Oregon Hashish: The OLCC License as Safety

October 19, 2023by Naomi Cramer

Can a creditor, landlord or different third social gathering take a safety curiosity in an OLCC license? Can an OLCC licensee collateralize or pledge its license– as if that license had been private property, and never only a permission conferred by the state? These are two sides of an instructional query we’ve been batting round for years as a result of it has severe, sensible implications. The brief reply is: “sure, an OLCC license may be collateralized.”

Now, what I simply wrote is an unsatisfactory authorized reply, for causes past the scope of this text (suffice it to say that it shouldn’t work). However it could possibly and does work regardless. The OLCC agrees. Legal professionals within the Oregon hashish bar additionally agree. Courts… haven’t disagreed. Thus, a few of us hashish lawyers have been securitizing OLCC licenses, and OLCC licensed companies, for years.

The rule at problem right here is OAR 825-025-1260 (the “Rule”). To paraphrase, the Rule permits OLCC to grant any of the next individuals “short-term authority” to function a licensed enterprise:

  • A trustee
  • The receiver of an bancrupt or bankrupt enterprise
  • The private consultant of a deceased licensee
  • An individual holding a [defaulted] safety curiosity within the enterprise

Right here’s the documentation OLCC requires to confer short-term authority beneath the Rule, per a current slide presentation from the Fee itself:

  • For trustees, receiver or private consultant (“PR”)
    • Proof the individual is the authorized trustee, receiver or PR (court order establishing non-licensee’s rights within the enterprise, authorized entry paperwork, and written request for authority)
    • A written request for authority to function because the trustee, receiver, or PR which ought to embody the tackle and phone variety of the trustee, receiver or PR
  • For secured social gathering
    • Proof of a safety curiosity within the licensed enterprise
    • Proof of the licensee’s default on the secured debt
    • Proof of authorized entry to the true property; and
    • A written request for authority to function as a secured social gathering which ought to embody the tackle and phone variety of the secured social gathering

You could have questions at this level. One of many extra compelling is: “what sort of proof of default will OLCC settle for?” The reply is: “a court order is usually required.” In some instances, OLCC can also settle for a licensee’s acknowledgment of its grant of a safety curiosity and subsequent default. My workplace, working with OLCC, the Oregon Division of Justice and one different legislation agency, was in a position to push by means of the primary of those exterior of court on that foundation, again in 2019.

Does it matter {that a} court order isn’t a safety curiosity beneath UCC Article 9? Nope. Does is matter that an OLCC licensee can’t switch or “promote” its license with out OLCC approvals? Nope. None of this issues. All that issues is the truth that OLCC at the moment treats these licenses like private property which may be secured, collateralized, transferred and liquidated for worth. The truth that OLCC isn’t issuing new licenses, but permits the “sale” of present licenses, is in keeping with this remedy.

I ought to emphasize at this level that the Rule contemplates solely a “short-term” operational authority by a 3rd social gathering. The aim of the Rule is to permit a 3rd social gathering to step in and wind up the enterprise, slightly than run the enterprise indefinitely. Thus, when OLCC points an order beneath the Rule, it provides a typical, 60-day horizon. Extensions are liberally granted, supplied the third social gathering can present a passable clarification of want in every case.

I must also emphasize that the Rule will seemingly change subsequent yr, along side rulemaking OLCC plans to undertake on associated ideas of “licensability” and license transfers. (Right here, I’m assuming the HB 4016 license issuance moratorium will probably be prolonged past March 31, 2024.) You possibly can count on to see the Rule constructed out to deal with the adjudicated incapacity of a licensee, for starters. However you may also count on severe dialogue in regards to the elementary validity of a rule or observe that permits a celebration to securitize a “license.” At this level, It’s only a query of whether or not the OLCC addresses this earlier than a court does.

For now, take excellent care in drafting your safety agreements, pledge agreements, leases, and so forth. An OLCC license generally is a precious asset. Failing to collateralize that asset within the method that OLCC wish to see might impair the rights and restoration prospects of anybody owed cash by a licensed enterprise.

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by Naomi Cramer

Auckland Lawyer for FIRST TIME Offenders Seeking to Avoid a Conviction. Family Law Expert in Child Care Custody Disputes. If you are facing Court Naomi will make you feel comfortable every step of the way.  As a consummate professional your goals become hers, with customer service as our top priority. It has always been Naomi’s philosophy to approach whatever you do in life with bold enthusiasm and pure dedication. Complement this with her genuine passion for equal justice and rights for all and you have the formula for success. Naomi is a highly skilled Court lawyer having practised for more than 20 years. She serves the greater Auckland region and can travel to represent clients throughout NZ With extensive experience, an analytical eye for detail, and continuing legal education Naomi’s skill set will maximise your legal rights whilst offering a holistic approach that best fits your individual needs. This is further enhanced with her high level of support and understanding. Naomi will redefine what you expect from your legal professional, facilitating a seamless experience from start to finish.   Her approachable and adaptive demeanor serves her well when working with the diverse cultures that make up the Auckland region. Blend her open and honest approach to her transparent process and you can see why she routinely delivers the satisfying results her clients deserve. If you want to maximise your legal rights, we recommend you book an appointment with Naomi today so she can detail the steps for you to achieve your goals. 

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