Answorth, Inc. v. OLCC

470 October 29, 2025 No. 934

IN THE COURT OF APPEALS OF THE

STATE OF OREGON

In the Matter of Marijuana Processor

License No. 1003825DB95 held by:

ANWORTH, INC.;

Devan Anthony, Pres/Dir/Stkhldr;

and Sally Alworth, Sec/Dir/Stkhldr,

dba Luminous Botanicals,

Petitioners,

v.

OREGON LIQUOR AND CANNABIS COMMISSION,

Respondent.

Oregon Liquor and Cannabis Commission

2019MJM001;

A177206

Argued and submitted January 9, 2024.

Kevin J. Jacoby argued the cause for petitioners. Also on

the opening brief were Andrew DeWeese and Green Light

Law Group. Also on the reply brief was Jacoby Law.

Peenesh Shah, Assistant Attorney General, argued the

cause for respondent. Also on the brief were Ellen F.

Rosenblum, Attorney General, and Benjamin Gutman,

Solicitor General.

Before Ortega, Presiding Judge, Powers, Judge, and

Hellman, Judge.

ORTEGA, P. J.

Affirmed.

Cite as 344 Or App 470 (2025) 471

ORTEGA, P. J.

On judicial review of an administrative contested

case, ORS 183.482, petitioners challenge an order of the

Oregon Liquor and Cannabis Commission (OLCC) that

denied petitioners’ label application and imposed a penalty

of $100,000 for transferring marijuana items for sale that

had unapproved labels. On appeal, petitioners raise four

assignments of error. We first reject petitioners’ procedural

challenge to the order, because any error was invited. As

to the denial of petitioners’ label application and the label

violations, we conclude that OLCC’s interpretations of the

applicable rules are plausible and thus due deference and

further conclude that OLCC’s final order is supported by

substantial reason. Finally, as to the penalty amount, we

reject petitioners’ contention that OLCC was not authorized

by statute to assess a penalty per marijuana item trans-

ferred with an unapproved label. Accordingly, we affirm.

I. BACKGROUND

We briefly set out background facts and OLCC’s

ultimate conclusions from its final order below. We discuss

in more detail aspects of that final order in our analysis of

petitioners’ specific assignments of error.

Petitioner Anworth is an Oregon corporation doing

business as Luminous Botanicals and holds a marijuana rec-

reational processor license. Petitioners Anthony and Alworth

comprise Anworth’s board of directors and stockholders. We

refer to petitioners collectively throughout this opinion.

Petitioners process and sell a cannabinoid tincture

called Universal Cannabis Tonic (UCT). Petitioners offer

UCT in three different formulations and in three different

sizes, including a small trial-size. In 2017, petitioners were

packaging the trial-size of UCT in small vials with stopper

caps, as follows:

“There was no writing embossed on, or wrapped around,

each glass vial. Each vial was glued to a folded piece of

cardstock containing labeling information with a dab of

fixed glue between the cap and the cardstock. The card-

stock closed over the vial like a book, but it was not sealed

shut.”

472 Answorth, Inc. v. OLCC

Petitioners sought approval of that style of labeling in 2017,

and, after discussions with OLCC, on June 7, 2017, OLCC

approved that labeling.

In 2018, OLCC adopted new packaging and label-

ing rules. Those rules required that all labeling applications

received on or after August 15, 2018, were subject to the

new rules. However, the rules also allowed for a “sell-down

period” of product from August 15, 2018, to March 31, 2019.

Petitioners understood that, under the new rules, “prod-

ucts in packaging that had previously been approved by the

Commission could be transferred from a processor to a dis-

pensary up through March 31, 2019.”

In July 2018, petitioners submitted a label applica-

tion for its UCT product, including the trial-size, with the

intention of complying with the new 2018 rules. The content

of the cardstock label for the trial-size UCT differed from

the 2017 labels in certain ways; however, how the labels

were affixed to the trial-size vials remained the same—

the cap of the vial was glued to the cardstock label. OLCC

rejected the label for the trial-size UCT. Petitioners resub-

mitted its application in August 2018, which OLCC again

rejected. OLCC’s position was that the label was not affixed

to the trial-size vial because the vial must be physically sep-

arated from the cardstock to use the product. In December

2018, petitioners resubmitted the trial-size UCT labels so

that OLCC could issue a formal appealable denial.

In the meantime, between September 11, 2018, and

March 31, 2019, petitioners transferred to marijuana retail-

ers for sale approximately 34,741 vials of trial-size UCT

products using a cardstock label that OLCC later found was

the unapproved cardstock label petitioners submitted in

2018.

On April 16, 2019, OLCC issued its notice of pro-

posed label denial, and petitioners requested a contested

hearing. After postponements of the hearing, on January 21,

2020, OLCC issued an amended notice that included a pro-

posed civil penalty along with the label denial. Ultimately,

as relevant here, OLCC alleged that, between September 11,

2018, through March 31, 2019, petitioners transferred 34,741

Cite as 344 Or App 470 (2025) 473

trial-size UCT products without an approved label, contrary

to the 2018 rules. That notice proposed a $100,000 civil pen-

alty for petitioners’ alleged labeling violations.

