New Compliance Demands for Oregon Cannabis Processors – Be Prepared

By Danica Hibpshman

The Oregon Liquor and Cannabis Commission (OLCC) recently published a Compliance Bulletin for licensed cannabis processors. Effective immediately, the OLCC will start requesting additional information on certain processed products on a random basis, as part of their Metrc compliance audit program. These audits are typically treated as educational opportunities when minor discrepancies or errors are discovered, but they can result in more serious enforcement action if severe violations are suspected.

When a processor licensee is selected for a Cannabis Tracking System (CTS) audit, the OLCC may now request copies of the licensee’s written operating procedures and ingredient lists for certain products. The OLCC will expect these procedure documents to exist, to be consistent with CTS data and license privileges, and to match the product’s approved packaging and labeling.

Does OLCC have the authority to request this information?

Yes. The records identified in the OLCC’s recent Bulletin are not new requirements; processors are already required to create and maintain operating procedures that show the steps, processes, and methods used for manufacturing their products. The OLCC can request copies of these records to ensure they exist and match the approved product categories in Metrc. This information was not typically gathered by the OLCC in the past from all processors, nor was it routinely analyzed.

This new component of OLCC Metrc audits makes it clear they are taking a heightened interest in ensuring that products processed in Oregon are manufactured in strict accordance with regulatory requirements. The OLCC will presumably take an education-first approach to these audits, working with licensees to address any deficiencies in their operating procedures – unless they are so significant as to threaten public health and safety.

Your legal counsel can assist you in navigating any corrective action from the OLCC.

What can you do to ensure compliance?

Many processors have never been asked by the OLCC to review their standard operating procedures – at least not since their initial licensing. A processor may have since made modifications to their processes, but may not have properly updated their operating procedures as required by the OLCC rule. With the OLCC’s new proactive audit approach including requests for this information, now is an excellent time to review all of your standard operating procedures, ingredient lists, or other similar materials documenting your processing steps.

Compare your materials with the requirements listed in the OLCC Bulletin to ensure they are compliant, or contact one of Tonkon Torp’s experienced cannabis attorneys for further guidance.

How can you protect your confidential or proprietary information?

Many processors consider the information in their standard operation procedures to be proprietary when it describes their methods, ingredients, and steps for creating products. Formulas, techniques, processes, ingredient lists, and other information contained in these types of documents may in fact be considered trade secrets. Documents produced to a government agency, however, can be subject to public records requests, with limited exception for certain confidential or proprietary information. If you believe your standard operating procedures are proprietary, consult with legal counsel on how to properly designate your documentation before responding to audit requests. As you review your materials (as suggested above), consider whether your proprietary materials are properly marked and subject to sufficient protection measures to qualify as trade secrets.

Further questions? Contact one of Tonkon Torp’s experienced cannabis attorneys for more information.

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