The Oregon Liquor and Cannabis Commission is amidst a period of transition that will greatly help the organization modernize. Important projects include a new, expanded warehouse, as well as moving the OLCC headquarters into downtown Portland, while also digitizing commission functions in need of a 21st-century update.
All this comes as the OLCC continues to run and regulate two very different businesses: a well-established liquor industry and Oregon’s pioneering legal cannabis market.
The Beaver State was the first to decriminalize cannabis in 1973. Oregon was also among the initial group of states that passed medicinal marijuana, just two years behind neighboring California in 1998.
So too did the state approve recreational laws before most of the country, in 2014, only two years after Colorado and Washington.
Ideal growing conditions in parts of Oregon promote outdoor cultivation of the plant. Cannabis culture on the West Coast, in general, is advanced when compared with the rest of the country. The result is a robust recreational market overseen by the OLCC, the ideal government entity to take on this modern task, thanks to many decades of alcohol regulation, dating back to the organization’s founding in 1933.
A New Commissioner
OLCC Executive Director Craig Prins joined the organization in February 2023. His appointment followed an unfortunate controversy at the commission involving the alleged mishandling of allocated whiskeys. After this issue made national news, Prins — formerly the Inspector General for Oregon’s Department of Corrections — arrived with the goal to have operations running smoothly after a challenging period.
“On the liquor side, my initiative is modernizing our warehouse, a project that started prior to me,” Prins says. “The approval for funding dates back to 2021. I wanted to make sure that we kept that funding on track. With the scandal, there was the possibility that that whole initiative could unravel.”
Thankfully, Prins has been able to keep the much-needed new warehouse project on schedule for completion.
As for the cannabis side of the commission, “I didn’t have an initiative there when coming into this position so to speak,” Prins explains, “other than making sure that we could maintain stability [of that market] and move forward.”
Prins’ previous role at the Department of Corrections is part of the 20 years he has worked in state government. He is a native of Oregon, having grow up in its southern region. He earned his law degree from the University of Notre Dame.
“After graduating, I came home to Oregon,” Prins says. “I have worked in state policy positions and our criminal justice system. I love Oregon, and I love serving our citizens. It’s a dream for me to support and regulate these two industries now for our state.”
New Warehouse and Headquarters
Currently, the $145.6-million project for a new OLCC warehouse includes purchasing land, construction of a new 347,000-square-foot facility and an expansive new conveyor belt system. When Prins came aboard, this undertaking also involved building new commission headquarters adjacent to the warehouse.
Given financial realities in this era of inflation, the executive director immediately had to make a difficult choice. “In the summer of 2023, I decided to put all our funding into the warehouse itself,” Prins explains. “We had to modify the plan and take out the headquarters in light of inflation.”
Rather than erecting a new HQ, the plan now is to move the offices five miles north, into downtown Portland.
“We’ll be right off of a public transportation line, sharing space with our Department of Health partners, while the Department of Revenue also has a small footprint there,” Pris says. “We’re going to be part of the revitalization of downtown Portland. It’s going to be a big step forward for us, sharing space with our sister agencies downtown.”
Also playing into that decision was the recent rise in remote work.
“Covid provided opportunity for us to work hybrid a lot more,” Pris says. “We don’t need as much office space as we once did. Folks in financial, licensing and administrative roles for us are working hybrid already. We can make our headquarters in downtown Portland a smaller one.”
While there was room for a pivot with the headquarters, construction of a new warehouse was critical. The current setup, which dates back to when Eisenhower was in the White House, regularly runs at or above capacity. This setup comprises two smaller warehouses linked by an inefficient system. Products get dropped off at one location and then packed and shipped to another.
“That’s a lot of touches just to get products out in individual cases to our 285 liquor stores,” Pris says. “And there’s no more room in our warehouses.”
The growth in capacity with the new facility will be significant. The current setup allows for a maximum of 628,000 cases and 9,900 pallets. The future site will more than double those numbers to 1.8 million cases and 29,000 pallets.
With the new warehouse, “We’re going to be a lot more efficient,” Pris says. “With more space, there’s opportunity for us to carry more labels, especially from smaller producers. There will be more room for the level of variation in the industry that we’re looking to support.”
In terms of timeline, “We’re looking to have the warehouse shovel-ready by April 2025,” Pris says, “with completion by the end of summer 2026.”
Technology Upgrades
While all of this is underway, the OLCC is also undergoing a substantial IT upgrade within the state’s distilled spirits supply chain.
This involves the adoption of new software at the commission. Pris and his team are finalizing negotiations with a provider. Improving these systems is imperative, as the OLCC — like many government entities nationwide — remains behind the times in terms of modern technology.