After a contested hearing before an administrative

law judge (ALJ), the ALJ issued a proposed order. Petitioners

lodged exceptions to the proposed order, which were heard

before the OLCC Board of Commissioners. OLCC rejected

petitioners’ exceptions and adopted the ALJ’s proposed order

as its final order. In brief, OLCC concluded that (1) petition-

ers’ 2018 label applications were properly denied “because

there was no label printed on or affixed to the container

holding the marijuana item, as required by OAR 845-025-

7030(1)(a) ([June 1,] 2018)”; (2) petitioners violated OAR 845-

025-7160(1) (June 1, 2018) and OAR 845-025-7170(1), (3),

and (4) (June 1, 2018), “on approximately 100 separate days

from September 11, 2018, through March 31, 2019, when

it sold to retail licensees for ultimate sale to a consumer

approximately 34,741 trial-sized vials of * * * UCT canna-

binoid tincture with labels that had not received approval

from [OLCC]”; and (3) it would assess a $100,000 civil pen-

alty against petitioners for those violations.

Petitioners now seek judicial review of that final

order under ORS 183.482, raising four assignments of error.

We address each assignment of error below.

II. ANALYSIS

A. Procedural Challenge

We first address petitioners’ fourth assignment of

error because it raises a procedural challenge. That chal-

lenge is based on an exchange at the hearing before the

OLCC Board of Commissioners on petitioners’ exceptions

to the proposed order. At that hearing, the OLCC case pre-

senter stated that there had been a settlement offer to peti-

tioners. The following exchange then occurred:

“CHAIR ROSENBAUM: And can you—I don’t know if

it’s on or off the record, and Counsel may object, but could

you tell us what that offer was?

“[OLCC CASE PRESENTER]: [Petitioners’ counsel],

do you object to me telling the Chair what the offer was?

474 Answorth, Inc. v. OLCC

“[PETITIONERS’ COUNSEL]: This is all a bit irreg-

ular because this is all outside the record and all prior to

our involvement. I’m at a bit of a disadvantage here. I—I

suppose that I don’t object to talking about what the offer

was, but the statements about what Mr. Goldberg and

Mr. Schein may have discussed, bother me a bit. Go ahead

and tell them what the settlement offer was, I don’t object

to that.”

The case presenter then disclosed the amount of the settle-

ment offer.

On judicial review, petitioners argue that solic-

iting the amount of the settlement offer, which was not in

the record, was a material error in procedure because OAR

137-003-0655(5) provides the process in contested cases for

introducing new evidence after issuance of a proposed order,

which was not followed here. Petitioners further argue that

the new evidence unfairly influenced the OLCC Board of

Commissioners to adopt the proposed order.

We reject petitioners’ argument because any proce-

dural error was invited by petitioners. “Under the invited

error doctrine, a party who was actively instrumental in

bringing about an alleged error cannot be heard to complain,

and the case ought not to be reversed because of it.” State

v. Kammeyer, 226 Or App 210, 214, 203 P3d 274, rev den,

346 Or 590 (2009) (internal quotation marks omitted). Here,

when asked if he objected to the immediate disclosure of the

settlement amount, petitioners’ counsel acknowledged that

the settlement amount was not in the record but affirma-

tively stated, “[g]o ahead and tell them what the settlement

offer was.” Having done so, petitioners were actively instru-

mental in causing the alleged error that they now complain

about. See id. (“The goal of the [invited error] rule is to

ensure that parties who make intentional or strategic trial

choices do not later ‘blame the court’ if those choices prove to

be unwise.”). As a result, we decline to consider the merits of

petitioners’ argument.

B. Label Denial

We next address petitioners’ second assignment of

error, which challenges OLCC’s denial of the proposed card-

stock labels for the trial-size UCT products. Petitioners set

Cite as 344 Or App 470 (2025) 475

out three arguments: OLCC’s interpretation of the word

“affixed” in OAR 845-025-7030(1)(a) (June 1, 2018), is erro-

neous; OLCC’s final order lacks substantial reason; and

OLCC’s application of the labeling rule in this case is incon-

sistent with its prior practice. As explained below, we reject

each of petitioners’ arguments.

We begin with OLCC’s interpretation of its own rule.

Under ORS 183.482(8)(a), our task is to determine if “the

agency has erroneously interpreted a provision of law.” “An

agency may determine whether the standard established in

a rule has been met in a particular instance by interpreting

the rule in the course of applying it.” Papas v. OLCC, 213 Or

App 369, 377, 161 P3d 948 (2007). “We defer to the agency’s

plausible interpretation of its own rule—including an inter-

pretation made in the course of applying the rule—if that

interpretation is not inconsistent with the wording of the

rule, its context, or any other source of law.” Id. (citing Don’t

Waste Oregon Com. v. Energy Facility Siting, 320 Or 132,

142, 881 P2d 119 (1994)). When determining the plausibility

of an agency interpretation, we apply our usual methodology

and consider the text of the rule in its statutory and regula-

tory context. Tualatin Riverkeepers v. DEQ, 235 Or App 132,

144, 230 P3d 559, rev den, 349 Or 173 (2010) (explaining that

we apply the same analytical framework that we apply to

the construction of statutes).

The labeling rule at issue here, OAR 845-025-7030

(1)(a) (June 1, 2018),1 provided:

“(1) A label required by these rules must:

“(a) Be printed on or affixed to the container holding

the marijuana item or industrial hemp commodity or prod-

uct and printed on or affixed to any outer package or con-

tainer that is used to display the marijuana item or indus-

trial hemp commodity or product for sale or transfer to a

consumer, patient or designated primary caregiver[.]”

