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Oregon Cannabis: Recent OLCC Settlement Trends

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olcc marijuana license revocation

We regularly represent marijuana businesses that find themselves on the wrong side of an OLCC charging document. The charging document will list the particular rule or rules that the OLCC alleges the licensee has violated and always, in my opinion, lists only the most severe sanctions.

The OLCC sanctions schedule is laid out in tiers. For Category I violations, the default sanction is license cancellation. The default sanctions for lesser violations are lower. For example, the standard sanction for a Category II(b) violation is a 30-day license suspension or a civil penalty of $4,950. The standard sanction for a first-level Category III violation is a 10-day suspension or $1,650 civil penalty. The proposed sanctions cascade when the charging document includes several violations, or when the licensee has been in trouble with the OLCC before.

The first questions a new client usually asks are: Does the OLCC really intend to cancel my license? Is a settlement for something less than cancellation possible? How long can I operate my business before my license is cancelled? The answer to these questions always depends on the facts and circumstances that led to the OLCC issue a charging document.

One way to evaluate settlement prospects is to look at past settlements between the OLCC and a licensee. This also useful when commencing negotiations with the OLCC Case Presenter (which is the title for an OLCC attorney assigned to the handle the administrative proceeding). Settlements are the norm and are negotiated between the OLCC Case Presenter and the licensee or its attorney. The “higher ups” at the OLCC often provide the Case Presenter guidance and review all potential settlements of Category I violations for less than license cancellation. Once terms are reached, the proposed settlement goes before the Commissioners at one of their monthly meetings for approval.

Past settlements are available to the public on the OLCC’s website.  Here is brief synopsis of some of those settlements in the past few months:

General Description of Violation Category Settlement
A site inspection revealed that the licensee had failed to accurately record harvest information. On two occasions, licensee failed to segregate harvest lots within 45 days of harvest. Licensee also had discrepancies between what was listed in CTS and its physical inventory for one package, and harvested marijuana could not be located on the premises during the inspection. Category III (2) Licensee will pay a $2,640.00 civil penalty June 15, 2020

OR serve a 16-day suspension

Licensee, who held a producer license, was discovered to have engaged in the transfer of marijuana product between two different producer licensees, which is prohibited under the rules. During the course of the investigation into the transfers, it was discovered that Licensee also had an ODA-registered hemp grow on the same tax lot as the licensed premises, but failed to submit a hemp control plan to the Commission for approval. Licensee subsequently obtained Commission approval for a hemp control plan. Category I (2) Licensee will either pay a $4,950.00 civil penalty before 5:00 PM AND serve a 60-day suspension OR pay a $9,900.00 civil penalty AND serve a 30-day license suspension
Licensee was improperly growing hemp on the licensed premises, and had hemp products on-site. Licensee had also altered the premises by adding a greenhouse, offices, and a storage container without obtaining approval from the Commission beforehand. Licensee’s prior compliance officer had falsely represented to Licensee that the appropriate forms had been submitted and approved by the Commission. When Licensee discovered the problems, they were rectified soon after. Category I