“We currently don’t have the ability to track products all the way through” from warehouse to sale, Pris says. “This upgrade will allow us to do that. It will allow us to be more efficient. We will be able to audit more. We will be able to make sure that payments are correct.”
Under the old system, which still relies on pen and paper, accomplishing all of that in an efficient manner was difficult, if not impossible — especially in light of how technologically advanced much of the business world has become.
“We can’t have this much technology debt and move into 2025/26,” Pris says. “We need to modernize these systems to be efficient. We hope this creates a good environment for continuing to be a positive business environment.”
Tackling these three significant projects simultaneously — warehouse, headquarters, IT — is no easy task, of course. Pris is aware of what he’s striving for and what it will take from him and his staff.
“We have to be laser-focused to complete everything,” Pris says. “It’s going to take a lot of focus. The next two years, we’re going to be saying no to some other initiatives. I can’t ask my staff to be doing more than they already are.”
Regulating Cannabis
Government alcohol regulators are a natural fit for overseeing their state’s recreational cannabis markets. These organizations take on the job while already possessing extensive, invaluable knowledge on how to safely and effectively oversee the sale of a legal intoxicant.
Naturally, there are key differences between alcohol and cannabis. In Oregon, the OLCC has regulated the former for 90 years, in collaboration with the federal government and the Alcohol and Tobacco Tax and Trade Bureau. As for cannabis, “For nine years, we’ve been regulating cannabis without federal partnership,” Pris points out.
So it is the same for state agencies across the country, operating on their own when it comes to cannabis. But all the prior experience in regulating alcohol has proven helpful and educational.
“We’ve had the opportunity to look at the two industries and try to make a better environment for both,” Pris says.
For instance, when trying to open a new dispensary in Oregon, the owner must first have a lease in place before they can even obtain their recreational sales license. Whereas with alcohol, a new owner can simply apply for and receive a temporary service permit to cover the period of license transition.
“That’s a lot more of a carrying cost for the cannabis business,” Pris says. “We understand that they’re two very different intoxicants, but maybe there can be a temporary service permit for the cannabis operator.”
Another issue hampering cannabis but not alcohol: “In cannabis, the distributor cannot give anything on credit,” Pris says. “The industry runs almost like consignment. You get your product into a store and then get paid after it’s sold. The structures of the two industries are so different.”
Pris is on point when he says, “Both industries are interested in what the other is doing.” For instance: the recent rise in THC beverages, which are among the hottest trends right now for beverage alcohol retailers across the country. Or consider this other example of crossover, this time at on-premise:
“At a recent industry conference, I was speaking with a Nevada regulator about Nevada’s social cannabis consumption cafes,” Pris says. This refers to spaces where cannabis users can legally consume the product in a controlled social setting, not unlike a typical bar.
“As an industry, we need to be informed about these products and how they’re consumed,” Pris says. “We need to understand if there is going to be some crossover.”
Organizations like the OLCC overseeing cannabis are also critical for the sake of public safety.
“We want to have a regulated industry where we’re checking these products for pesticides and metals,” Pris says. “An advantage of a regulated market is its safety. We’re always making sure that we have a safe product. The three-tier system is designed so that distributors can pull something if there’s a problem.”
The OLCC runs labs that ensure the safety of the product. This includes checking that THC levels listed on labels are accurate, both to maintain consistency and to avoid consumers accidentally overdosing.
“Unfortunately, we’ve had to take action in some cases,” Pris says.
Upholding public safety involves other important initiatives. “We’re always focused on no alcohol or cannabis for people under the age of 21,” Pris says. “We run a minor decoy program to see of people will sell to those who appear to be underage.”
While this public safety work is obviously vital, Pris stresses it’s about more than just fines, violations and checking the system for flaws.
“We need to upgrade our training for servers to include more about why this is important for public health,” he says. Pris brings up the many studies through the years that found that alcohol and cannabis consumption for minors is detrimental to their long-term health and professional prospects.
“We’re an educate and enforce agency,” he says. “We’re not just coming in to try to hang tickets on everyone. We try to focus also on the ‘why’ behind these things.”
Cash remains an issue in the legal cannabis industry, as federally regulated banks cannot accept accounts for marijuana companies and their employees, as long as the drug remains illegal at the national level. Thus, all business must be conducted in cash — both an accounting headache and a risk for theft.
Thankfully, “we do have a couple of credit unions that have gotten comfortable with the cash in the cannabis industry,” Pris says.
When it comes to cannabis, many states look to Oregon and other pioneers in the recreational marketplace.
“We hope we can regulate it well and learn from other industries,” Pris says. “We hope that we can be a leader here because of our head start.”
Kyle Swartz is editor of StateWays magazine. Reach him at kswartz@epgmediallc.com. Read his recent piece, The NHLC Celebrates 90 years.