1

We apply the labeling rule that was in effect at the time of petitioners’

label application. Since that time, OAR 845-025-7030 has been amended several

times. We note, however, that the current version of OAR 845-025-7030(1)(a) is

identical to the June 1, 2018, rule with the exception that the phrase “marijuana

item or industrial hemp commodity or product” in the 2018 rule now reads “mari-

juana item or hemp item.” Compare OAR 845-025-7030(1)(a) (June 1, 2018), with

OAR 845-025-7030(1)(a) (Jan 1, 2025).

476 Answorth, Inc. v. OLCC

In the final order, OLCC interpreted “affixed” in that rule to

mean “a secure and firm attachment, such that the label is

unlikely to fall off or be removed during transport or normal

use of the product.”

Petitioners argue that OLCC’s interpretation is not

plausible because the word “affix” simply means to physi-

cally attach. They assert that OLCC’s interpretation inserts

words and concepts into the rule that would require a

rulemaking to establish. Petitioners also argue that the con-

text demonstrates that “affixed” in OAR 845-025-7030(1)(a)

(June 1, 2018) was not intended by OLCC to mean “a secure

and firm attachment” because OLCC has promulgated other

rules that expressly use the term “securely affixed” when

that is what is meant.

OLCC, for its part, argues that its interpretation

is plausible because it is based on the plain meaning of

the word “affixed,” citing to dictionary definitions. It also

asserts that the interpretation is consistent with the context

and purpose of the rule, which in turn is consistent with the

label requirements in the statutes.

We conclude that OLCC’s interpretation of its own

rule is plausible. The issue here largely centers on OLCC’s

use of the word “affixed” in OAR 845-025-7030(1)(a) (June 1,

2018), which is not defined by statute or rule. When a word is

not defined by statute or rule, we often turn to dictionary defi-

nitions to aid in our understanding of the plain and ordinary

meaning of the word. Central Oregon Landwatch v. Deschutes

County, 276 Or App 282, 290, 367 P3d 560 (2016). As relevant

in the context of affixing a label to an item, “affix” is defined

as “to attach physically (as by nails or glue) : fasten—usually

used with to * * * <affix the label to the package>.” Merriam-

Webster’s Unabridged Dictionary, http://unabridged.merriam-

webster.com/unabridged/affix (accessed Oct 22, 2025). In

turn, “attach” is defined as “make fast or join (as by string or

glue) : bind, fasten, tie <attach price tags on each article>.”

Merriam-Webster’s Unabridged Dictionary, http://unabridged.

merriam-webster.com/unabridged/attach (accessed Oct 22,

2025). Further, “fasten” is similarly defined as “to cause

to hold to something else : attach especially by pinning,

tying, or nailing” and “to cause (parts which are separate)

Cite as 344 Or App 470 (2025) 477

to hold together : make fast and secure.” Merriam-Webster’s

Unabridged Dictionary, http://unabridged.merriam-webster.

com/unabridged/fasten (accessed Oct 22, 2025). Based on

those definitions, the plain meaning of affix, in this context,

is to physically attach or join something to something else.

The definitions also include the concepts that the attach-

ment is secure, such that it remains joined. That is conveyed

by detailing that the attachment is usually by glue or nails

and through the examples of labels on packages and price

tags on articles. Petitioners would have us read the defini-

tion for affix as “physically attach” and stop there. However,

that would require us to ignore the full concept of “affix” as

conveyed through the relevant dictionary definitions.

A dictionary definition is not the end of our inquiry.

Although those definitions aid us in understanding the plain

meaning of words, we must also consider the words in the

context in which they are used. Central Oregon Landwatch,

276 Or App at 290-91. Here, the direct context is that the

rule requires that a label must “[b]e printed on or affixed

to the container holding the marijuana item.” That context

suggests that an affixed label must be secure and not easily

removed, because the rule equates printing a label directly

onto the container (a permanent labeling) with affixing a

separate label onto the container. OLCC’s interpretation is

consistent with how the words are used in the context of the

rule.

We also consider the broader statutory and regu-

latory context. The statutory context is provided by former

ORS 475B.605 (2017), renumbered as ORS 475C.604 (2021),

which addresses labeling requirements for marijuana

items.2 That statute provides that the purpose of the label-

ing requirements is to protect the public health and safety by

ensuring that marijuana products sold for retail are labeled

with the required information. See former ORS 475B.605

(1)(a) (2017) (“As is necessary to protect the public health and

2

We cite to the statute in effect at the time OLCC enacted OAR 845-025-

7030(1)(a) (June 1, 2018). However, we note that the cited portions of former

ORS 475B.605 (2017) are identical to the current version of the statute, ORS

475C.604, with the exception that “inhalant delivery systems that contain indus-

trial hemp-derived vapor items” are now also explicitly included as items covered

by the labeling requirements.

