Oregon Cannabis Legislation Update: The Moratorium Bill – House Bill 4016 – Passes
The Oregon OLCC recreational cannabis program had its biggest day to-date of the 2022 legislative session yesterday.
House Bill 4016, which provides for an immediate moratorium on new OLCC recreational marijuana licenses, passed the Oregon senate yesterday twenty-four to three with three senators excused or absent. Next, the bill moves to the governor’s desk for signature.
What does this mean? The OLCC will process all recreational marijuana license applications in the queue that were submitted prior to January 2, 2022 and inactivate all (excepting labs, which are not affected by the moratorium) applications submitted on or after January 2, 2022 that are not part of a change of ownership. A new license moratorium will be in effect until the end of March of 2024.
In short, this brief respite from would-be licensees and expanding cannabis businesses needing to purchase licenses – or, more precisely, purchase the right to have a change of ownership form submitted for their application – is over. Sure, the bill could fail to get signed by the governor, but that is extremely unlikely and I expect only the most cautious of businesspeople will wait until the bill is signed to act. And, sure, you can submit an application until the bill is actually signed into law, but the OLCC is currently experiencing an approximately three month delay in assigning application, so an application submitted now has almost no chance of being assigned before HB 4016 is law.
For the last few weeks, we have been advising clients looking to sell OLCC licenses, or businesses without much value beyond the license, to wait with only a few exceptions. This is because there was significant risk of transactions going sideways based on the progress of HB 4016, leaving the client with expenses and no deal.
If you have been looking to sell, now is the time to start the process. What if you have been considering buying? Honestly, now is the time, too. We expect there to be some confusion and price swings in the market still, with prices likely trending up. Sellers might benefit from eager buyers worried about climbing prices and buyers might benefit from sellers who have not yet caught up with the possible economic effects of the change in law.
As always, purchases and sales of businesses are going strong and are more insulated from the swings in the market for standalone licenses.
If you want to talk about purchasing or selling a recreational marijuana licensed business or license, or if you want to know more about how this legislative session is affecting the Oregon cannabis industry, give us a call.