Can a creditor, landlord or other third party take a security interest in an OLCC license? Can an OLCC licensee collateralize or pledge its license– as if that license were personal property, and not just a permission conferred by the state? These are two sides of an academic question we’ve been batting around for years because it has serious, practical implications. The short answer is: “yes, an OLCC license can be collateralized.”
Now, what I just wrote is an unsatisfactory legal answer, for reasons beyond the scope of this article (suffice it to say that it shouldn’t work). But it can and does work regardless. The OLCC agrees. Lawyers in the Oregon cannabis bar also agree. Courts… haven’t disagreed. Thus, some of us cannabis lawyers have been securitizing OLCC licenses, and OLCC licensed businesses, for years.
The rule at issue here is OAR 825-025-1260 (the “Rule”). To paraphrase, the Rule allows OLCC to grant any of the following persons “temporary authority” to operate a licensed business:
A trustee The receiver of an insolvent or bankrupt business The personal representative of a deceased licensee A person holding a [defaulted] security interest in the business
Here’s the documentation OLCC requires
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