lots or affix UID tags and accurately weigh

    • Surveillance Camera & Alarm System

      • Insufficient coverage

      • Failure to maintain video recordings and back up copies for 30 days

      • Failure to ensure 24 hour a day taping

      • Failure to have fully operational alarm system

    • Restricted Access

      • Failing to prevent unauthorized access to restricted areas.

    • Fines: Cancelled License


Oregon Cannabis Regulator Ratchets Up Penalties and Cancels Cannabis Producer License

Staff of the Oregon Liquor Control Commission (OLCC) recommended that the license for Oregon Bud Works, a cannabis producer, be cancelled and inventory destroyed for multiple regulatory violations. Oregon Bud Works will have until January 31, 2019 to complete a sale of the company or it will be required to surrender its producer license. The OLCC staff’s recommendation to cancel the producer’s license sends a significant message to egregious rule violators and licensees that they must comply with the state’s regulations.

The staff of the OLCC found multiple violations of the state’s cannabis regulations during inspections of the premises. The OLCC”s findings are in line with past enforcement actions brought by Oregon including:

  • Approval of Premises Structure:

    • Unapproved construction of a new building, and

    • Use of conex storage bins

  • Seed-to-Sale Tracking System

    • Failure to enter inventory

    • Intentional misrepresentation of data

    • Failure to segregate harvest lots or affix UID tags and accurately weigh

  • Surveillance Camera & Alarm System

    • Insufficient coverage

    • Failure to maintain video recordings and back up copies for 30 days

    • Failure to ensure 24 hour a day taping

    • Failure to have fully operational alarm system

  • Restricted Access

    • Failing to prevent unauthorized access to restricted areas.

Washington Revokes Marijuana Grower's License and Seizes Marijuana Products

Washington State Liquor and Cannabis Board (WSLCB) will seek to permanently revoke The Sunshine Tiki Hut’s license for violating various regulations including potential diversion of marijuana into the black market. The WSLCB also seized 1,309 marijuana plants, 213.5 lbs. marijuana flower and 5,644 grams of extracted marijuana oil.

The WSLCB Enforcement group performed a site inspection after receiving a complaint from the Hoquiam Police Department. The WSLCB observed marijuana plants and products that did not have an id tag that allows regulators to track the marijuana from the time it is planted through its sale. The real time view into the marijuana inventory levels allows regulators to determine whether licensees are following the rules such as paying taxes.

The Sunshine Tiki Hut also failed to inform the WSLB of additional storage facilities that contained three freezers where the WSLCB found untagged marijuana. An RV vehicle was also found on the premisses it appeared was being used as a residence, which is prohibited under the WSLCB regulations.