Skip to content

Review of Updates to OLCC Rules (Part 1)

Papers magnifine glass med

The OLCC recently updated its application rules, including definitions of “licensee,” in an attempt to streamline the licensing process, and hopefully speed up some of the backlog that has consistently plagued the industry for the last several years. Most of the changes apply to who must be listed on the license, and what types of information needs to be provided to the OLCC at the time of application, but there are a few other miscellaneous updates as well.

This is Part 1 of a two-part series. This first part will discuss updates to the definition of “Licensee” and “Applicants,” updates to the information that OLCC requires for an application, and the new rule allowing changes of locations for applicants, other than producers, in the queue.

For all applications currently in the queue, the OLCC will be requesting the applicants to provide an updated application form that complies with the new rules. The new forms are much less onerous to fill out than the old, and should assist in streamlining the process.

Definition of “Licensee

The definition of “licensee” in 845-025-1015(47) has been updated to include “each applicant listed on an application that the Commission has approved and each individual who the Commission has added to the license.” It’s worth noting that this actually makes the definition broader – any individual that the OLCC requires to be added to the license, including financial interest holders, will be a licensee. However, since financial interest holders are not automatically reported to the OLCC, they wouldn’t be added to the license unless the OLCC requests their information.

Updates to Information Required for License Application

As an initial matter, the OLCC moved the definition of “applicants” from 845-025-1030 to 845-025-1045, which makes sense, because 845-025-1045 is where the definition of “ownership interest” may also be found.

Additionally, the documents and information required in the initial application have been pared back. After the rule changes, the OLCC is only going to require the following information from all applicants:

  1. Names and required information for individuals and legal entities who are applicants. The rule used to require information for financial interest holders as well, but does not any longer, although the OLCC may request that information;
  2. OLCC-required forms and the information in those forms;
  3. Premises map and floor plan;
  4. Operating plan (which is included in the application form). A separate plan is no longer required.

Under the previous rules, information or fingerprints for background checks were required to be submitted with the initial application. That rule has been removed, and now the OLCC is allowed to require that information of any applicant or financial interest holder, but does not need it in the initial application. Additionally, the OLCC no longer requires proof of the right to occupy the premises, but again may request it. The operating plan is now explicitly included in the application form, which has been the practice for a while, but the rule was never updated.

Producers need no longer provide information on canopy size and designation of canopy area within the license premises, but only need to provide production tier and producer type. The OLCC may request a designation of the canopy area within the licensed premises, but it does not need to be on the initial application. A description of the grow operation is no longer required at all, and is not among the information the OLCC may request later, so that is a burden on producers that has been eased. Finally, the initial application need only include an attestation that the producer has a legal source of water, although the OLCC may ask for proof.

Processors are no longer required to provide a description of the product type to be processed along with information about the equipment and chemicals used.

Updates to Applicants

Guidance from the OLCC released on October 15, 2020 indicates that OLCC will no longer routinely collect information on financial interest holders, AND that it is the licensee’s responsibility to correctly identify all “applicants” to the license. The definition of “Applicants” in 845-025-1045(3) and 845-025-1045(4) has been updated to include only:

  1. Individuals or legal entities who hold or control a direct or indirect interest of 20% or more in the business;
  2. Individuals or legal entities that have an ownership interest. The definition of “ownership interest” was not changed with this round of rule changes; and
  3. If the applicant is an entity, the following persons must also be listed as applicants:
    • General partners in a limited partnership;
    • Managers of a manager-managed LLC; and
    • Principal officers of corporate applicants.

If the applicant is an entity, the OLCC used to require more individuals or entities to be disclosed, but has pared back the requirements here too. In particular, the following individuals and entities used to be required on the application, and are no longer required:

  1. Limited partners whose investment commitment is 10% or more of total investment commitments;
  2. All members in an LLC or partnership whose commitments or membership interest is 10% or more;
  3. All directors who own or control 3% or more of the voting stock; and
  4. Natural person stockholders owning or controlling 10% or more of the voting stock of a corporate entity.

The OLCC has also included some helpful guidance for determining if your interest in a license is over 20% or not. This is particularly useful for any licensee owned by several levels of entities. For example, if the license is owned by Company A, and twenty percent of Company A is owned by Company B, then if Company B is owned equally between two individuals, each individual has a 10% interest in Company A, and neither is therefore an “applicant.”

Changes to Locations for Applicants in the Queue

845-025-1132(3) changed the blanket prohibition on changes to locations for applications, so that under the new rules, only producers who applied on or before June 15, 2018 are prohibited from changing the location on an application, and only until January 2, 2022. That means that processors, wholesalers, and retailers are allowed to change the location on an application, no matter when they applied.

Part 2 of this series will cover changes to the rules regarding business structure updates, and other miscellaneous rules changes. The business structure updates are particularly exciting for anyone looking to make changes to their business structure, as several types of changes no longer need to be sent to OLCC for notification or approval.

McGlinchey logo

Green Light Attorneys Perry N. Salzhauer, Daniel Shortt, and Brittany Adikes have joined McGlinchey Stafford