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The Real OLCC Scandal Is There Are Two Sets of Rules



We have been working with the Oregon Liquor and Cannabis Commission incessantly since 2015, when rulemaking commenced for the adult use program. Over the years, we’ve dealt with many, many compliance-related issues, including Notices of Proposed License Cancellation to licensee clients from OLCC. We’ve also seen the Commission change its position and philosophy drastically on enforcement.

In the early days, OLCC emphasized “teaching compliance” and working with licensees who made mistakes—honestly or otherwise. We later saw a transition toward heavy-handed enforcement, as the Commission worked with the legislature in an effort to cull licenses.

The problem is, OLCC treats small businesses much differently than bigger outfits. We’ve been saying this on the blog for a while now (see here and here for example). And when I say “OLCC” please note that I am not talking about specific OLCC personnel. There are some great people at the Commission who are smart, work hard, and really care. This post is not for them.

Recent OLCC liquor and cannabis scandals

This year, OLCC and the cannabis industry are at a nadir with two-bit scandals. Things kicked off with reports of a shady land deal and escalated with revelations that the Executive Director, legislators and others were hoarding rare bottles of bourbon for themselves. The latter felt especially small-time and chumpy.

More recently, Sophie Peel of the Willamette Week has led a barrage of investigative reporting of La Mota, Oregon’s second-largest dispensary chain. OLCC continued to issue licenses to that rogue retailer despite the fact that La Mota had been: a) saddled with millions of dollars in state tax liens, b) sued more than 30 times by unpaid vendors, mistreated employees and others, and c) charged with attempted diversion of 148 pounds of cannabis inventory, among other serious no-nos, in a case that settled in early 2020.

OLCC and the big cannabis retailers, going back

The La Mota “diversion” case went on for a couple of years. We had clients watching closely, including one larger outfit that was ready to pounce. A general assumption was that, given the nature of the charges and evidence, La Mota was cooked and those stores would be up for grabs. It didn’t turn out that way, of course: La Mota paid some fines and returned to business as usual. Over that same period, OLCC revoked the licenses of many smaller outfits, often for lesser charges. Some of them couldn’t afford to fight.

During all of that, we settled one particularly interesting case with OLCC. Our licensee client was known as Rose City Buds & Flowers. It was a small store owned by a woman who had agreed to sell to Nectar, the state’s larges retailer. Prior to seeking OLCC permission, as required, Nectar effectively bought the store but refused to share profits with Rose City. Nectar then committed a series of further OLCC violations at the store that accrued to our client’s license. The Commission decided to license Nectar and approve the transaction regardless, throwing the book at our client on the way out the door. (Nectar subsequently refused to pay Rose City for the store; our client was forced to sue.)

Ironically, the published settlement between Rose City and OLCC ran alongside stipulated settlements between OLCC and Nectar for other violations, elsewhere, including a series of Category I, II and III violations. And those were not the first allegations or slap-on-the-wrist settlements between OLCC and the chain. A year later, the Commission and Nectar settled an avalanche of 28 new charges where again, many industry watchers thought a prominent chain would be cooked. These violations occurred up and down the Nectar supply chain from things like delivering cannabis to unlicensed residences (“diversion”; perhaps the strictest no-no), to not keeping required surveillance at licensed premises. The charges mostly arose from a “routine traffic stop” by police, which turned out to be an unmarked, un-manifested U-Haul truck, running Nectar cannabis.

The most recent settlements occurred in May of 2020. Since then, OLCC has been talking tough about “bad actors” (their words), but using its cudgel to beat down small operators. No big outfit has had its license revoked. A beatdown may come in a variety of ways: often, a Notice of Proposed License Cancellation is enough, as many in the struggling industry don’t have the wherewithal to fight.

We’ve also seen OLCC bend and break its own purported “policies” around infractions and settlement. In one particularly frustrating case, our client self-reported a violation of providing literally one marijuana item, off-site, to a minor. This was wrongful behavior to be sure, but nothing in comparison to the aforementioned cases. OLCC doggedly attempted to cancel his licenses before we helped the client reach a settlement which allowed him to sell his farm and store. OLCC then went dark during the buyer approval process, for many months, effectively killing the sale.

Ultimately, the Commission cited a “policy” around financial interests during settlement to justify the outcome. Not only was this position contrary to the spirit of the settlement; it was inconsistent with the Commission’s “policy” actions on matters my law firm had recently handled. But the client here was finished. He was not a large chain like La Mota, diverting taxpayer money to fight the process. And he went belly up.

