Oregon Regulator Shuts Down 2 Marijuana Businesses for Rule Violations

The Oregon Liquor Control Commission is sending a strong message that marijuana establishments must comply with the regulations or be shut down permanently. The Commission shut down two licensees based on significant regulatory violations including misrepresentation and evidence tampering. The Commission’s decision to terminate the license of serious rule offenders is consistent with last month’s determination to revoke the license of Black Market Distribution due to recidivist activity.

First, the Commission upheld the temporary suspension by an administrative law judge of the Corvallis Cannabis Club’s retail license due to federal criminal investigations. The Commission charged the Corvallis Cannabis Club with five (5) violations following a search warrant that was executed by federal investigators.

The Commission also cancelled the recreational marijuana producer license held by the High Cascades Farm of Bend for thirteen (13) significant violations ranging from performing activities outside the authorized scope of the license, misrepresenting the destruction of marijuana plants, intentionally destroying or concealing evidence, and failing to disclose financial owners. The violations cited by the Commission show an intentional attempt to circumvent the regulations for the entity’s financial benefit.

Compliance with regulatory requirements is going heavily scrutinized as the marijuana industry matures and more states enter into the market. Regulators are armed with significant information through the seed-to-sale tracking systems that allow them to identify potentially fraudulent activity which they have the broad authority to investigate. Licensees must be familiar with the regulatory requirements and ensure that compliance systems are in place to identify any misconduct or failing controls. The penalties for failing to do so are significant and can result in the loss of a business.