478 Answorth, Inc. v. OLCC

safety, * * * [OLCC] shall adopt rules establishing standards

for the labeling of marijuana items, including but not lim-

ited to * * * [e]nsuring that usable marijuana, cannabinoid

concentrates and extracts, cannabinoid edibles, and other

cannabinoid products have labeling that communicates [cer-

tain required information].”); former ORS 475B.605(3) (2017)

(requiring OLCC to require that marijuana items sold or

transferred by a marijuana retailer are labeled in accor-

dance with subsection (1) and OLCC’s rules); former ORS

475B.605(4)(d) (2017) (providing that OLCC “[m]ay not adopt

rules that are more restrictive than is reasonably necessary

to protect the public health and safety”). OLCC’s interpre-

tation is consistent with that statutory purpose. The pub-

lic health and safety purpose of the labeling requirement

would not be met by labels that are not securely attached to

marijuana items, such that the label was likely to fall off or

be removed during transport or normal use.

The regulatory context provides only slight addi-

tional illumination. An OLCC rule provides that the pur-

pose of the labeling rules “is to set the minimum standards

for the packaging and labeling of marijuana items * * * that

are for ultimate sale or transfer to a consumer * * *.” OAR

845-025-7010(1). OLCC’s interpretation of affix as requiring

a firm and secure attachment is consistent with that general

purpose and its other labeling requirements. Petitioners,

however, assert that in two instances OLCC has used the

term “securely affixed” in its rules and, with that context,

“affixed” must mean something other than securely affixed.

We are not persuaded that those two instances of using the

term “securely affixed” by OLCC in sections of the mari-

juana regulations that are not part of the labeling rules

renders implausible what is otherwise a plausible interpre-

tation by OLCC.3

3

Petitioners cite to OAR 845-025-2880(4)(h) and OAR 845-025-3305(2)(a).

The first rule addresses delivery of marijuana items and requires that “[a]ll mari-

juana items must be kept in a lock-box securely affixed inside the delivery motor

vehicle.” OAR 845-025-2880(4)(h) (Dec 28, 2017). That rule does not provide use-

ful context for the labeling rule at issue here. The second rule addresses labeling

requirements for marijuana items processed directly for a cardholder and that

are not for retail sale. That rule as it existed in 2018 when OLCC promulgated

the rule at issue in this case did not use the term “securely affixed.” Instead, it

simply provided that the processor must “label the package” with the required

statements. OAR 845-025-3305(2)(a) (Dec 28, 2017). In December 2018, OLCC

Cite as 344 Or App 470 (2025) 479

Based on the text and context, we conclude that

OLCC’s interpretation of OAR 845-025-7030(1)(a) (June 1,

2018) to require “a secure and firm attachment, such that the

label is unlikely to fall off or be removed during transport or

normal use of the product” is plausible and due deference.

We thus proceed to address whether OLCC’s final

order was based in substantial reason when it concluded

that petitioners’ proposed labels did not meet the affixed

requirement in OAR 845-025-7030(1)(a) (June 1, 2018). For

its order to be supported by substantial reason, “the agency

must articulate a ‘rational connection between the facts and

the legal conclusions it draws from them.’ ” Jenkins v. Board

of Parole, 356 Or 186, 195, 335 P3d 828 (2014) (quoting Ross

v. Springfield School Dist. No. 19, 294 Or 357, 370, 657 P2d

188 (1982)).

Petitioners argue that OLCC’s conclusion lacks sub-

stantial reason because it conflicts with finding of fact 38 in

the order, which details an exchange with petitioners and

Anthony Geltosky, OLCC’s packaging and labeling special-

ist, about the labels, and the testimony of Geltosky at the

contested hearing, without explaining that conflict.

We reject petitioners’ argument. In the final order,

OLCC concluded that it had shown

“that a reasonable cannabis consumer would likely remove

the cardstock label from the container (i.e., vial) of mari-

juana product during (or before) normal use of the product.

And, because the record persuasively establishes that the

trial-sized UCT vials are not intended to be single-dose

or single-serving size, the likely removal of the cardstock

label from the vial will result in a completely unlabeled

vial of marijuana product, which constitutes a public safety

concern.”

OLCC then provided additional rational explanation that

connected its findings with its legal conclusions that peti-

tioners’ proposed label did not meet the rule requirement

that it be affixed to the container.

amended that rule to provide that the processor must “securely affix a label that

contains the following information.” OAR 845-025-3305(2)(a) (Dec 28, 2018). As

a result, that rule also does not provide useful context of OLCC’s intent when it

promulgated the rule at issue here.

480 Answorth, Inc. v. OLCC

The finding and testimony referenced by petitioner

are not in conflict with that explanation and petitioners do

not explain their position. Instead, in their opening brief,

petitioners modified a quotation from the transcript with

well-placed ellipses to make it appear that Geltosky testified

that the proposed cardstock label qualified as a label under

the rules. That was not his testimony. His testimony was

in response to a question by the ALJ whether the proposed

cardstock label was itself a container under the rules, and

he testified that “I would consider it more akin to a flag or

a hand-tag label—that our rules allow for if the container

itself that’s holding the marijuana item meets certain min-

imum requirements.” That testimony does not demonstrate

that OLCC’s order lacked substantial reason. Further, OLCC

was not required to explain its decision with respect to each

line of testimony or each piece of evidence submitted. See

D. T. v. Dept. of Human Services, 247 Or App 293, 304 n 5, 269

P3d 96 (2011) (“The ‘substantial reason’ test does not require

an agency to expressly reject each of a petitioner’s arguments

or recount all the evidence that the agency considered; rather,

it requires that an agency adequately explain ‘the reasoning

that leads * * * from the facts that it has found to the conclu-

sions that it draws from those facts.’ ” (Quoting Drew v. PSRB,

322 Or 491, 500, 909 P2d 1211 (1996) (emphases in Drew).)).

Finally, we address petitioners’ contention that

OLCC’s decision in this case was inconsistent with its

approval of other labels that were placed into evidence.