Category III

Licensees will pay a $6,105.00 civil penalty OR serve a 37-day license suspension
OLCC Dispatch received a complaint of an explosion at the premises. Investigation revealed that this producer Licensee was processing hemp without either a processor license or a hemp endorsement. The lack of a processor license meant that the processing equipment had not been safety-certified as required as part of the OLCC pre-licensing process. Fortunately there was no report of serious injury. Category I (2) License cancellation, though the Licensee was permitted to try and sell the business.
Investigations on five of Licensee’s producer premises were initiated subsequent to a Nectar wholesaler improperly transporting a U-Haul truck containing multiple totes of untagged marijuana to one of the producer premises. Violations were found while investigating all five producer licenses, including a violation for entering marijuana items transferred from a Nectar wholesaler as inventory in Licensee’s CTS when it was actually delivered to Licensee’s unlicensed administrative offices. Other violations include camera violations, and/or failing to maintain on premises documentation for pesticides, fertilizers and agricultural chemical used in the production of marijuana. Category III (3) Licensee will either pay a $4,950.00 civil penalty OR serve a 30-day suspension
This was a minor decoy operation resulting in a sale to a minor of a $3.00 half-gram pre-rolled marijuana joint. The selling budtender relied on a door-checker who checked ID. The selling budtender claimed that she usually re-checks ID but believed the minor was of age. The door-checker made a mistake; there was no evidence of intentional sale. Category II(b) Licensee will pay a $3,795.00 civil penalty OR serve a 23- day suspension beginning
This worker permittee failed to give the Commission written notice of a felony conviction within 10 days, as required by law. Permittee is in school and relies on this employment, and was given a strong recommendation by his employer. Category I Permittee will pay a $750.00 civil penalty OR serve a 30-day suspension
This retailer allowed itself to be used by another licensee as part of a scheme to get marijuana out of the METRC Cannabis Tracking System (CTS) so the other licensee could take it to an unapproved trade show. In doing so, this retailer transferred marijuana contrary to its license privileges, and intentionally entered misleading data into CTS. Licensee admits that he erred in relying on the other licensee’s assertion that this conduct was allowable, and now reaches out to OLCC staff when he has questions about licensee requirements. Category I (2) Licensee will pay a $10,230.00 civil penalty OR serve a 62-day suspension
The Commission issued an immediate suspension based on a Category I charge for operating other than its license permits for conducting open blasting to process marijuana into butane honey oil. In addition to the charge for operating outside license privileges, the subsequent charge letter alleged Category I violations for having hemp on the premises, intentional false statement, and producing marijuana in a location that’s also a residence, as well as Category III violations for failure to tag plants and products with UID tags, and allowing consumption of alcohol and/or marijuana on the premises. Category I (5)

Category III (3)

License cancellation, though the licensee was permitted to try and sell its business.

These settlements reflect that a Category I violation does not necessarily result in license cancellation. They also indicate that settlement prospects are poor when the OLCC believes a licensee is diverting marijuana into the illegal market, has defrauded its investigators, or that a licensee’s conduct is a threat to the welfare and safety of the public. Although the OLCC is willing to exercise its discretion in the appropriate case, this is determined on a case by case basis and in my experience requires the licensee to martial facts and law in support of a lesser sanction.

Where the OLCC insists on license cancellation, marijuana businesses may sometimes sell their license and/or business to a third party. But the OLCC does not give licensees an open-ended period in which to do so. Licensees who seek to sell their license in the face of a proposed cancellation must act diligently and quickly because the OLCC will set a time limit for the sale and if not complete by certain date, the license simply will be cancelled. In most circumstances, licensees may continue to operate their business during the administrative proceedings. Depending on the caseload at the OLCC, this may mean several months of continued business operations.

If find yourself on the receiving end of charging document you should:

  1. retain experienced counsel
  2. obtain the investigative report and other documents
  3. conduct an internal investigation
  4. prepare a response within the permitted time frame and
  5. commence settlement negotiations.

We are here to help.

Source: https://harrisbricken.com/cannalawblog/oregon-cannabis-recent-olcc-settlement-trends/

Cannabis

Current Research on Effect Specific Uses of Cannabis

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New research regarding the benefits of cannabis and its main properties of CBD and THC continues to emerge as more countries and states legalize the medical and recreational use of marijuana. Also, because of legalization, the business potential of the cannabis industry continues to grow. Cannabis companies can now distribute to a broader range of people. However, there is more to cannabis than different strains (Indica or Sativa) or the ratio of CBD to THC. Another essential cannabinoid is terpenes, and they play a critical role in the effectiveness of cannabis.

A Perfect High

As the cannabis industry continues to enter the mainstream sphere, it must determine how to market to the mass consumer who expects their cannabis product to be consistent in quality and give off the desired effect. Consumers search for a product that provides a more tailored experience and a more controlled high. Like how the consumer can pick their alcohol to achieve desired effects, cannabis companies and scientists research ways to deliver a custom product. Before a consumer buys a product, they need to know if the product’s cost matches the quality of the experience.

