Oregon Cannabis: What to Watch for in 2021?

As we recently wrote, 2020 was a remarkable year for the Oregon cannabis industry for several reasons including COVID-19 and raging wildfires. This post follows up on the “State of the State” and is a sister post to our California Cannabis: What to Watch for in 2021.

OLCC Enforcement: Although the OLCC began to shift toward a less punitive approach to the enforcement of rule violations in 2020, at least for a few rules, licensees should not expect a sudden turnaround for many violations. The rules give the OLCC and its Case Presenters who prosecute rule violations a great deal of discretion in terms of enforcement and settlement. So, the result in one case may not mean much in another case. This uneven application of the rules continues to create significant risks for licensees, who may find themselves litigating against a particularly aggressive Case Presenter who interprets the rules strictly and narrowly. That said, penalties and settlements for certain kinds of violations (e.g. sales to medical patients over the limit) have coalesced into reasonably predictable patterns judging by the stipulated settlements the OLCC has entered in the past several months. One thing we will be watching is how the new VOC program affects the workload of investigators and Case Presenters and whether the reduced workload will mean increased scrutiny of licensees and how it may affect the OLCC’s willingness to settle matters.

OLCC Rule Changes:  The rules will continue to evolve. In December 2020, the OLCC banned certain additives from cannabis vaping products (the news release is here) and the OLCC met to consider the adoption of rules designed to streamline marijuana licensing (the draft rules are here).  One issue we will be watching closely is how and when the OLCC changes rules it adopted when COVID-19 first began rampaging through the state such as the easing of delivery and curbside pickup rules and the increase to the amount of flower available to OMMP card holders. While we don’t expect that to change any time soon given the prevalence of COVID-19 in Oregon, this is something to keep an eye on.

Marijuana Litigation: As the marijuana industry has matured in Oregon, so too has the litigation. Litigation in the early years tended to involve jolted investors (see hemp!) alleging fraud or waste related to their investment in the “Green Rush.” As in 2020, we expect marijuana litigation in 2021 to involve partnership disputes, minority-interest buyouts, and litigation involving the purchase-and-sale of licensed production, retail, and processing companies and their assets.

Hemp Litigation:  Hemp litigation in 2021 Oregon looks a lot like marijuana litigation did a few years ago. Hemp production businesses are failing left and right thanks to the combination of the FDAs foot-dragging on CBD, the precipitous decline in prices, and unscrupulous operators who took advantage of investors that poured money into hemp with little to no experience. For potential plaintiff-investors, a huge question is whether there is any money out there to be recovered and, if there is any hemp, how and when to convert that into cash to reduce losses.

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