Two sets of OLCC cannabis rules and policies

Oregon cannabis is a mess right now. It’s sad. We have great clients who are exasperated with the La Mota story in particular. That rogue outfit moved in down the street from one of them recently, in a smaller community. The client asked me in a call: “How can we compete with that? We pay our vendors. We pay our taxes. We give our employees health insurance and all the rest… La Mota doesn’t pay anyone. They are going to drag prices down to $2/gram next door, and we’ll get killed.”

Nectar, too, is up to its old tricks. We were involved in a sale that closed last year where Nectar again used its “services agreement on steroids” maneuver to effectively purchase a store prior to OLCC approval. Why sellers continue to fall for this sort of thing is very confusing; to wit, not a penny of profit was ever paid by Nectar during the “services” period. (To be fair, it’s possible that OLCC wasn’t aware of what had happened in that particular deal. But when you see the bigger chains operate consistently with impunity, it’s easy to get cynical.)

All of this is exacerbated by the fact that the OLCC is under media scrutiny and seems to be in a state of constant personnel flux. Prior to the Executive Director resigning under scandal, other high-ranking positions on the cannabis side – e.g. Director of Licensing and Director of Compliance – have turned over repeatedly in recent years. Sometimes, these and other key roles have also gone unfilled. The organization is off-track in composition and orientation.

From my chair, when I hear the phrase “OLCC policy”, that’s simply code for “what we want to do here.” When I hear the phrase “for all licensees” that means “for all licensees except big licensees.” So I guess I’m glad I’m not a licensee– especially a smaller one. And while I would like to see the rash of scandals subside, I would also like to see this highlighted and fixed. We need one set of rules and policies for everyone in Oregon cannabis.

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Will the 3rd Time be a Charm for Nebraska and Legalizing Medical Marijuana?




Nebraska legalizes medical marijuana

Nebraskans for Medical Marijuana, an organization formed by a state lawmaker in Nebraska, is optimistic that the third time will be the charm and that medical cannabis will be legalized in the state.


Nebraskans for Medical Marijuana (NMM) turned in two petitions to the secretary of state’s office on Thursday in an effort to start the 2024 election process as Sen. Anna Wishart’s (D) reform measure remains stuck in committee.


Nebraskans for Medical Marijuana’s Third Attempt


In Nebraska, proponents of the drug are attempting a third time to have voters decide the matter. They gathered sufficient signatures to get it on the 2020 ballot, but the state Supreme Court disqualified the proposal because of a legal issue with its single subject. They also failed to gather the necessary number of signatures for updated petitions in 2022 as a result of a large loss of essential money.


Co-chair of the NMM campaign, Crista Eggers, stated in a news release the need to consistently petition the government. She emphasized the Legislature’s defiance in the face of tremendous support from more than 80% of Nebraskans across political lines, geographic regions, and age brackets.


“We have consistently come up empty-handed after more than ten years of advocating, educating, and attempting to follow the right channels through our elected leaders in the Unicameral,” Eggers said. “As a result, we will once more turn to voting as our means of advancement.”


Regarding the newly submitted petitions, Senator Wishart confirmed that the language remains the same as in 2022. She mentioned that the Secretary of State’s office would legally review the petitions.


Renewed Efforts and Revised Petitions for 2024 Ballot


The senator’s proposed legislation on medical cannabis underwent a hearing in the Judiciary Committee of the unicameral legislature in February but has not made any progress. She attributes the lack of action to changes in membership and turnover within the committee. A previous bill version faced a filibuster in the Republican-controlled legislature, ultimately leading to its stagnation.


Regarding the 2024 ballot effort, Wishart expressed determination, stating that they would file again. She believes perseverance is vital to success; every setback they encounter only strengthens their resolve.



Wishart also highlighted their experience from the previous year, where they realized they didn’t have to rely solely on a major donor for success. She expressed optimism about their achievements with over a year of collection time. They gathered 180,000 signatures in just three months through a volunteer-led effort with limited resources.


One of the initiatives submitted by the campaign on Thursday aims to ensure legal protection for doctors who recommend cannabis and patients who use and possess it. The initiative focuses on patients and seeks to establish a state statute that exempts them from penalties under state and local law when they possess limited quantities of cannabis for medical purposes with a written recommendation from a healthcare practitioner. Additionally, it allows caregivers to assist qualified patients in these activities.


The second measure proposes the creation of the Nebraska Medical Cannabis Commission, which would be responsible for registering and regulating individuals involved in the possession, manufacturing, distribution, delivery, and dispensing of medical cannabis.


To prevent potential legal obstacles similar to the single-subject challenge that hindered the previous reform effort in 2020, the complementary proposals have been carefully designed to maintain a narrow focus. The aim is to ensure that each initiative addresses a specific subject matter, minimizing the chances of derailment.


