Dear Pot Lawyer,
I have a licensed processing kitchen that isn’t at capacity. Is there anything I can do?
Yes, there is! Last June the OLCC issued final regulations that allow edible and topical processors to share OLCC-approved kitchen space in certain circumstances. The OLCC calls these “alternating proprietors” and recognizes that many small-scale processors may not be able to justify around-the-clock production, or even justify owning their own “food establishment.” These small-scale processors can join forces in a single kitchen under a few strict rules.
First and foremost, this is not an opportunity for multiple unrelated bakers to share a single processor license. Each alternating proprietor must have its own OLCC processor license.
More importantly, your sharing arrangement must be formalized. The OLCC must approve your sharing schedule in advance, with “specific hours and days that each processor will use the food establishment.” This day-by-day and hour-by-hour schedule must be posted near the front door and can’t be changed without prior approval from the OLCC.
Finally, each alternating proprietor must have a secured, separate area to store their raw materials and finished products that is only accessible by that proprietor. A proprietor is strictly liable (regardless of guilt or intent) for any violations occurring in this designated area, regardless of the culprit.
While it isn’t clear from the final rule, it looks like the OLCC intends that each proprietor will have exclusive access to the shared space during their scheduled hours. With that presumed goal in mind, it’s no surprise that each proprietor is also strictly liable for any and all violations that occur in the shared kitchen during the proprietor’s specific hours.
One other quirk of the law is that this shared space arrangement will not work for processors that make concentrates for other licensed manufacturers. Any concentrates produced at the shared kitchen must be used in that proprietor’s own edibles or topicals.
If you don’t feel comfortable sharing your kitchen with someone else, then you can explore licensing and co-packing arrangements. The idea here is that a third party will pay you a fee to use your employees and facilities to create their product. If you go this route, be sure to sign licensing agreements that shift as much liability as possible to the third party for intellectual property violations or product liability claims. Also remember that if the third party’s fee is dependent in any way on the success of your business (like a royalty from the sales of their products), then the third party will be considered to have a financial interest in your business and must be pre-approved by the OLCC.
Hopefully with the flexibility afforded by the new rules, you will be able to keep your kitchen busy around the clock and bring a greater variety of products to Oregon’s shelves.
Got a question? Email us at email@example.com. And remember that if you have a legal problem, contact a lawyer! Our educational musings cannot be relied upon as specific legal advice.