Petitioners’ argument centers on two labels for products

purchased at a marijuana dispensary that they put into

evidence at the hearing—one for a fudge bar and one for a

chocolate bar. They asserted that normal use of those prod-

ucts, which were more than one serving, left the remain-

ing unused portion unlabeled and, thus, the approved

labels were not securely affixed to the container containing

the marijuana item. Petitioners assert that the inconsis-

tent treatment of petitioners’ proposed labels in this case

requires reversal and remand for an explanation addressing

the inconsistency.

Under ORS 183.482(8)(b)(B), we will remand an

order to an agency if we conclude that an agency’s exercise

Cite as 344 Or App 470 (2025) 481

of discretion is “[i]nconsistent with an agency rule, an offi-

cially stated agency position, or a prior agency practice,

if the inconsistency is not explained by the agency[.]” In

reviewing an order for consistency, we review “to determine

if the [agency’s] findings, reasoning, and conclusions demon-

strate that it acted in a rational, fair, and principled manner

in deciding” petitioners’ case. Gordon v. Board of Parole, 343

Or 618, 634, 175 P3d 461 (2007).

Here, we question whether petitioners have identi-

fied a relevant prior agency practice that is inconsistent with

OLCC’s decision in this case. Petitioners put into evidence

two candy bars that in normal use could result in an unused

amount being unlabeled; they have not explained how that

labeling is a relevant prior practice given the dissimilarity

of the products. Regardless, in its findings in the final order,

OLCC included its position, as explained by Geltosky, for

treating chocolate bars differently from petitioners’ product.

He explained:

“[T]he chocolate bar is capable of being relabeled and [peti-

tioners’] product is not. A chocolate bar will come packaged

in a fully labeled container that protects the bar. Typically,

when a consumer removes the bar from the packaging, he or

she has the option to put the bar back in its original packag-

ing. To remove the bar, have a single serving, and leave the

bar unpackaged is irresponsible. It is also unlikely because

the longer a chocolate bar is exposed to air, the more it oxi-

dizes. In this scenario, the consumer has the convenient

option to be responsible by placing the bar back in its pack-

aging. In [petitioners’] scenario, the consumer cannot phys-

ically reattach the vial to the labeling without glue or tape

and must go through extra steps to be responsible. These

extra steps increase the risk of unintended ingestion.”

Thus, OLCC did explain any inconsistency in its treatment

of labels for marijuana fudge or chocolate bars and petition-

ers’ product. See Thomas Creek Lumber and Log Co. v. Board

of Forestry, 188 Or App 10, 24, 69 P3d 1238 (2003) (rejecting

argument for remand based on unexplained inconsistency

with prior agency practice where the agency did provide an

explanation for its different action).

We thus affirm OLCC’s denial of petitioners’ pro-

posed cardstock labels for its trial-size UCT products.

482 Answorth, Inc. v. OLCC

C. Label Violations

We next address petitioners’ first assignment of

error, which challenges OLCC’s determination that petition-

ers violated OAR 845-025-7160(1) (June 1, 2018)4 and OAR

845-025-7170(1), (3), and (4) (June 1, 2018),5 “on approxi-

mately 100 separate days from September 11, 2018, through

March 31, 2019, when it sold to retail licensees for ultimate

sale to a consumer approximately 34,741 trial-sized vials * * *

with labels that had not received approval from [OLCC].”

OLCC based that conclusion on its finding that the labels

used for the trial-size UCT that petitioner had transferred

for sale during that period were the labels that petition-

ers had submitted for approval in 2018 that OLCC denied.

Petitioners again raises two arguments: OLCC erroneously

applied the 2018 labeling rules because those rules did not

apply to product sold before April 1, 2019, and OLCC’s order

lacks substantial reason. As explained below, we reject both

of those arguments.

When OLCC promulgated the June 2018 labeling

rules, it provided in OAR 845-025-7190 (June 1, 2018) for a

sell-down period during which products transferred for sale

did not have to comply with the new packaging and labeling

rules. As relevant here, OAR 845-025-7190 (June 1, 2018)

provided:

“(1) These rules become effective on August 15, 2018.

On and after August 15, 2018, all package and label

4

OAR 845-025-7160(1) (June 1, 2018) provided:

“Prior to selling, offering for sale, or transferring a marijuana item or

industrial hemp commodity or product that is for ultimate sale to a consumer,

a licensee, a license applicant or a registrant must submit both a package and

a label application to and receive approval from the [OLCC].”

5

OAR 845-025-7170(1), (3), and (4) (June 1, 2018) provided:

“The Commission may impose a civil penalty of up to $500 per day per

violation for any of the following:

“(1) Failure to comply with these rules.

“* * * * *

“(3) Failing to receive package and label approval prior to transferring,

selling, or offering for sale a marijuana item or industrial hemp commodity

or product that is for ultimate sale to a consumer.

“(4) Transferring, selling or offering for sale a marijuana item or indus-

trial hemp commodity or product that has not received package or label

approval.”

Cite as 344 Or App 470 (2025) 483

applications received by the Commission will be reviewed

and evaluated under these rules.

