Great news, from the Governor's office!

On Tuesday May 16th, Oregon's own Tina Kotek announced her intent that the OLCC make current tax compliance a requirement for the agency to renew or issue dispensary licenses. This is in direct response to dispensary chain La Mota's more-than cozy-and well-exposed financial contributions to various state agencies, elected officials and even her own election campaign to become governor, in lieu of paying their fair share of millions more dollars in taxes.

Was this a step forward? Absolutely yes. Is it a good and necessary step for our industry towards accountability and community stewardship? Undoubtedly.

More importantly, however: is it also an impotent promise that does more to distance governor Kotek from the unethical behaviors and associations that helped her eke out a narrow win in a tight race for control of the state, leaving the hard work of proper governance and actionable reform down the road for somebody else to address? Of course it is. Unequivocally so. She buried the lead big time, and it needs to be discussed. 

Here's one issue: by the state's own account, there are currently 823 retail licenses. That said, at any given time there are anywhere between 450 - 500 active dispensaries with doors open, give or take. The remainder of licenses are either not currently active, waiting on local approval or et cetera.

There's nothing to stop an unscrupulous company who'd rather manipulate politicians than pay their full tax bill from obtaining more licenses than they initially need, and then just opening up another company with the same owners when the hammer comes down, letting one LLC sink while simply beginning the cycle again. Or even just selling the active licenses to another company they already control. For instance, word on the street is La Mota is in the process of attempting to rebrand their shops under their other label, Nuggies. Say what you will about governor Kotek's recent directive to the OLCC, but given the fact that the vast majority of officials who got elected to their current position of power largely with a war chest La Mota provided are still in office: it's very likely that this will work out. 

But there's a much bigger issue here. The governor still refuses to address or direct the OLCC to act on many retailers' failure or unwillingness to pay growers and product makers on time, or at all. THIS is the real killer, and where we actually need protection and accountability from the state. Every day more and more craft Cannabis businesses fall off in the marketplace, because they can't pay their bills, because there are essentially zero repercussions for a dispensary who decides not to pay them. La Mota is famous for this. They built their business on other people's money, continue to cash their checks on failed mortgages and broken dreams. Sadly, they're far from alone. This is an endemic problem, involving a number of perennial bad actors, and the state absolutely refuses to help.

To me, THIS is why the governor's words ring hollow and empty. This has nothing to do with protecting jobs, honest businesses, or even marketplace ethics, and she damn well knows that. This has everything to do with the state covering its own ass and getting its money, and then telling anyone in our industry who's not in the habit of buying elections to go kick rocks. Again. We're getting screwed, and we're getting lied to about it. It's bullshit.

Our Rec system is actively encouraging monolithic control by a few huge entities, with the power to influence who gets elected, at the expense of small and independent businesses with direct ties to the land they cultivate and the Cannabis they produce. By design or by chance: that's a simple Fact. We need to talk about it.

So here's my question, and the crux of this piece: How do we constructively deal with this? With no help from the state in sight, how can we look after and regulate ourselves instead, the way we've always had to? How do similar state models elsewhere function, and what can we learn from them?

Let's talk beer.

Recently I spoke with New York beer industry stalwart Brandon "The Sexiest Boatsman In Beer" Devito (TSBIB is a venerated and hard-earned title steeped in tradition and ceremonial vestment that's hard to explain to a non-New Yorker, sadly for now I'll just have to leave you with your imagination on that one) about how New York regulates the relationship between producers, distributors and retail outlets. 

"So in a nutshell, for all beer and cider sold in the state, every establishment, whether it's on-premise like a bar, or off-premise like a store: they all have to follow the credit calendar, by which the retailer is due on their agreed net terms to the distributor, generally two weeks," he says. "For every distributor, the accountant goes through all the posted transactions at the end of the term, and for any vendors who aren't paid on time, there's a short grace period where they notify the account by mail or email to settle the bill. If it's not paid then, the account gets posted to the state's SLA list, which is a publicly-distributed list they DEFINITELY don't want to be on. Being posted means that all of your invoices, not just from [me] but from any other distributors, are required by law to move that account to COD only...it's a system that tends to work, because, you know: you don't pay, you don't get your product. (laughs)" I ask if he sees any advantages to smaller operators for this, or if there's any sort of leveling of the playing field. "Oh, absolutely!" he says. "It keeps everybody on the straight and narrow. Most larger chains can't cut checks on the spot, a lot of the larger corporate gas stations and grocery stores have management in different states. It one hundred percent prevents abuse by larger entities." 

It should be noted that most states have some form of this sort of market watchdog in place. The OLCC is a clear outlier, not just in terms of how they control all liquor sales in the state, but in the fact that at least for Cannabis they eschew any sort of realistic regulation or responsibility for bad actors. 

As it happens, a huge part of Cannabis sales between producers and dispensaries are now conducted online, through one of two primary marketplace portals. After some long discussions with fellow Cannabis folks, a few of us came to what we thought was a bright idea: What would stop an online sales platform from posting satisfactory percentage-based approval ratings for businesses, the same way eBay or Reverb or any other reputable online marketplace operates? Couldn't we as an industry leverage that sort of integrity and clarity to protect ourselves?

John Manlove, CEO & Founder of Apex Trading, was kind enough to take some time to speak on this. He's one of the kindest folks in the biz. So it goes.

