As far as I know, the OLCC is a party to two, separate litigations surrounding its administrative rules. The first lawsuit relates to Ballot Measure 119, which is a unionization measure applicable to most classes of Oregon marijuana licensees. The second lawsuit concerns rules that require retail applicants to acquire a certificate of tax compliance (or enter into an approved payment plan) at license renewal.
Both cases have been decided, subject to appeal. OLCC is batting .500 so far, with a loss in the unionization case and a win in the tax compliance case. Today, I'll tour your briefly through each litigation.
The Ballot Measure 119 case
BM 119 required most Oregon cannabis businesses to enter into labor peace agreements with approved unions, in order to renew or obtain licensure. On May 20th, the Oregon District Court ruled against OLCC. (Technically, the defendants are the OLCC Chair and its former Executive Director, along with other state actors). You can view my May 20th post explaining the ruling here.
On June 11th, OLCC et al. paid $605 and submitted a Notice of Appeal to the U.S. Court of Appeals for the 9th Circuit. That august body then set a September 3rd deadline for the state to provide an opening brief. The plaintiffs (who are OLCC licensees) must file a reply brief by October 3rd. With luck, we'll have a ruling around a year from now. As the Court's website notes, oral argument usually follows "approximately four months from completion of briefing." Most cases are then decided "within 3 months to a year after submission [of all arguments, including oral argument]."
I don't plan to follow the briefing or argument on this case closely, but will update once the court reaches a decision— or on the off chance there is a settlement prior. In keeping with everything I've written before, I don't think the state has a great case, and I think BM 119 was a big waste of taxpayer money. But, as my law partner recently said, "the executive branch is on the rise conceptually." So let's see if these unionization rules can be resuscitated.
The tax compliance case
This case was decided a couple of weeks ago in the Oregon Court of Appeals. Sophie Peel of the Willamette Week published a summary earlier this week here. If you'd like to read the actual opinion, I've got it here.
In short, a couple of cannabis businesses sued the OLCC to invalidate its rules requiring all retailer applicants to provide a certificate of tax compliance, to receive a license renewal. The petitioners argued that the rules "exceed the statutory authority of the agency" under ORS 183.400 review. The Court disagreed.
The court's analysis is concise, harkening back to Measure 91 of 2014 which mandated that the legislature and OLCC "establish a comprehensive regulatory framework concerning marijuana under existing state law." The opinion then looks at the statutory and rules-based prongs under which OLCC can refuse to grant a license, including for want of "financial responsibility", "good repute and moral character", etc., and finds that OLCC acted comfortably within its authority here.
I know the attorneys who argued this case on both sides, and my law firm has had certain dealings with the petitioners, so I'll reserve further commentary– except to say that the ruling seems to adopt much of the State's briefing, which is an easy out if the Court is simply thinking "pay your damn taxes." To wit, the opinion gives little consideration to the petitioners' arguments that cannabis businesses are treated differently than any other type of business—including heavily regulated businesses—with these rules.
In the Willamette Week story, the petitioner's attorney is quoted as saying that "he is still considering whether to advise his clients to appeal the July 9 ruling to the Oregon Supreme Court." So let's see.
Bottom line
Bottom line for now is that OLCC licensees: 1) don't have to sign labor peace agreements or stay silent during unionization efforts, but 2) do have to pay their taxes. If any of that changes, or becomes irreversibly settled law, we'll let you know.
OLCC Litigation Updates: Unionization, Tax Compliance Rules
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