Kevin Jacoby | January 17, 2024

Holding Cannabis Regulatory Agencies Accountable: The Constitutionality of Immunity

Oregon’s cannabis regulatory environment is challenging. Rules change frequently, some of which present existential threats to a licensee’s business model or revenue sources. Sometimes, with the aid of experienced lawyers, the courts have stepped in to put a stop to those rules in the name of avoiding irreparable harm, but those rulings often come after some amount of harm has already occurred, leading licensees to wonder whether they can sue the promulgating agency for damages. Further underscoring the challenging regulatory environment, employees of the state agencies tasked with regulating cannabis in this state, namely the Oregon Liquor and Cannabis Commission, Oregon Health Authority, and Oregon Department of Agriculture, often push the envelope of their authority to investigate to the extreme by violating licensees’ constitutional rights or outright committing torts against licensees and their personnel. In these extreme situations, licensees often seek advice as to whether they can sue the agency for the legal wrongs committed by the agency itself or that of its employees. The short answer: it’s complicated.

To be clear, suing a state agency for damages is always complicated, whether it’s regarding cannabis regulation or enforcement or not. State agencies are creatures of statute, and most agency enabling statutes (that is, the statutes that create the agency and define its powers) have a provision that the agency “may sue or be sued.” For example, ORS 475C.017(2) provides that OLCC “may sue and be sued.” However, that language merely opens the courthouse doors, but not necessarily grants a right to sue for money damages.

As a matter of federal common law, states enjoy “sovereign immunity,” which traces its origins back to English common law regarding the relationship between the monarch and the courts. Without going too far into legalese, the rationale holds that the courts get their authority from the monarch, and accordingly have no jurisdiction to hold the monarch accountable. This is why Queen Elizabeth II famously enjoyed driving her cars without ever obtaining a driver’s license – as the sovereign, she was immune from all enforcement of traffic and licensing laws without her consent.

Under the American tradition, at least according to the United States Supreme Court, and bolstered by the history of the Eleventh Amendment to the Constitution, the sovereign power once enjoyed by the monarch of England had been apportioned between the states and the federal government. Under the current understanding of state sovereign immunity, a state cannot be sued for money damages in state or federal court without its consent. State agencies are viewed as components of the state itself, and accordingly may exercise the state’s sovereign immunity. However, at common law, state sovereign immunity did not extend to individual state employees, who could be sued for torts they committed in the course of their employment by the state.

1 A “tort” is a legal term of art for a legal wrong, other than in breach of contract, that gives rise
to civil liability. Examples of common torts are negligence, assault and battery, interference with
contractual or economic relations, intentional infliction of emotional distress, etc.

Many states, including Oregon, have consented to suits seeking money damages in certain circumstances by enacting legislation outlining the types of cases that the state will consent to be sued in and also providing for certain other procedural mechanisms and limits on maximum liability that can be imposed. For example, Oregon’s Tort Claims Act operates as a waiver of the state’s sovereign immunity for all torts committed by state agencies, officers and employees, subject to a pre-suit notice requirement no more than six months after the harm occurs and an overall cap on damages available (which now increases periodically to account for inflation). Oregon’s Tort Claims Act also provides a benefit to state employees who don’t enjoy the protection of sovereign immunity at common law – the Act provides that the state shall be substituted in as a party any case against a state employee in the place of that employee, and the plaintiff’s remedy is against the state alone. This provides the plaintiff with a solvent defendant while also protecting state employees from the potentially ruinous consequences of a personal judgment.

A special problem arises with state agencies involved in cannabis regulation and the employees who work for them – the Legislature, when it codified and amended Measure 91 in 2015, inserted a statute that is now found at ORS 475C.477, which reads as follows:

“A person may not sue the Oregon Liquor and Cannabis Commission or a member of the commission, the State Department of Agriculture or the Oregon Health Authority, or any employee of the commission, department or authority, for performing or omitting to perform any duty, function or power of the commission, department or authority set forth in ORS 475C.005 to 475C.525 or in any other law of this state requiring the commission, department or authority to perform a duty, function or power related to marijuana items.”

