OLCC trims backlog of marijuana license cases; liquor store expansion meets demand

PORTLAND, Ore. (KTVZ) — The Oregon Liquor and Cannabis Commission’s Administrative Hearings Division has significantly reduced the backlog of violation cases against OLCC marijuana licensees, the commission learned at its regularly scheduled monthly meeting.

Commissioners also approved three stipulated settlements for violations committed by marijuana licensees.

The agency had been facing a backlog of close to 500 cases for alleged violations committed by licensees. Some of the alleged violations dated back several years to before the start of the COVID-19 pandemic, yet licensees had not been formally charged under the administrative process, essentially leaving them in limbo.

After OLCC’s Administrative Hearings Division (AHD) reviewed all of the backlogged cases, it reduced the number of cases that will potentially be formally charged to 40. The other cases were processed through the use of informal and formal warnings. The OLCC gave warnings to licensees that took the corrective action needed to get back in compliance with OLCC rules.

“We’re finding now with the evolution of the industry, there can be a little more tolerance of a violation,” said Rich Evans, Sr. Director of Licensing & Compliance. “Some of the violations we were charging in 2019 and moving the cases forward are actually handled in a different manner today.”

To qualify for a warning, a licensee or cannabis company needed to have an otherwise exemplary record, a history of cooperation with the OLCC, and had corrected and not repeated the original violation. Some of the correctable offenses have included [surveillance] camera issues, unreported changes in ownership or unreported changes in financial interests in a licensed cannabis business.

The change in approach to handling marijuana violation cases also reflects the evolution of the regulatory environment compared to when the OLCC issued Oregon’s first marijuana licenses. In 2016 Oregon was one of just four states allowing the sale of adult-use cannabis, and legalized states were following the informal guidelines established in the Cole Memorandum issued by the US Department of Justice.

To better manage the agency’s high case counts OLCC’s AHD is adding more case presenters and will do more formal data collection of the time spent on violation cases from start to finish; analysis of that data will be used to further adjust and streamline caseloads.

The Commission also approved the following violation fines and suspensions based on stipulated settlements (detailed information on specific cases can be found here on the OLCC website):

SOUTHERN OREGON CANNABIS CONNECTION in Grants Pass, a recreational marijuana retailer, will pay a $4,000 fine OR serve a 16-day recreational marijuana producer license suspension for two violations.

Licensee is: Iron Cross Enterprises, LLC; Fred Tamayo, Managing Member.

WICKED FLOWER FARMS, a recreational marijuana producer, will surrender its license for one violation, on the date the transfer of ownership of the business is completed or on May 18, 2022, whichever is earlier.

Licensee is: Wicked Flower Farms, LLC; Jeremy Hayes, Member.

THE WICKED FLOWER SHOPPE in Medford, a recreational marijuana retailer, will surrender its license for one violation, on the date the transfer of ownership of the business is completed or on May 18, 2022, whichever is earlier.

Licensee is: Wicked Flower Shop, LLC; Jeremy Hayes, Member.

*The locations of OLCC marijuana producer, processor and wholesale licensees are exempt from public disclosure under Oregon law. 

A copy of the Stipulated Settlement Agreements for Marijuana Violation Cases can be found on the OLCC website, on the Laws & Rules page under the Final Orders section.

Meanwhile, the steady addition of independently owned and operated liquor stores across Oregon is helping meet customer demand for products while keeping pace with Oregon’s growing population, according to the OLCC. That assessment of the agency’s retail store expansion was presented as part of an annual business review provided to Commissioners during their regularly scheduled monthly meeting.

In other business, the Commission unanimously supported the renewal of 23 liquor store agent agreements, and approved one stipulated agreement.

The retail liquor store expansion effort was launched in 2015 with the objective of providing consumers greater convenience and improved product offerings. Expansion also generates small business opportunities for Oregonians to own and operate liquor stores while providing support to Oregon’s hospitality industry. Liquor stores sell and deliver distilled spirits to restaurants, bars and hotels which historically represents between 20 to 25 percent of all liquor sales.

 “Locally owned liquor stores are a vital business partners for Oregon’s hospitality industry statewide and our expansion is mindful of the need for a strong and dependable business-to-business supply chain,” said Chris Mayton, Director of the OLCC Distilled Spirits Program. 

During the six-year expansion, 36 additional liquor stores have opened across Oregon, bringing the total to 281 stores*. In that same period, for all stores, the average sales per liquor store improved from $2.3 million to $2.9 million, a more than 25% increase (4.3% annualized.)

To date, the stores added during retail expansion have generated more than $287 million in revenue, producing about $109 million in funding for state programs, and created more than 165 new jobs. The OLCC previously reported that Oregon’s liquor stores sales set a new high of $813 million in 2021.

The sales of distilled spirits by liquor stores is projected to generate $631 million dollars (2021-23 budget) distributed to state, county, and city services for education, health, public safety and other public services.

“Our partnerships and contracts with all these private businesses that sell distilled spirits, are the key ingredient to us being able to meet demand and providing access to local and world class products,” said Steve Marks, OLCC Executive Director. “OLCC’s successful work to tie store expansion to population growth is mission driven. The agency strives to balance sustained consumer satisfaction and the prosperity of the hospitality industry, with public safety and considerations along with our fiscal responsibility for ensuring predictable and stable revenue growth for state and local public services.”

First-time liquor stores have opened in Parkdale, Selma, and Terrebonne, while the metropolitan areas in Bend, Eugene, Medford, Portland and Salem added a combined 21 stores. The measured store growth is in part based on population; in 2015 there was one liquor store for roughly every 16 thousand residents; today there is one liquor store for every 15 thousand residents. In 2015, Oregon had slightly over 4 million residents, today the state has more than 4.2 million residents.

The Commissioners also ratified the following stipulated settlement agreement (detailed information on specific cases can be found on the OLCC website):

NOI THAI (FCOM) Two of the five members of Noi Thai, LLC in Bend were convicted in December 2019 of defrauding the government for using software in their restaurants to skim cash sales from their books, resulting in a percentage of their sales being unreported. The Licensee has accepted responsibility, the two convicted members are required to divest their interest in the business and are subject to license restrictions preventing them from participating in the operation or management AND will either pay a $4,950 civil penalty OR serve a 30-day license suspension.

Licensees are: Noi, LLC; Pornchai Chaiseeha, Managing Member; Settapong Nilket, Member; Jantana Chaiseeha, Member; Chadillada Lapangkura, Member; Chanpen Lapangkura, Member.

*Currently three stores are not operational (Blue River, Camas Valley, Garden Home)