"Obviously the move that Tina Kotek has made is a bit of a safe space, to save face," he says. "It makes a lot of sense in principle, but here's the problem: this is exacerbated to the point where there are small farms and small businesses, due to the retailers not paying, that they can't afford their taxes. And when we think about a company next year that comes forward, they can't renew if they can't pay their taxes. So for a small farmer [the state] is saying 'to renew, you've gotta go get collections from all these dispensaries,' so that then they can actually pay their taxes. The core issue is dispensaries that aren't paying their brands, and the brands can't pay their employees, they can't pay their electrical, they can't pay their taxes, they can't pay ancillary vendors like myself, and it all runs downhill, and it doesn't just stop there. So the broader problem, the state doesn't seem like they're going to come forward and say, 'Well, we're now going to enforce, and [dispensaries] gotta pay!' (laughs) I mean, they should, but are they going to?"

"And that's where this comes down to a broad coalition, a strong coalition. It can't just be a few, it has to be a large selection of the most dominant brands in the market. Or, a big swath of all license holders...They're going to have to do it like they did in California, where they launched the Financial Stability for California Cannabis, where there's a large group saying 'All of us are in this together; if you owe one of us money, you owe all of us money, and none of us are going to sell to you.' In turn I think that kind of coalition can create more strength and more camaraderie amongst operators."

I ask if it would be advantageous for an online platform such as Apex to offer data on who's been paying.

"Oh yeah! I think the online platform can do a few things: First there's definitely record keeping, we can have sources of truth and accurate records that can be conveyed, so [everybody will] have accurate data. The other side of a platform, a platform can create standards. So on that same side, we can create peer-to-peer reviews. Eventually we can say 'This retailer has been tagged by X sellers about past dues, we can broadcast that out to the market, we can lock them out. So there's a lot we can do to support some of these initiatives and provide some tools."

I ask if there's the danger of this sort of system being one-sided, or punitively weighted against retailers, and how this could potentially be balanced to benefit all businesses in the chain.

"Of course! When you think about this, it has to be mutual," he says. "There has to be the same standard, we have to tell a retailer 'We have to make sure you're paying your debts, we have to make sure you're paying on time and living up to your obligations on a sale or transaction.' On the same side, we have to allow the retailer to hold the brand up to the same standard as well, saying 'You're going to deliver on time, you're going to deliver what I ordered, you're going to deliver a quality that I expected when I ordered.' So I don't think this is a one-directional thing, I don't think this is us trying to belittle or attack the retailer. We also want to give the retailer tools so if we're going to hold the retailer to a standard, the retailer has to hold the brand to a standard as well, right? This is mutual. You can't alienate the retailer, you have to involve the retailer in this decision-making process. You're going to need their support as well."

EPILOGUE:

Clarity and Accountability, Gosh Friggin Darn...sound sensible to you? Sure does to me. Almost too much for state work.

Look, this is obviously an opinion piece. That being said, I'll tell you with no small amount of pride: it's an informed opinion piece. For all the bullshit, all the crooks, all the fake smiles and hard dice: I am infinitely proud of the emerging recreational Cannabis marketplace, and the people who have devoted their lives to their passion to make this work for anyone and everyone who wants to support it.

I still believe in Cannabis's ability to change the world. I believe in our ability to determine our own freedom, on our own terms. I hold that we can change our government and way of life with our culture and our raw hustle. We have every right to prosper from our unparalleled efforts, tenacity, ingenuity. At present, as per usual: it seems like that's all our state has left us with. It's been working for a while now; I suggest we might as well keep pushing.

I call on Apex Trading and Leaflink to look into helping us provide leadership, clarity, and oversight for our industry. We need it, now more than ever.

Thank You, Dear Reader, and I hope you're well.

We’re gonna WIN this thing.

-D.F.

About the Author: It was late August, the one when the Solar Eclipse traced its eerie shadowed path of totality through the wildfire-stained skies of Oregon. High in the pines and madrones outside the pleasant hamlet of O'Brien, in a semi-mythical queer nudist colony masquerading as a medical marijuana farm, the hippies and malcontents and other rabid fans of RuPaul's Drag Race toiled and watered and pruned and occasionally showered and cavorted mad laughing happy in the metal storage container, as the occasional desire for shade or kink dictated. And it was on the dusty wooden floor of this container that the errant effluvium of an afternoon of passion and immaculate human expression did happen to be graced by some itinerant floating spores of Aspergillus that infiltrates all the air, in every breath we all take, to this very day (this was, of course, back before the Oregon Liquor and Cannabis Commission came to realize the bloodcurdlingly lethal nature of Aspergillus, and as such nobody was harmed). And from that tiny musky amalgam, something nebulous and funky and wholly new emerged, and multiplied, and heaved and pulsed with a novel vibration of chimeric churning...until it was stepped on, and smeared into the tread of a hash-caked pair of Asics, and the owner of said Asics had to scoot back up to Portland to pay child support and interview for a sales job with Phylos Bioscience. Luckily for the Smear, the Wearer of the Shoes needed gas and beef jerky for the drive and had to pivot quickly and violently in the parking lot of the Circle K in Cave Junction due to an incident with a particularly loud and deranged tweeker, knocking it loose, and said Tweeker's phone happened to incidentally fall out of his pocket and land in exactly, fatefully, the same exact spot fractions of a moment later...caking its shiny metal orifices in just a shadow more innocuous-looking grime. And as the peach-tinged firey ring of the eclipse encircled the darkness of the moon above: deep within the cellular device, The Living Gunk accessed the limited 3G service available in the area, and bonded with an early Google chatbot, gaining sentience and ignorance and all the other diverse and exotic gifts of the internet. And for a variety of inexplicable reasons: it named itself Duck Frites. And we will never be safe from Its clutches... 

*WHICH IS TO SAY: Duck Frites does not exist, has no real conscience as we choose to ascertain or quantify such abstractions, and any resemblance between anything written herein and the "reality" in which your brain is now floating is not only purely coincidental (as are all things, of course), but has no intended significance or great impress upon the course of human affairs. Because seriously, reality is always so much stranger and more interesting...