Monthly Archives: November 2013

OLCC Case Profile: Aroma Restaurant’s License Suspended

Compliance, OLCC

OLCC Case Profile: Aroma Restaurant’s License Suspended

Permitting unlawful activity is a category III violation under Oregon law. The OLCC has determined that the provision of security services by an individual without DPSST certification constitutes unlawful activity under Oregon law. Aroma Restaurant was sanctioned for permitting unlawful activity of this nature.

This case is interesting for two reasons. First, it illustrates the OLCC’s escalating penalty schedule and the OLCC’s discretion in increasing or decreasing the sanction based on aggravating or mitigating circumstances. Second, it highlights the importance of promptly addressing compliance issues after a violation and having systems in place to avoid “low hanging fruit” violations.

The OLCC’s sanction guidelines suggest the following penalties for category III violations:

• First in two year period. $1,650.
• Second in two year period. $4,950 or a 30 day suspension.
• Third in two year period. Mandatory 30 day suspension.
• Fourth in two year period. Cancellation.

Here, the licensee had a previous category III violation for a similar incident within the last two years. The standard sanction would be a 30 suspension or a civil penalty of $4,950. Here, the OLCC found aggravating circumstances and imposed a sanction of either a 32 day suspension or a $4,950 civil penalty and 2 day suspension. So, in either case, the licensee faced a mandatory suspension. For licensees with video lottery, the imposition of a mandatory suspension is particularly important because the Lottery will turn off the video lottery machines for the length of the suspension, at a minimum. The Lottery has the discretion to terminate the retailer contract under such circumstances.

The second lesson from this case is just as important. After settling a violation or losing at a contested hearing (or, ideally, as soon as the compliance problem comes to their attention), a licensee must take the time to ensure that the underlying problem has been addressed. The escalating penalty schedule provides for increasing sanctions for violations of the same category within a 2 year period of time. Generally speaking, violations serve as a red flag to OLCC enforcement and may lead to increased scrutiny of a licensee’s business. So, in addition to ensuring that the issued underlying the violation has been addressed, such a licensee would be well served to audit its alcohol service policies and procedures to ensure future compliance, or to have a third party conduct such an audit. DPSST and service permit violations are low hanging fruit violations that can be easily avoided with sound systems and regular compliance checks. In addition to avoiding violations, ensuring that your staff is appropriately trained and permitted helps the business to stay in compliance generally.

I provide compliance audits for licensees and would be happy to talk with you if you have concerns about the compliance of your licensed business.

OLCC Rulemaking: Spirits Tastings at Additional Locations for Oregon Distilleries

Laws & Rules, OLCC

OLCC Rulemaking: Spirits Tastings at Additional Locations for Oregon Distilleries

Oregon House Bill 3435 amended ORS 471.230 to allow a distillery licensee to conduct tastings at its annually licensed premises as well as up to five other premises it owns or leases. The bill takes effect on January 1, 2014. The OLCC is in the process of amending OAR 845-005-0431 to account for this statutory change. For a distillery licensee with multiple retail locations in Oregon that it can show it has exclusive use and possession of, this represents a great opportunity to showcase and sell their distilled products at additional locations.

OLCC Initiates Rulemaking Regarding Licensing “Food Carts”

Laws & Rules, OLCC

OLCC Initiates Rulemaking Regarding Licensing “Food Carts”

The City of Portland sued the OLCC after it issued an annual liquor license to Cartlandia and the OLCC failed to move forward on rule making to imposed additional restrictions on the licensing of “food carts”. The OLCC has never licensed a “food cart” itself. Rather, the OLCC has licensed an exterior area adjacent to a food cart, just as it licenses an exterior area adjacent to a brick and mortar bar or restaurant. The OLCC has carefully reviewed the proposed operations of food cart applicants and imposed operational restrictions on them on a case-by-case basis.

Now, the OLCC is seeking to move forward on rules that would standardize the licensing requirements and operational restrictions on food carts, or, as the rule describes them, as “outdoor areas that do not abut a licensed building.”

In short, the OLCC will not issue a license and may cancel an existing license for a food cart if:

• Such alcohol service is not an authorized use per the local jurisdiction or lease;
• The outdoor area fails to quality for a minor posting III (meaning that the area is not a drinking environment and thus minors are allowed at all times); or
• The applicant or licensee fails to define the boundaries of the area, describe how it will control the area, fail to show how it will supervise the area or fail to adequately confine the area.

In addition, the rulemaking will impose additional operational requirements on food cart operations:

• A patron will not be allowed to possess more than two containers of alcohol at a time;
• A patron will not be allowed to bring alcohol to or remove from the licensed area;
• Amplified music will not be allowed from 10:00pm to 7:00am;
• Alcohol service will not be allowed from 10:00pm to 7:00am;
• The applicant or licensee will need to show how it will control the outdoor area; and
• The area must be appropriate for a minor posting III.

The rulemaking also applies to the patios of bars and restaurants and requires the following for such areas, but allows the applicant or licensee to show good cause that outweighs the denial basis:

• Such alcohol service is not an authorized use per the local jurisdiction or lease;
• The outdoor area does not abut the licensed premises;
• The applicant or licensee fails to define to the boundaries of the area or fails to show how it will supervise and control the area;
• The applicant or licensee will allow amplified entertainment in the outdoor area between 12:00am and 7:00am.

While the intentions motivating this rulemaking are likely well intentioned (and may be related to a mutually acceptable resolution of the lawsuit between the OLCC and Portland), removing the discretion from the OLCC in determining whether to license a “food cart” and what operational restrictions may be appropriate given the facts and circumstances at hand seems ill advised. A food cart operation may very well be able to operate effectively, responsibly and in compliance with Oregon law after 10:00pm, as an example. To date, I am not aware of any major compliance problems associated with alcohol service at a food cart.

Mark Your Calendar: the OLCC Licensing Group Will Be Attending an Internal Licensing Academy the Week of November 18th-22nd

OLCC

If you have any pending licensing matters with the OLCC or anticipate needing to resolve any licensing issues later this month, you should keep in mind that much of the OLCC’s licensing group will be attending a week long intensive training during the week of November 18th-22nd. While this is good news for the OLCC and applicants going forward (kudos to the OLCC for investing in their great staff), it could lead to some short term delays in application processing that applicants should keep in mind.

The OLCC Announces its 2014 Meeting Schedule

OLCC

Mark your calendars. The OLCC published its 2014 meeting schedule today. The 2014 meetings are scheduled for the following dates:

January 24, 2014*​ ​

February 20-21, 2014​ ​

March 21, 2014​* ​

April 24-25, 2014​ ​

May 16, 2014*​ ​

June 26-27, 2014​ ​

July 25, 2014*​ ​

August 21-22, 2014​ ​

September 26, 2014*​ ​

October 23-24, 2014​ ​

November 21, 2014*​ ​

December 18-19, 2014​

Meetings usually start at 9:00 a.m. In-person meetings are usually held at OLCC Headquarters, 9079 SE McLoughlin Blvd. in Portland. Meetings are subject to change, so please check the OLCC Website for meeting agendas and to confirm that there have been no changes.