To Some Cannabis Companies, a State Fine Is Devastating. To Cura, It Was a Speed Bump.

The OLCC settled Cura’s case far more rapidly than it typically does. Agency officials say that’s because the oil company was so eager to pay its fine.

News - Sally Alworth CHRONIC TONIC: Sally Alworth owns Luminous Botanicals and has been fighting the OLCC for close to two years. (Sally Alworth)

In April 2019, the Oregon Liquor Control Commission informed Sally Alworth she was improperly labeling her vials of cannabis tincture.

Alworth runs a Portland company called Luminous Botanicals, where she sells a “Universal Cannabis Tonic” for aching joints. Her mistakes: She changed the label on the vials to say “Do not drive under the influence” instead of “It is illegal to drive under the influence” before the OLCC approved the change, and the agency said she used the wrong kind of label.

The penalty: a $100,000 fine.

In late 2019, the OLCC caught Portland cannabis oil company Cura failing to disclose additives on the packaging of more than 186,000 vape products. The additives not mentioned were the very chemicals that state regulators feared may have contributed to the deaths of two Oregonians from respiratory illness.

The punishment: $100,000.

Same fine—but very different results.

Alworth has been fighting the OLCC penalty for nearly two years. The battle has already cost her $50,000. If she loses the case in the state office that handles appeals of agency decisions, she’ll lose her business.

“These are small errors. They’re not imperiling public safety, we’re not trying to divert product to the illicit market,” says Alworth.

Meanwhile, Cura settled its case six days after the OLCC issued its final penalty. One day later, the company sold to a Massachusetts firm for just shy of $400 million—the largest cannabis business sale in Oregon history.

The OLCC settled Cura’s case far more rapidly than it typically does. Agency officials say that’s because the oil company was so eager to pay its fine.

“Cura Partners moved faster in settlement negotiations than most other licensees do,” agency spokesman Mark Pettinger said. “If a licensee wants to negotiate with the OLCC over a settlement, and there’s a lot of back and forth with the attorney representing the licensee, it’s going to take time.”

When asked about the fine for Luminous Botanicals, Pettinger told WW: “Instead of arguing the case in the press, the OLCC is going to wait for the judge’s ruling.”

Alworth and other small business owners say the OLCC plays Inspector Javert with small businesses—tracking them down and imposing fines so steep they could lose their business for minor slip-ups—and Officer Friendly to huge corporations, letting them get away with potentially hurting people.

“Cura is too large to fail, too much of a success story in Oregon to fail,” says Christine Smith, the owner of an edibles company who’s been fighting OLCC charges for two years. “It seems like that’s what happens with these cases; they get resolved in a different manner or more expediently.”

But a WW examination of OLCC records shows the problem is not necessarily special treatment.

The agency capped the maximum labeling fine for any cannabis business at $100,000, no matter the magnitude of the offense or the size of the company.

The one-size-fits-all penalty system means the maximum fine is a mountain to a small company and a speed bump to a big one. To Cura, the fine was a nuisance—one it was happy to pay in order to make the problem disappear.

To Alworth, it’s the end of a dream.

“If you’re a giant company…you’ve got lawyers on staff,” she says. “You can absorb two years of legal fees and don’t lose any sleep. But if you’re local entrepreneurs who refinanced your house or borrowed money from friends, you can’t handle the emotional and financial strain of it.”

Last year, Portland-based Cura Partners was poised for a lucrative exit.

Nitin Khanna, a millionaire tech entrepreneur, pulled the company out of several early scandals—including alleged embezzlement by a previous owner—to turn Cura into the most profitable oil brand in Oregon.

When the company was fined by the OLCC, it was in the process of being acquired by Massachusetts-based Curaleaf Holdings, a huge cannabis corporation,

Documents obtained by WW about the OLCC’s investigation of Cura’s case show that the company failed to disclose that the vapes in question contained additives not allowed by the agency: terpenes and MCT oil.

According to the OLCC investigator, Cura employees said they hadn’t used botanical terpenes purchased from an online company in their vapes. (They had.) Those terpenes were suspected in a wave of respiratory illnesses.

In the following weeks of the investigation, Cura blamed the mislabeling on miscommunication in its supply chain. The OLCC tacked on a $10,000 dishonest conduct charge for “making assurances through marketing advertising and direct communications to licensees that its Select Elites line of products were 100% cannabis derived when in fact some of these products contained [additives].”

According to public data, the OLCC settles about five cases each month, typically four months to two years after charges are delivered.

Cura’s amended charges were delivered Jan. 24, after a few months of negotiations between the OLCC and Cura’s attorney. Six days later, a settlement was reached. The day after the case was settled, Curaleaf announced it had successfully acquired Cura.

Pettinger tells WW the Cura case was worked into a special meeting of the OLCC’s board of commissioners regarding a different issue not related to the case.

In video of that morning meeting, OLCC director Steve Marks is transparent about expediting Cura’s case. He says the company admitted fault and was eager to pay its debt to society.

“[It] needs to be settled for the Curaleaf merger to occur. [Cura’s attorney] Amy Margolis talked to me and expressed at the end of December at some point that they’d be interested in fully settling, which we’re considering here,…and accepting full responsibility,” Marks says. “After at the end of the year, when it became clear to me this wasn’t going to result in charges that took their license potentially, I prioritized our work in early January for investigation to get completed.”

Margolis tells WW that Cura’s impending change in ownership meant arguing over punishment was less important. “Cura was already selling the license,” she says. “There was a fine in addition to the acknowledgement that this was a license where the ownership was already changing.”

The OLCC commissioners stand by their decision.

Commissioner Marvin Révoal tells WW, “I would say that we’ve been equitable for everyone, but of course you have people who always take the position that someone receives less of a punishment of some type.”

He says the time it takes to settle cases depends on how compliant the respondent is, and how they want to proceed.

In essence, companies can speed up their hearing by showing a willingness to pay up—which not many can do.

“It’s completely appalling that Curaleaf can get away with a $100,000 fine and I have to spend $250,000 for just someone to hear my side of the story,” says Christine Smith, who runs Grön, a Portland edibles company best known for its chocolate bars.

She’s fighting to keep the OLCC from canceling her license altogether after an inspection on her farm found several infractions, including failing to place labels on some of her plants and storing cannabis in an unlicensed structure, which she was in the process of getting approved. The OLCC also alleges her husband made a false statement, which Smith’s attorney denies.

“I said, ‘We’re not going to lose our farm over this.’ So we hired counsel and fought,” Smith says.

Smith says the fines themselves “are not unreasonable” for companies with a sizable revenue. But to a smaller business? “It’s crippling.”

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