“(2) All marijuana items and industrial hemp com-

modities and products packaged or transferred for sale to

a consumer on or after April 1, 2019 must be labeled and

packaged according to these rules.”

Before the ALJ, petitioners argued that labels were

subject to the 2017 labeling rules through the sell-down

period, which ended March 31, 2019, and not the 2018 rules

cited by OLCC in its violation notice, and, as a result, OLCC’s

notice was defective. In the final order, OLCC rejected that

argument, interpreting the 2018 rules as they apply to pro-

cessors as follows:

“Labels approved prior to August 15, 2018 and sold through

the March 31, 2019 sell-down period were not subject to the

labeling and packaging requirements of the 2018 new rules

package. However, labels that were not approved prior to

August 15, 2018, and that were nonetheless sold through

March 31, 2019, were not afforded that same exclusion from

the 2018 labeling and packaging requirements. Similarly,

any label application received on or after August 15, 2018

was subject to review and evaluation under the 2018 label-

ing and packaging requirements.”

(Emphasis in original.) On judicial review, petitioners chal-

lenge that interpretation as contrary to the text of OAR 845-

025-7190 (June 1, 2018) and the testimony of one of OLCC’s

witnesses.

In addressing OLCC’s interpretation of its own

rule, under ORS 183.482(8)(a), our task is to determine if

“the agency has erroneously interpreted a provision of law.”

“We defer to the agency’s plausible interpretation of its own

rule—including an interpretation made in the course of

applying the rule—if that interpretation is not inconsistent

with the wording of the rule, its context, or any other source

of law.” Papas, 213 Or App at 377. We again apply our usual

methodology and consider the text of the rule in its statu-

tory and regulatory context. Tualatin Riverkeepers, 235 Or

App at 144. Applying that methodology, we conclude that

OLCC’s interpretation is plausible and due deference.

484 Answorth, Inc. v. OLCC

As relevant here, the plain terms of OAR 845-025-

7190 (June 1, 2018) did two things: the rule made the 2018

labeling rules effective on August 15, 2018, and it provided

a window until March 31, 2019, to sell products that did

not have 2018-compliant packages and labels. However, and

importantly, the sell-down period did not provide a blanket

exemption from the August 15, 2018, effective date of the

2018 labeling rules. Although the sell-down period deferred

compliance with the labeling and packaging requirements

for sold product, it did not defer compliance with the label

preapproval requirements (or defer the effective date of the

civil penalty rule enforcing that requirement). OAR 845-

025-7190(1) (June 1, 2018) expressly provided that preap-

proval applications submitted after August 15, 2018, would

be evaluated under the 2018 rules.6 It is the preapproval

requirement that OLCC concluded petitioners had violated.

OLCC’s interpretation of OAR 845-025-7190(1)

(June 1, 2018), set out above, is consistent with the rule’s

plain text. Additionally, we perceive nothing in the regula-

tory or statutory context that is inconsistent with OLCC’s

interpretation, and petitioners point to none.

We also reject petitioners’ apparent argument that

OLCC could not apply the interpretation of OAR 845-025-

7190 (June 1, 2018) that appears in the final order, because

it was not an interpretation offered by OLCC witnesses at

the contested case hearing before the ALJ. Contrary to peti-

tioners’ assertion, OLCC is free to adopt as its own an ALJ’s

interpretation in a proposed order. That is what OLCC did

in this case when the Board of Commissioners rejected peti-

tioners’ exceptions to the ALJ’s proposed order and adopted

it as OLCC’s final order. When we give deference to an

agency interpretation of its own rules, we are giving def-

erence to interpretations by those at the agency who have

policy-making authority. See, e.g., Clardy v. Gangitano, 334

Or App 213, 221-22, 556 P3d 642, rev den, 373 Or 154 (2024)

(stating that deference “applies only to interpretations ren-

dered by agency personnel who possess interpretive author-

ity”); OR-OSHA v. Loy Clark Pipeline Co., 320 Or App 205,

6

We also note that petitioners do not dispute that the label preapproval

requirement predated the 2018 labeling rules.

Cite as 344 Or App 470 (2025) 485

210, 514 P3d 544, rev den, 370 Or 471 (2022) (“[D]eference is

owed only to the authority that promulgated the rule, not to

interpretations by those without policy-making authority.”).

The OLCC Board of Commissioners is the policy-making

authority for OLCC and the interpretation in the final order

is its interpretation. See ORS 471.705(1) (OLCC consists

“of nine commissioners appointed by the Governor”); ORS

471.720 (the OLCC administrator “shall be subject to pol-

icy direction by the commissioners”); ORS 475C.017 (setting

out powers and duties of OLCC with respect to marijuana

regulation). OLCC was not required to explain why its inter-

pretation of its own rule differed from the opinion of a staff

witness that appeared at the contested case hearing.

