Current through Register Vol. 48, No. 38, September 20, 2024
a) A
license issued by the Department shall be valid only for the specific
dispensing organization identified on the application and for the specific
location proposed and approved by the Department.
b) Any proposed change of ownership or sale
or transfer of a license must be requested by the dispensing organization in a
form or manner prescribed by the Department. Upon review, the Department will
approve a proposed change of ownership or sale or transfer of a license that
complies with the Act and this Part. If the Department does not approve of the
proposed changes, the dispensing organization is prohibited from undertaking
those changes.
c) The Department
shall receive approval from the current dispensing organization to engage with
the buyer regarding the Department's review and approval of any change of
ownership or sale or transfer of a license. Approval shall be on a form or
manner provided by the Department and made readily available on its
website.
d) As used in this
Section, a "sale" includes but is not limited to a transaction to acquire at
least 51% of the dispensing organization licenses between an existing license
holder and a buyer that is not already registered as a principal officer on the
affected licenses.
e) As used in
this Section, a "transfer" includes but is not limited to a transaction to
acquire a dispensing organization license, which results in a change of at
least 51% of the ownership structure of the dispensing organization, between
persons that are already registered as principal officers on the affected
licenses. A "transfer" shall not include a reallocation as described in Section
1291.213(c).
f) As used in this
Section, a "change of ownership" means any or all of the following, or any
combination thereof:
1) Any action which
results in a change of at least 51% of the ownership structure of the
dispensing organization;
2) A
change in an employee identification number (EIN) associated with the
dispensing organization;
3) The
addition of a person that will have a revenue sharing arrangement with or
assume the responsibility for the debts of the dispensing
organization;
4) Any agreement or
contract between a dispensing organization and a third-party MSC in which the
MSC offers its services or expertise to the dispensing organization through an
instrument, such as a management service agreement that does not otherwise meet
the exception for a consultant or conditional management service agreement
under Section 1291.214. If an agreement or contract between a dispensing
organization and a third-party exists that does not meet the limited exception
under Section 1291.214, then all individuals who meet the definition of a
principal officer under Section
1291.30 and the Act shall be
approved by the Department prior to the agreement or contract taking effect;
or
5) Any action which indicates a
change in control over the dispensing organization. In evaluating whether a
person exerts "control" over a dispensing organization, the Department will
consider the totality of the evidence, including, but not limited to, the
following or any combination thereof:
A) Any
action which results in a person owning or controlling at least 51% of the
dispensing organization that does not otherwise qualify for an exemption under
Section 1291.213, if any;
B) The
person's ability to materially influence and direct the operational and
managerial decisions of the dispensing organization including but not limited
to corporate decision-making, employment decisions, product selection, access
to security systems, advertisement decisions;
C) The person is an immediate family member
of one or more persons in control of the dispensing organization and has a
common purpose or motive relating to their collective ability to materially
influence and direct the operational and managerial decisions of the dispensing
organization. An "immediate family" member as used herein shall mean a spouse
(other than a spouse who is legally separated from the individual under a
decree of divorce or separate maintenance), parents, siblings, and children
whether by blood, marriage or adoption; or
D) The person has the ability to control the
proxy machinery or to win a proxy contest;
E) The person is a primary creditor or a
guarantor, such as through a loan or guaranty agreement, of the dispensing
organization. As used in this subsection "primary creditor" means a person who
would receive an ownership interest requiring registration as a Principal
Officer in a dispensing organization upon a default of a loan or other similar
agreement.