Despite the disappointment caused by the Nebraska Supreme Court’s ruling on the single subject issue in 2020, Adam Morfeld, co-chair of NMM and a former Nebraska senator, emphasized that the ruling provided valuable guidance for refiling a new initiative. After thoroughly examining the court’s decision, the campaign has developed two new statutory initiatives that they are confident will meet constitutional requirements.


To secure a spot on the November 2024 ballot, the campaign needs to gather approximately 87,000 valid signatures for each petition and submit them by July 5, 2024. Activists have announced their plan to commence a signature drive at the beginning of June.


Following the setback faced in 2022 regarding medical cannabis, there were initial considerations of pursuing an adult-use legalization initiative. However, the current focus of the strategy seems to be solely on medical marijuana.


Lessons Learned and Ongoing Challenges


There are just three states without a medical cannabis program, including Nebraska. However, the National Conference of State Legislators claims that some states have low-THC programs.


State Senator Anna Wishart speculated that there might have been an error the first time.


She said, “they sold themselves short when we thought we had to wait for a major donor. They fell short by less than 10,000 signatures on the two petitions last year. We accomplished that with volunteers in three months. Imagine what we can achieve in a year and a half.


In 38 of Nebraska’s 93 counties, petitioners must also collect the signatures of 5% of the registered voters. They attempted to sue over that in the past but were unsuccessful.


Support from Medical Professionals and Patient Advocacy Groups


As a potential treatment for several medical problems, medical marijuana is receiving more and more support from physicians and other healthcare professionals. Medical professionals and patient advocacy organizations have significantly contributed to Nebraska’s current medical cannabis petition campaign. The campaign has received strong support from organizations like the Nebraska Medical Association and regional patient advocacy groups, who have highlighted the potential advantages of cannabis-based medicines for treating patients’ pain and enhancing their quality of life. Their backing gives the petition more authority and informs the public about medical cannabis’s therapeutic potential.


Nebraskans for Medical Marijuana improves their argument for legalization by working with healthcare providers and patient advocacy organizations, highlighting the medical necessity and beneficial effects on patients’ lives. These professionals’ engagement strengthens the campaign’s legitimacy and gives it a powerful voice in promoting compassionate and fact-based healthcare solutions.


Bottom Line

Nebraskans for Medical Marijuana is on its third attempt to legalize medical cannabis in Nebraska. Despite previous obstacles, the organization remains optimistic and determined in its pursuit. Supported by medical professionals, patient advocacy groups, and a dedicated team of volunteers, they aim to gather the required signatures to secure a place on the 2024 ballot. The proposed initiatives focus on safeguarding doctors and patients and establishing regulations for the medical cannabis industry. While challenges persist, the campaign draws inspiration from past experiences and the unwavering belief in the power of public support. Nebraskans for Medical Marijuana continues to advocate for the advancement of medical cannabis, fueling hope for its legalization in Nebraska.





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New York Cannabis: The New True Party of Interest Rule




New York’s release of the revised adult-use rules and regulations has been well-publicized. A key revision that was the source of significant speculation was whether the Office of Cannabis Management (OCM) and Cannabis Control Board (CCB) would revise the True Party of Interest (TPI) definition with respect to ancillary service providers and the monetary limits before TPI status is triggered. And they did!

The revised TPI limits apply to the following parties:

  • Parties with risk sharing or goods and services agreements with the applicant/licensee;
  • Parties that consult and receive flat or hourly compensation from an applicant/licensee under a goods and services agreement; and
  • Goods and services provides that do not have any right to control the applicant/licensee.

Any party that falls under the aforementioned categories does not constitute a TPI as long as the payments in “that calendar year” do not “exceed the greater of”

  • 10% of the gross revenue of the applicant/licensee;
  • 50% of the net profit of the applicant/licensee; or
  • $250,00 from the applicant/licensee.

The key revision was increasing the dollar figure amount from $100,000 to $250,000, which will be particularly relevant to service providers to licensees in their first year(s) of operation, when gross revenue and/or net profit has the potential to be low.

Practically speaking, it will be interesting to see how the OCM actually applies this rule, given that gross revenue and net profit for a calendar year cannot actually be calculated until the end of the calendar year. It would not be surprising to see service providers structure contracts with a base compensation of $250 plus a year-end “true up” based on the licensee’s gross revenue or net profit.

We will keep working through the significant revisions to New York’s adult-use rules and regulations. Stay tuned!

