When Oregon voters legalized recreational cannabis in 2014, the Oregon Liquor Control Commission was given the responsibility for the licensing and regulation of cannabis businesses. Unlike other states, Oregon was meant to have a non-competitive licensing system with no limit on the total number of licenses issued. This approach was intended to encourage existing medical cannabis growers and dispensaries to enter into the regulated market and allow women, minorities and other entrepreneurs the opportunity to participate in the new cannabis economy.
While the licensing system initially worked well, the system hasessentially ground to a halt. According to the OLCC’s website, the agency is just now processing applications to grow recreational cannabis that were filed in February 2018. It’s not much better for those seeking licenses to process, sell or distribute cannabis. The agency is just now getting to applications filed in June 2018. That means the OLCC is more than two years behind in issuing licenses and there is no point in filing a new application for eligible business types.
As a lawyer in this space since before legalization, I know that those waiting for licenses include small businesses that have been stretched thin by the delays. They have built out facilities to comply with regulations, paid rent each month, accepted money from investors and now have little hope that they will ever be able to operate. One client, Adam Dunn, filed for a processor’s license two years ago, spent $300,000 on security and construction and has been paying rent since 2018. With the current backlog, he will likely still wait years to receive approval. This is the same story I hear over and over as desperate applicants find themselves in permanent limbo.
The OLCC is not even able to provide any timeline to applicants, denying them the ability to make informed decisions about crucial issues such as whether to keep a lease or buy equipment. As the agency communicated to me in a recent email, “We do not have a way of giving any sort of accurate estimate as to when a certain new application may receive an assessment of its readiness to be assigned.”
At the same time, the OLCC has prioritized change-of-ownership applications, which favor large businesses that can afford to buy an established operation – and its license. This prioritization has created a secondary market for licenses ensuring that large, and often multi-state operators can grow their companies while others lose months, years, and in some cases, everything they have while they wait. In contrast to the backlog on new licenses, the OLCC is working on change of ownership applications submitted in 2020 with the average wait time being 157 days, according to a public records request.
It is time for the OLCC to turn all its attention and resources to addressing this crisis. The agency does not have the statutory authority to unilaterally stop issuing new licenses that were lawfully applied for. If the OLCC cannot or will not turn their attention to this enormous and years long backlog, the governor’s office should immediately intervene. The Legislature also should mandate strict timelines for the issuance of licenses as well as make sure that the commission is sufficiently funded to provide rapid licensing services for all applicants.
Now, more than ever, in this pandemic-ravaged economy, the state and its agencies should be supporting the exact kind of economic opportunity legalization and regulation that was promised.
By Amy Margolis for oregonlive.com