Oregon Cannabis: Why Public Records Laws Matter to Oregon Marijuana Businesses

09 Sep Oregon Cannabis: Why Public Records Laws Matter to Oregon Marijuana Businesses

Every state has some form of open records laws. Most of us have probably heard of the Freedom of Information Action (“FOIA”) which is the federal open records law. The purpose of the FOIA according to the U.S. Supreme Court is “to ensure an informed citizenry, vital to the functioning of a democratic society, needed to check against corruption and to hold the governors accountable to the governed.” The purpose of state open records law is no different. Open records laws can serve others purpose beyond the vital roles of checking corruption and holding government officials to account.

This post discusses how licensees and businesses involved in the Oregon recreational marijuana market can—and often do—make use of the Oregon Public Records Act. The Oregon Public Records Act (the “Act”), ORS 192.001 et seq., gives “every person” a right to inspect the public records of a public body unless a specific exemption applies. (The term “every person” includes business entities and partnerships as well).

The Act applies to the Oregon Liquor & Cannabis Commission (“OLCC”) as it is a public body that maintains non-exempt public records. (Side note: the Oregon Liquor Control Commission recently changed “control” to “cannabis”; we are happy about this).

The Act is fairly easy to understand. An agency, like the OLCC, has an obligation to provide non-exempt records upon receipt of a written request. An agency must respond within five business days of a written request to confirm receipt thereof. The Act establishes a baseline that public bodies will complete their responses no later than 15 business days after receiving the request. To be sure there are exceptions to the 15-day deadline, but these are narrow and public bodies carries the burden to demonstrate the applicability of an exception. The general idea is that an agency must complete its response as soon as practicable and without unreasonable delay.

Our firm has been involved in cannabis work for many years, before the OLCC even got involved. We’ve written a lot about the OLCC and the rules it has promulgated governing the licensing of Oregon marijuana producers, processors, and retailers. (See here, here, here, here and here … to name a few).

In representing marijuana businesses, we frequently request records from the OLCC under the Act. We do so for a variety of reasons, each of which stands on its own as evidence that a robust public records law is vital to the Oregon marijuana marketplace.

First – we make public records requests on behalf of clients who find themselves on the wrong end of an OLCC enforcement action. As regular readers know, one of the OLCC’s many jobs is to enforce the laws and administrative rules that govern the Oregon recreational marijuana market.

When the OLCC believes a licensee has engaged in conduct that violates the rules, it issues a charging document that sets forth the alleged violations and the proposed sanctions. Charging documents themselves are usually light on the facts and heavy on technical administrative language.

A licensee who receives a notice of proposed license cancellation (or lesser charge) needs to understand what led the OLCC to issue the charging document, who was involved, and what the OLCC believes happened. A public records request is surefire way to get the OLCC to disclose the documents that underlie the charging document.

Although the OLCC Case Presenter often will provide the underlying reports to an attorney informally, a public records request imposes a legal obligation on the OLCC to provide the requested information. And when a licensee challenges the proposed sanction, thereby commencing an administrative hearing process, a public records request is a nearly sure-fire document discovery tool that a licensee has to seek records.

Requests under the Act are particularly vital when a licensee requires documents beyond what is in the underlying report. Relevant documents might include internal OLCC emails, the results of actions against similarly-situated licensees, or internal OLCC policies and procedures.

In sum, the ability to request and timely obtain public records is an essential part of fending off an enforcement action . . . or realizing that settlement is the only real option.

Second, we often make public records requests for prospective purchasers of already-licensed marijuana businesses. Whether a buyer is looking to enter the market for the first time or is an established multi-state operator looking to increase its holdings in Oregon, every M&A transaction involves (or at least ought to) some form of investigation of the seller. Griffen Thorne has been writing recently on cannabis M&A deals quite a bit. (See here, here, here, here, here, and here . . . to name a few).

One part of any (good) transaction is the due diligence period. Although a seller might represent to a buyer that they are in good standing with the OLCC and that there is nothing to worry about, that is not always the case. We’ve seen deals fall apart after months of work because either the seller was not completely honest or, in a few cases, unaware of adverse action by the OLCC.

A public records request is a critical due diligence tool. A prospective buyer can find out about the seller’s compliance history, whether the OLCC has charged the seller with any violation and the disposition of those actions, and whether the OLCC has any pending investigations or proceedings involving the seller. A public records request is a powerful took in this respect. Not only does the buyer learn about any potential hiccups with the OLCC, the buyer can find out what kind of person they are dealing with on the other side.

Third, we occasionally make public records requests for reasons outside the context of enforcement proceedings or the purchase and sale of a business. The reasons are varied—sometimes they involve civil litigation in which the OLCC is not a party—and I won’t delve into the details. But having a tool to collect accurate information about a particular licensee or other aspects of the Oregon marijuana industry is incredible helpful to marijuana businesses and attorneys. And frankly, for the public.

The point here is that the Oregon Public Records Act serves the public in numerous ways.

The Oregon Legislature can be stingy with the OLCC—surprising treatment for an agency responsible for millions and millions of dollars of state revenue. What the Legislature must realize is that funding the OLCC makes it better for Oregon cannabis and better for Oregonians. We urge the Oregon Legislature to provide OLCC with the funding and tools it needs to comply with the Act, which OLCC has struggled with as of late.