People who own businesses often try to keep their names off state-controlled websites and other public registries, to the extent possible. There are various reasons for this: the owners may hope to avoid receiving tax and legal documents in front of clients, may wish to avoid media inquiries, or may simply cherish their privacy. With cannabis businesses, owners have a whole slew of reasons for wanting to maintain their anonymity. In Oregon, however, that is about to become a bit more challenging due to House Bill 2191, which takes effect on January 1.
To be clear, under Oregon state law, information related to marijuana business applications and ownership has always been subject to disclosure via an ordinary public records request. Those requests are easy to make in Oregon, and almost always cheap or free. There are some exemptions to the disclosure rule, but they relate mostly to security. Business ownership status is not a security concern, according to the Oregon Liquor Control Commission (OLCC). That said, public records requests are targeted in nature to a specific business or other matter, and it’s hard to do a quick sweep if you are looking for a certain someone. The online Secretary of State business search page, by contrast, allows anyone to simply type in the target individual’s name, and get immediate results.
Most law firms, like ours, offer registered agent services for their business clients. These services come at a standard fee, and one attractive feature is that the law firm will list itself as the point of contact for official documents, thereby shielding the names of business owners. In Oregon, an owner did not have to be listed at the initial registration in the case of an LLC, historically; and in the case of a corporation, neither shareholders nor officers needed to be listed. On renewal, the standards were a bit tighter, but overall, most business owners were able to remain discrete, like in Delaware and other states. That will be harder now.
Under HB 2191, an individual with direct knowledge of business operations and activities must be identified on the articles of incorporation/organization (including amended, restated, conversion and merger filings). In the case of a corporation, that person may be a director or controlling shareholder; in the case of an LLC, that person may be a member or manager. Alternatively, either type of business can list “any individual that has direct knowledge of the operations and business activities.” Anyone forming a marijuana business and hoping to remain discrete had better find a partner who is willing to be listed.
HB 2191 also adds a requirement that any new company list its principal place of business, rather than a P.O. Box or other address, upon incorporation. This mirrors the I.R.S requirement, and the principal place of business “must be a physical street address” rather than a commercial mail-receiving agency, mail forwarding or virtual office. This new rule probably won’t bother anyone running a dispensary, but producers, processors, and wholesalers may not be so keen on the change.
HB 2191 is a rare example of an Oregon law that affects cannabis operators but did not go into effect immediately on passage. Unlike many other new laws that passed in the last session, HB 2191 is not specifically targeted toward the cannabis industry and wasn’t a “quick fix” in nature. Still, pot business owners should be aware that their information is about to become more searchable. Heads up.