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The Cannabis Correlation – Every $1 Spent on Cannabis Leads to a Drop in Alcohol Sales of $0.75 to $0.85 Says New Canadian Study




weed correlation to booze sales

New Study Finds That Every Dollar Of Cannabis Sold Is Linked to a Reduction in Alcohol Sales

…. A Threat To Big Alcohol?


Big players in the alcohol industry have long been watching the development of legal cannabis with a careful eye, most especially with the launch of recreational cannabis markets in North America and beyond.


While some players in the alcohol industry see cannabis legalization as a threat, others see it as a special opportunity to develop new products and attract a new customer base. Customers themselves are becoming increasingly more educated about the harms of vices once thought as safe and normal – most especially alcohol consumption. The use of marijuana is already seen as normal in today’s society, and a safer substitute to alcohol.


Now, a recent study from Canadian researchers confirms that sales of medical marijuana are linked to a decrease in booze sales. The findings, which were published in the medical journal Health Policy, showed that medical marijuana legalization in Canada in particular may have prompted customers to substitute it for alcohol. The study was led by Professor Michael J. Armstrong of Brock University, who studied the sales of legal cannabis to those of wine, beer, and other liquor from 2015 through 2018 in Canada.

Specifically, he discovered that for every dollar of legal marijuana sold, there was a tie to declines in alcohol sales between 74 to 84 Canadian cents. Prof. Armstrong says the findings are not causative though it does suggest that alcohol is being replaced by cannabis. Additionally, he found that sales of alcohol from 2017 to 2018 were around 1.8% less than they would have been, had Canada not regulated medical cannabis.


“The negative association was robust to several alternative modeling choices,” he writes.


“From an academic perspective, this study found evidence that cannabis on average was a substitute, not a complement, for alcohol in Canada. This suggests cannabis might also have a substitution effect in other countries that legalize it, though that remains to be seen,” says Professor Armstrong in the paper.


“From a public health perspective, the results likewise imply that reductions in alcohol-related health impacts might partly offset the increased cannabis-related health impacts that legalization might bring,” he continues. “Furthermore, medical cannabis presumably improves the health of at least some patients by treating symptoms that alcohol had merely masked,” Armstrong says.


“Finally, from a political perspective, the results could make cannabis legalization slightly less attractive as financial policy but slightly less concerning as public health policy. This might influence legislative decisions in other countries that are considering legalization,” he adds.


Can Marijuana Substitute Alcohol?


Alcohol and marijuana are both mind-altering substances which have been used since ancient times by civilizations around the world for enjoyment. However, they are very different: consuming too much alcohol even just on one occasion or over a long period of time can result in serious health problems.


Alcoholism is a real problem in today’s society. Based on the 2021 National Survey on Drug Use and Health, almost 30 million people from ages 12 and up have experienced alcohol use disorder. Considering how widely available and easily accessible alcohol is, and the damage this can cause to families, our bodies, and society as a whole, these figures are downright shocking and scary.


Before discussing the use of marijuana as a substitute for alcohol, we must take note that anyone struggling with alcoholism or alcohol use disorder need to work with a medical professional to wean themselves off safely. Having a mental or physical dependency on alcohol is vastly different from an individual who merely wants to cut down on their drinking. You can also speak with a cannabis-knowledgeable doctor, if medical marijuana is legal in your state, about the possibility of integrating CBD into your therapy. There has been some research suggesting that CBD may indeed be useful for reducing alcohol cravings and helping individuals safely wean themselves off the drug.


That said, cannabis is a much safer substance compared to alcohol in more ways than one.


Alcohol alone is responsible for the deaths of 2.8 million each year around the world. Despite the research and illness we see caused by alcohol today, it is still among the leading causes for death and disability particularly cancer. It has been linked to around 60 chronic and acute diseases including heart disease, stroke, high blood pressure, breast cancer, dementia, and much more.


On the other hand, marijuana has never killed anyone. You can’t even overdose on cannabis. It’s significantly less addictive and less harmful, though possibilities of dependency still exist, but thousands of people around the world are able to consume cannabis responsibly. You can use pot instead of drinking wine at the end of a stressful day at work, to help you cope with everyday anxiety and depression, or even to help with chronic disease.




We do hope to see more studies verifying that cannabis sales result in less alcohol sales. This is only going to benefit society and our health as a whole.


But Big Alcohol doesn’t have to suffer the economic impact. If you can’t beat em, join em! And that’s what many alcohol companies are doing now: taking advantage of the opportunities presented by the growing trend of increased cannabis intake, by developing cannabis-infused beverages that merge the best of both worlds. Consumers also no longer have to choose between one or the other when you opt for a THC or CBD infused drink.





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