Finally, we reject petitioners’ substantial reason

challenge. For an order to be supported by substantial reason,

“the agency must articulate a rational connection between the

facts and the legal conclusions it draws from them.” Jenkins,

356 Or at 195 (internal quotation marks omitted).

Here, OLCC determined that petitioners violated the

2018 labeling rules by transferring products for sale with

unapproved labels after August 15, 2018—specifically,

between September 11, 2018, and March 31, 2019. That

determination was based on OLCC’s findings of fact that the

labels used on the products transferred between those dates

were not the same labels that OLCC approved for petition-

ers’ trial-size UCT product in 2017 and, instead, that the

labels were the same labels that OLCC had denied approval

for in 2018.7 OLCC did articulate a rational connection

7

OLCC found:

“From September 11, 2018 through March 31, 2019, [petitioners] trans-

ferred approximately 34,791 trial-sized vials of its UCT cannabis tincture to

licensed retailers for sale to consumers. The folded cardstock labels accom-

panying those trial-sized vials differed from any previously approved tri-

al-sized cardstock labels in the following ways:

“1) the product identity was listed as a ‘Cannabinoid Tincture;’

“2) the lettering of the product identity was in bold font;

“3) the product identity was located in approximately the middle of the

front cardstock page;

“4) [petitioners’] license number was on the back cardstock page;

“5) the driving warning stated, ‘Do not drive a motor vehicle while under

the influence of marijuana;’

486 Answorth, Inc. v. OLCC

between the facts it found and its legal conclusions, having

explained:

“The trial-sized UCT vials that [petitioners] ultimately

transferred for sale during the period September 1[1], 2018

through March 31, 2019 had labels that differed in eight

ways from the previously approved 2017 trial-sized labels.

Contrary to [petitioners’] repeated assertions, the tri-

al-sized labels that [petitioners] sold during the sell-down

period were not the previously approved trial-sized labels

with simply a new product identification and two or three

inadvertent and insignificant changes. In fact, the tri-

al-sized UCT labels that [petitioners] sold from September

11, 2018 through March 31, 2019 were the very labels that

[petitioners] had submitted for OLCC approval in July 2018

(with the intention that they be reviewed under the 2018

rules), August 2018, and December 2018—labels which

OLCC denied.”

(Emphasis omitted.)

On judicial review, petitioners argue that OLCC’s

order lacks substantial reason because it does not square

with petitioners’ preferred interpretation of OAR 845-025-

7190 (June 1, 2018) and finding of fact 15. We reject that

argument because OLCC’s interpretation of that rule is

plausible and entitled to deference. Additionally, we see

nothing in finding of fact 15 that supports petitioners’ argu-

ment that OLCC’s order lacks substantial reason.8

Petitioners also articulate for the first time on judi-

cial review that the final order lacks substantial reason

“6) the caution language stated, ‘Cannabinoid products can take up to 2

hours or more to take effect;’

“7) the first listed ingredient was ‘Cannabis flower;’ and

“8) there was no nutritional information listed.”

(Footnote and record citations omitted.) OLCC also found that “[t]he trial-sized UCT

cardstock labels that Mr. Geltosky observed on April 17, 2019 at the three retail

stores were all materially the same as the trial-sized cardstock labels that [peti-

tioners] had submitted for OLCC approval in July, August, and December 2018.”

8

Finding of fact 15 provides:

“The new rules create a special ‘sell-down’ period from August 15, 2018 to

March 31, 2019, applicable to processors such as [petitioners]. (Test. of Sweet

and Dickinson; see OAR 845-025-7190(2); see also Ex. A40.) The sell-down

period was not intended to allow a processor to sell labels that were non-

compliant with, and not approved under, the former rules. (See test. of

Sweet.)”

Cite as 344 Or App 470 (2025) 487

because the order merely assumes that the changes to

the labels negated petitioners’ 2017 label approval, with-

out conducting an analysis under the 2017 rules to deter-

mine whether those changes would have been permitted by

those rules.9 Even setting aside the lateness of petitioners’

articulation of that argument, we reject it as insufficiently

developed. Petitioners do not cite to any 2017 rules at all, let

alone rules that demonstrate that the unapproved changes

they made to their labels were permitted by their 2017 label

approval. Instead, in their reply brief, petitioners cite to OAR

845-025-7160(7) (June 1, 2018),10 a rule they assert would

allow the changes they made to the labels without resubmit-

tal for approval, and then state, “[i]t stands to reason that

if the 2018 rules allow certain non-material changes to pre-

viously approved labels without requiring re-approval, the

prior rules likely did as well.” As to the 2018 rule, petition-

ers do not explain how OLCC’s decision lacks substantial

9

Petitioners assert that they raised this issue in their exceptions to the

ALJ’s proposed order that they presented to the OLCC Board of Commissioners.

We conclude, however, that petitioners did not raise this issue. In the exceptions,

petitioners argued that the changes to the labels were changes that the 2018

rules allowed without resubmittal, specifically OAR 845-025-7160(7) (June 1,

2018). Petitioners did not directly argue, making only a passing statement in that

direction in a footnote, that OLLC was required to evaluate their labels under the

2017 rules to determine if they were approved labels, despite the changes made

to the labels. And, more importantly, petitioners never identified any 2017 rules

that supported their position that the labels were approved, despite the changes.

10

OAR 845-025-7160(7) (June 1, 2018) provides:

“Packages and labels that have been previously approved do not need to

be resubmitted if the only changes to the packaging or label are:

“(a) Changes in the:

“(A) Harvest or processing date;

“(B) Strain;

“(C) Test results;

“(D) Net weight or volume; or

“(E) UID numbers.

“(b) The deletion of any non-mandatory label information.

“(c) The addition, deletion or change in the:

“(A) UPC barcodes or 2D mobile barcodes (QR codes);

“(B) Website address, phone number, fax number, or place of address of

the licensee or registrant; or

“(C) Instructions for opening or using child-resistant packages.

