By Danica Hibpshman and Jessica Morgan
Since June 2018, Oregon has not processed new applications for any cannabis license type. Due to concerns of a large cannabis oversupply, and a flood of applications, Oregon’s cannabis regulatory agency, the Oregon Liquor and Cannabis Commission (OLCC), “paused” the processing of new applications effective June 15, 2018. Only applications submitted on or prior to that date are eligible for investigation and potential issuance. During the 2019 legislative session, new producer applications were further prohibited in statute until at least January 2022, in what is often referred to as the “producer moratorium.”
Since the pause and moratorium were put in place, the OLCC has expended considerable resources and effort to streamline their licensing processes and reduce requirements that often made obtaining a license more burdensome than necessary. As a result, they have almost entirely eliminated the backlog of applications. The OLCC has publicly stated that it is nearly operationally ready to being processing new applications again. Meanwhile, SB 218 is scheduled to sunset in January 2022, thereby lifting the statutory prohibition on new producer licenses. These factors beg the question that so many are now asking: how soon will Oregon start allowing new applications for licenses?
Lifting of the Moratorium and Pause on New Licenses
For now, it is still unknown as to when the OLCC will start processing new applications, but it does not appear imminent. The OLCC pause on processing applications for new retail, processor, laboratory, or wholesale licenses is set entirely in agency policy, not statute. Although the statutory prohibition on new producers ends in January 2022, nothing prevents the OLCC from continuing a pause on processing even that license type.
Recently, the OLCC held an advisory committee meeting in which this topic was discussed at length (link to audio). The large majority of the committee advised the OLCC to carefully consider market conditions, their resources, equity issues, and more in evaluating whether or not to allow new license applications. There were many recommendations that the OLCC allow the Oregon legislature to weigh in on the issue during their 2022 legislative session. The OLCC is not bound to take the committee’s recommendations, but it does appear to be carefully considering the feedback received.
Even if the OLCC begins processing new applications in the near future, it is likely there will be new parameters put in place to limit the flow of new licenses issued and to ensure market conditions remain stable and OLCC resources are not overtaxed. Opening the licensing window again without guardrails could result in a large influx of applications for the OLCC to process, which could slow down processing timelines and make it difficult to predict how long it takes to obtain a new license.
Therefore, for the near future it appears likely that the main way to obtain a cannabis license will be through purchasing one. Since every license and transaction can be different, it is important to consult with your legal counsel before embarking on the process of license transfer.
Stay tuned for our next installment in this article to learn more about license transfers.
If you have any questions on cannabis licensing, please contact Jessica Morgan (firstname.lastname@example.org or 503.802.2165), or one of Tonkon Torp’s experienced cannabis legal team for further assistance.