THC causes impairment, slower reaction time, and difficulty performing simple tasks. Consumers want to control their level of buzz. Just like there is a wide variety of alcohol, each with its flavors, and proof, that allows a consumer to have their own unique experience. Cannabis companies strive to achieve a range of products that can mimic the desired effect, from calming to energetic or happy. Consumers also want to test how their body responds to these products to make the most informed decision about what is right for their needs and works best for them.

Ultimately, scientists continue to learn about the importance of terpenes and CBD to modify THC’s effects. The largest cannabis companies and their teams of scientists keep their research under wraps for competitive reasons. Every company wants to be the first to produce a controlled, tailored product. Whoever discovers this first will have an advantage within the cannabis industry.

The Entourage Effect

Cannabis companies and scientists ultimately want to achieve a way to tame THC, a term first introduced by scientist Ethan Russo in 2011. They estimate the cannabis industry will grow as large as the alcohol industry and generate billions of dollars in revenue a year, but only if they can manufacture a product that consistently delivers. In 1998, scientists Raphael Mechoulam and Shimon Ben-Shabat discovered the entourage effect, or the combination of THC, the psychoactive component, CBD (cannabidiol), an active non-psychoactive ingredient, and terpenes, the flavor and taste profile of each strain. All three elements have a unique effect on the body, depending on each ingredient’s ratio and combination.

However, with just the cannabis plant, it is hard to replicate the same feeling and its effects on the body since each plant, grown from different marijuana seeds, has its unique properties. Scientists continue to try and isolate these components to learn better ways to use them as a controlled substance. Also known as whole plant synergy, the main ingredients THC, CBD, terpenes, and other cannabinoids are also essential to unlock the health benefits of cannabis and how to use each ingredient to treat chronic pain and diseases better.

Evidence shows that cannabinoids boost other cannabinoids; for example, THC enhances CBD’s medicinal properties, while CBD modifies and controls the effects of Eagle Moon High THC Seeds, producing a more controlled high. Each cannabinoid is more effective together, which is why THC alone or CBD only products derived from hemp are less potent and effective. There are also other minor cannabinoids at play, such as CBG or CBN, that scientists continue to research. Emerging research also suggests the possibility of two different types of entourage effects: Intra-entourage refers to the interactions of cannabinoids and terpenes and inter-entourage, which relates to the interactions between terpenes to terpenes and cannabinoids to cannabinoids. However, research slowly begins to unearth the role terpenes play in the entourage effect and its full potential.

Terpenes and Future Potential

Cannabis consumers are more sophisticated than society’s perpetuated stereotype of the stoner or hippie. Consumers want to know about the benefits and properties of cannabis, such as Indica versus Sativa, and THC versus CBD. While they may be more familiar with these terms, terpenes are a newly discussed topic amongst cannabis circles, and consumers and scientists alike want to unlock terpene’s full potential. Scientists describe terpenes as the flavor profile in all plants but specifically provide each cannabis strain with its taste and smell.

Researchers today understand that the properties of terpenes go beyond just flavor, smell, and stimulating moods, but modulating brain activity that can have potential health benefits. CBD and THC have higher potency together, and the same is true that terpenes, along with other cannabinoids, work better together and have a more substantial impact. Terpenes and cannabinoids can increase blood flow, enhance motor and sensory functions, and eliminate respiratory bacteria that cause MRSA. The terpenes and cannabinoid attribute to the effectiveness of marijuana or cannabis products in the treatment of chronic pain, inflammation, depression, anxiety, and even fungal and bacterial infections.

 

Companies define the use of cannabis for medicinal or holistic reasons, by the strain or CBD to THC ratio. However, new research suggests that the terpene profile may be one of the most critical elements in the effectiveness of the strain and its intended use. As the cannabis industry and scientists compete to unlock the potential of terpenes and its connection to THC, CBD, and other cannabinoids, consumers will gain access to a marijuana experience unlike anything before.

 

AUTHOR BIO:
Crystal Wilson. Crystal has been closely studying the cannabis industry trends for quite some time. Intrigued by the booming growth of this sector, she takes interest in penning down her views providing quality insight on current marijuana trends, particularly medical cannabis.

