Oregon’s Moratorium on New Recreational Cannabis Licenses

Oregon Enforces Moratorium on New Recreational Cannabis Licenses

On March 2, 2022, the Oregon State Senate passed HB 4016, which extends and expands the long-standing Oregon Liquor & Cannabis Commission (OLCC) recreational cannabis licensing moratorium. HB 4016 extends the licensing moratorium through at least March 3, 2024. As of the date of this post, HB 4016 is awaiting signature by Governor Brown, and no veto is anticipated.

HB 4016 Extends the Recreational Cannabis Licensing Moratorium to 2024

The licensing moratorium has become a familiar phrase in the Oregon cannabis industry since June 2018, when the OLCC first began limiting new license applications. At that time, the OLCC committed to exclusively processing previously received applications in an effort to prioritize pending applications and stop an ever-increasing backlog. The Oregon legislature gave the OLCC additional support in June 2019 by passing SB 218, which allowed the OLCC to deny producer licenses until January 2, 2022 – what has become known, in common industry parlance, as “the moratorium.” During November 2021, the OLCC announced a resumption in processing new applications for processors, retailers, and laboratories, having attempted to resolve the backlog and streamline licensing processes. However, the OLCC continued to refuse processing producer licenses, as these licenses were covered by SB 218 until 2022.

HB 4016 Expands the Recreational Cannabis Licensing Moratorium to All Categories

HB 4016 is retroactive and expands the OLCC’s prior authority under SB 218. The bill specifically authorizes the OLCC to continue to refuse to process applications for all recreational cannabis licenses – not just producer licenses – “received on or before January 1, 2022.” Therefore, any application received after January 1, 2022, no matter the license type or where the application is in the processing queue, will not be processed.

Applicants who properly submitted a complete application prior to 2022, however, have the option to remain in the queue for a new license. This impacts non-producer applicants who submitted complete applications, including those submitted in November and December of 2021. For this limited category of applicants, a land-use compatibility statement is required before March 23, 2022 to remain in the queue. Additionally, these applicants remain subject to well-known restrictions: they may not change their proposed license location or the majority ownership structure on their application while being in the queue. The OLCC has not provided clarifying guidance on the number of applicants in this group, or the length of anticipated processing time.

Conclusion

Potential entrants to the Oregon cannabis market cannot join by applying for a new license with the OLCC. The only avenue available as a result of HB 4016 is via the secondary license market. Cultiva Law’s depth of experience in OLCC license transfers and regulatory compliance provides cannabis market entrants with viable paths to cannabis entrepreneurship in the shadow of the newly extended and expanded moratorium.