This statute, on its face, provides blanket immunity not only to OLCC, OHA and ODA, but also to “any employee” of any of them “for performing or omitting to perform and duty, function or power” of their employing agency. This effectively overrode the qualified waiver of sovereign immunity provided in the Tort Claims Act that applies to nearly every other function of state government other than the regulation of cannabis. While the policy reasons for such immunity appears to be grounded in the fact that the state was embarking on a unique experiment in light of federal prohibition, and such the Legislature did not want these agencies or these employees to be bothered with litigation if they overstep or cause harm, it also can have a detrimental effect on regulation. Without the guardrails of the courts, the agencies and their employees have carte blanche to trample the rights of the citizens they regulate – in other words, a blanket ban on citizens’ access to the courts to redress wrongs committed against them by state actors is not exactly a model of good governance. The wisdom of this legislative policy aside, it is the law as it is currently constructed. At least according to this statute, if an OLCC inspector physically assaults you during an inspection and sends you to the hospital, you can’t sue OLCC or the inspector to cover your medical bills – the most you could do is sue for an injunction that orders the inspector not to do it again.

If this doesn’t sit right with you, rest assured, there’s more – as I mentioned above, it’s complicated. In the hypothetical posed above, this statute would indeed prevent you from obtaining a money judgment against OLCC, because the immunity it grants is consistent with sovereign immunity. In essence, by enacting ORS 475C.477, the Legislature revoked the Tort Claims Act’s waiver of sovereign immunity for torts committed in the performance of regulation cannabis and enforcement of Oregon’s cannabis laws. However, the same is not necessarily true of the statute’s grant of blanket immunity to agency employees. To the contrary, that immunity likely runs afoul of the Oregon Constitution’s Article I, Section 10, which provides as follows:

“No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation.”

The last clause, referred to by lawyers and judges as the Remedies Clause, has been interpreted by the Oregon Supreme Court to, essentially, preserve common law rights of action. In cases interpreting the clause, the Court has held that while the Legislature can tinker with the intricacies of the commonly by creating or abolishing certain duties between and among citizens, if the Legislature wants to abolish a remedy that existed at common law at the time the Oregon Constitution was ratified, it needs to provide some reasonably equivalent benefit to the class of persons that stand to lose the remedy. A quintessential example of this is the workers’ compensation system – in exchange for abolishing an employee’s right to sue their employers for injuries sustained on the job due to the employer’s negligence, the Legislature provided a benefit whereby issues of fault in the employee in causing or contributing to the injury are rendered irrelevant. In Smothers v. Gresham Transfer, the Court held that because the workers’ compensation system provided a reasonably equivalent remedy (and in fact, likely a more generous remedy), the Remedies Clause did not bar the Legislature from prohibiting workers to sue their employers for on-the-job injuries.

There is a long line of cases in Oregon jurisprudence discussing the boundaries of what a reasonably equivalent remedy is and isn’t, which still vexes the Oregon Supreme Court Justices to this day. However, within those cases is a recognition that the Remedies Clause prohibits outright barring a common law remedy without providing for any other remedy. And this is what ORS 475C.477 does – using the hypothetical above, the statute outright bars the licensee from seeking a remedy from the OLCC inspector who assaulted her simply because the assault occurred in the course of an inspection, which the licensee otherwise could have done at common law. This runs afoul of the command of the Oregon Constitution’s Remedies Clause that every person “shall have a remedy by due course of law for injury done him in his person, property, or reputation,” and is therefore unconstitutional. If confronted with a claim in the same vein as in the hypothetical, Oregon courts will likely hold that the immunity granted to agency employees is unenforceable, citing the Remedies Clause.

But, following my hypothetical, the OLCC inspector who committed the assault would likely be fired and could face criminal liability, so wouldn’t that give the licensee a rather emasculated remedy? After all, a judgment against an unemployed criminal is not likely to result in any actual money, right? Not exactly. Another provision of the Tort Claims Act requires the state to defend (that is, hire a lawyer) and indemnify (that is, pay any resulting judgment) the OLCC inspector for all claims brought against him for conduct that was arguably within the course and scope of his duties, so the state would pick up the tab anyway.

That being said, it’s not a very efficient way of settling disputes, and the first case that tests the validity of ORS 475C.477 is likely to be mired in time consuming appeals, leading to inevitable delays and costs that will be insurmountable to the average litigant. Under any rational sense of justice and good governance, the Legislature should end the blanket immunity ORS 475C.477 purports to provide and allow all claims against the state, even those involving cannabis, to be administered uniformly under the Tort Claims Act.

Until that happens, the best that operators in Oregon’s challenging cannabis regulatory environment can do is utilize the tools available under Oregon’s Administrative Procedures Act and resulting body of administrative law to prevent or put a halt to overreaching by agencies or their employees before significant harm occurs.


You can contact Kevin Jacoby at or set up a consultation by calling (503) 208-4470.

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