 

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Cannabis

Jay-Z announces new line of cannabis products dubbed Monogram

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Rapper and entrepreneur Jay-Z is launching his own cannabis brand in partnership with Caliva, the California-based weed company that hired the star as its chief brand strategist last year. 

Named Monogram, Jay-Z’s line of marijuana products launched its website and social media accounts on Friday.

“Monogram marks a new chapter in cannabis defined by dignity, care and consistency. It is a collective effort to bring you the best, and a humble pursuit to discover what the best truly means,” Monogram’s website highlights.

No further information on the specific products that will be sold under the Monogram brand has been released yet. 

However, according to the website, the flower used in Monogram’s products is grown in small batches, with a board of “cannabis experts” tasked with grading and hand-selecting each flower that goes into the line. 

The New York rapper joined Caliva in 2019 as a brand strategist, which entailed overseeing the creative direction of the company. Furthermore, Jay was focused on Caliva’s social equity efforts as he aimed to increase economic participation of people disproportionately harmed by marijuana prohibition in the newly legal industry. 

As for when consumers can expect to try Jay-Z new products, a spokesperson told the New York Daily News Monogram still hasn’t set its dispensary release schedule. The line will “definitely be available across all of California,” according to the spokesperson.

In other news, basketball star Shawn Kemp who played for the Seattle SuperSonics is also showing his love of pot. Kemp is set to open Seattle’s first black-owned marijuana dispensary this Friday. The Sonics legend named his dispensary Shawn Kemp’s Cannabis and is hoping to serve as a model for others in the black community who might be interested in foraying into the legal marijuana business in the area. 

“I’m looking forward to welcoming Sonics fans on a regular basis, starting with opening day. I hope that Shawn Kemp’s Cannabis will be an inspiration for people to get involved with the legal cannabis industry, especially people of color,” the Reign Man said in a press release. 

Source: https://greencamp.com/jay-z-announces-new-line-of-cannabis-products-dubbed-monogram/

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Analysis: Legal weed in Texas would generate over $500 million in tax revenue per year

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Legalizing marijuana in Texas could generate over half a billion dollars in tax revenue per year and create more than 40,000 new jobs, according to the results of a report released by Vicente Sederberg LLP earlier this month. 

Legal cannabis sales in Texas would reach about $2.7 billion annually based on the fact that there are more than 1.5 million residents over the age of 21 that consume pot on a monthly basis, the analysis calculated. 

The estimated tax revenue was calculated under the assumption Texas would tax marijuana sales at the same rate as Colorado at 20.6%. This would amount to $1.1 billion in taxes per biennium, while Texas could collect an additional $10 million per year through the issuing of marijuana business licenses.

The report notes Colorado has raised nearly $13 million on average per year just from license and application fees. Furthermore, the report indicated that current taxpayer dollars that go towards marijuana arrests and prosecutions amount to $311 million per year – money that Texas would save should it legalize pot.  

“States across the country are seeing the benefits of legalizing and regulating cannabis. It is inspiring lawmakers in prohibition states to reexamine the efficacy and costs of their current policies and take a closer look at the alternatives,” said Shawn Hauser, a partner at Vicente Sederberg.

“The goal of this report is to provide a snapshot of the economic benefits Texas would experience if it started treating cannabis more like alcohol for adults 21 years of age and older,” he commented on the new report

Aside from the tax revenue that legal weed in Texas could generate, the report highlighted marijuana’s job creation potential. An estimated 20,000 to 40,000 new jobs would be available in the newly legal industry, with tens of thousands of additional indirect positions, the report estimated.  

Hauser also pointed out the added economic benefits of legalization in Texas given current uncertainties provoked by the coronavirus pandemic.

“Texas is leaving an enormous amount of money on the table by keeping cannabis illegal,” according to him. 

Texas was once known for having the strictest drug laws in the U.S., but the state has softened its stance on cannabis in recent years. A very limited medical marijuana program was established in 2015, while, more recently, cannabis possession arrests in the state have been significantly declining after hemp became legal.   

Source: https://greencamp.com/analysis-legal-weed-in-texas-would-generate-over-500-million-in-tax-revenue-per-year/

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