“(d) The repositioning of any label information on the package, as long as

the repositioning of label information is consistent with these rules.”

488 Answorth, Inc. v. OLCC

evidence or contains legal error when it rejected petitioners’

argument that the changes were permissible under the 2018

rule without resubmittal of the label, which was the argu-

ment petitioners made in their exceptions to the ALJ’s pro-

posed order. As the 2017 rule, petitioners’ speculation about

the likely effect of an unspecified 2017 rule does not demon-

strate that OLCC’s final order lacks substantial reason,

particularly when petitioners failed to raise that argument

below.

OLCC’s final order articulates a rational connec-

tion between the facts it found and its legal conclusions.

Petitioners have not challenged any of OLCC’s findings of

fact as lacking substantial evidence, including OLCC’s find-

ings that the labels were not the 2017 approved labels, but

were, in fact, the 2018 labels that OLCC rejected. Nor have

petitioners explained a basis on which we could conclude

that OLCC’s order lacks substantial reason.

We thus reject petitioners’ first assignment of error.

D. Penalty Amount

Finally, we address petitioners’ third assignment

of error. In that assignment petitioners argue that OLCC

exceeded its discretion in imposing a $100,000 penalty for

the labeling violations because that amount is not autho-

rized by former ORS 475B.655(1) (2017), renumbered as ORS

475C.644(1) (2021).11 Because petitioners’ assignment is

grounded in their contention that former ORS 475B.655(1)

(2017) compels a particular method for calculating a penalty,

we review for an error of law. See ORS 183.482(8)(a) (provid-

ing that a court may reverse or remand an agency order “[i]f

the court finds that the agency has erroneously interpreted

a provision of law and that a correct interpretation compels

a particular action”); Springfield Education Assn. v. School

Dist., 290 Or 217, 227, 621 P2d 547 (1980) (“The dispositive

question of law on review, under this section, is whether the

agency action is within the legislative policy which inheres

in the statutory term.”).

11

We cite to the version of the penalty statute in effect at the time of peti-

tioners’ alleged violations. However, we note that former ORS 475B.655 (2019) is

substantively identical to the current version of the statute, ORS 475C.644.

Cite as 344 Or App 470 (2025) 489

In the final order, based on OLCC written policy,

OLCC concluded that petitioners’ violations were Category

III violations, which were subject to a penalty of $400 per

day per violation, with the total penalty amount capped at

$100,000. OLCC determined that the $400 per day per vio-

lation applied to each of the 34,741 items transferred with

unapproved labels.

On judicial review, petitioners argue that, under

former ORS 475B.655(1) (2017), OLCC could not assess the

penalty on a per unit basis. They argue that the plain text

provided that the metric for civil penalties is the number of

days a violation occurs and not the number of units involved

in the violation. As a result, petitioners assert that the max-

imum penalty that could be imposed is $35,200 (88 days

times $400).

We are thus required to determine whether, under

former ORS 475B.655(1) (2017), OLCC could assess the

penalty as it did. That statute provided that OLCC “may

impose for each violation of a provision of ORS 475B.600

to 475B.655, or a rule adopted under a provision of ORS

475B.600 to 475B.655, a civil penalty that does not exceed

$500 for each day that the violation occurs.”12 Nothing in

ORS chapter 475B provided further guidance on what con-

stitutes “the violation” that can be assessed “each day.”

However, OLCC has promulgated a rule specific to

assessing penalties for labeling violations. The version of

the rule that applied at the time of petitioners’ violations

provided:

“The Commission may impose a civil penalty of up to

$500 per day per violation for any of the following:

“(1) Failure to comply with these rules.

“* * * * *

“(3) Failing to receive package and label approval prior

to transferring, selling, or offering for sale a marijuana

12

Similarly, OLCC’s then-applicable general penalty rule provided that

OLCC “may impose for each violation of a provision of * * * OAR 845-025-7000

to 845-025-7190, a civil penalty of no more than $500 for each day the violation

occurs.” OAR 845-025-8590(2) (Dec 28, 2018).

490 Answorth, Inc. v. OLCC

item or industrial hemp commodity or product that is for

ultimate sale to a consumer.

“(4) Transferring, selling or offering for sale a mari-

juana item or industrial hemp commodity or product that

has not received package or label approval.”

OAR 845-025-7170 (June 1, 2018). That rule, by its plain

terms, permits a civil penalty “per day per violation,” with a

violation including a failure to receive approval before sell-

ing “a marijuana item.” In the final order, OLCC cited that

rule and applied the rule’s plain text when it determined

that a penalty could be assessed for each violation—the

34,741 items transferred with unapproved labels—which

triggered the $100,000 penalty cap.

On judicial review, petitioners fail to address the

text of OAR 845-025-7170 (June 1, 2018) or explain how

OLCC’s application of that rule here is inconsistent with

former ORS 475B.655(1) (2017), besides simply stating that

it is. We will not make arguments for petitioners that they

have failed to make for themselves. We are not persuaded

that OLCC’s application of OAR 845-025-7170 (June 1,

2018) is inconsistent with the plain text or legislative policy

expressed in former ORS 475B.655(1), and we reject peti-

tioners’ third assignment of error.

As a result, we affirm OLCC’s final order.

Affirmed.