Kaya Holdings Inc. (KAYS)

[Pennywhistle]

KAYS_LOSES_TWO_LICENSES_FOR_ILLEGAL_ACTIONS in a judgement from OLCC, Oregon's marijuana regulatory commission.

Funny how Dirty Dave and Frank the Crank are still putting out false pr's claiming to be vertically integrated.Just to clarify what the behind the scenes information I shared means. That's the two licenses needed to be vertically integrated lost, Production and Processing both!

https://www.oregon.gov/olcc/Docs/stipulated_settlements/marijuana/SSA_October2020_MJ.pdf

Sunstone Marketing Partners, LLC Robert Frey, Member/Manager dba KAYA FARMS (#A8DF) (Processor)
OAR 845-025-1160(4) – On or before August 18, 2018, Licensee or Licensee’s employees, agents, or representatives failed to notify the Commission of a change to its corporate or ownership structure, or in who has a financial interest in the business prior to making such a change when Bruce Burwick and/or MJAI Oregon 1, LLC obtained an ownership and/or financial interest in the licensed business without notification to or approval from the Commission prior to making the changes. Bruce Burwick obtained an ownership interest, as described in OAR 845-025- 1045(3), and/or a financial interest, as defined in OAR 845-025-1015(26), in the licensed business by becoming a 50% member of the licensed entity, Sunstone Management Partners, LLC, and/or providing it with approximately $3 million in capital investments. MJAI Oregon 1, LLC obtained an ownership interest, as described in OAR 845-025-1045(3), and/or financial interest, as defined in OAR 845-025-1015(26), in the licensed business by, including but not limited to: entering into a contract or contracts that allowed them to operate the licensed business, and subsequently operating the business, such that the performance of the business caused, or was capable of causing, them to benefit or suffer financially; and/or allowed them to exercise control over the business; incur debt or be entitled to incur debt or a similar obligation on behalf of the business; and/or enter into or be entitled to enter into a contract or a similar obligation on behalf of the business, other than as employees acting under the direction of the owner.

(Category I)
OAR 845-025-7520(1)(d) - On or about July 18, 2019, Licensee or Licensee’s employees, agents, or representatives failed to properly tag all marijuana inventory with a unique identification (UID) tag pursuant to the system requirements of METRC Cannabis Tracking System when there were several jars of marijuana in a room on the licensed premises that did not have UID tags on them.

(1ST Level Category III)
OAR 845-025-1410(3)(b) - On or about July 18, 2019, Licensee or Licensee’s employees, agents, or representatives failed during all hours when Licensee was not operating to keep all useable marijuana enclosed in an area that was secured with a steel door with a steel frame when several jars of marijuana were in a room with glass exterior doors.

SYNOPSIS: An investigation showed that Licensee Sunstone Partners had entered into an agreement with Kaya Farms whereby Kaya Farms was able to obtain ownership and financial interests in the licensed business without prior approval by the Commission. Pursuant to the agreement, Kaya Farms operated and exercised control over the licensed business and Licensee was no longer involved. A site inspection revealed additional Category III violations at both premises. Licensee agreed to surrender its license, and warranted that any sale of the business would not be to the entity that had obtained the unapproved interest in the business.
.
TERMS OF AGREEMENT
1. Licensee accepts responsibility for the violations as set out in the Notice. Violation Number One was Licensee’s first Category I violation. Violations Number Two and Three were Licensee’s first and second Category III violations within two years.

2. Commission staff proposed license cancellation for these violations. Licensee has begun the process of selling the business. Licensee will surrender its license on the date the transfer of ownership of the business is completed or at 12:00 PM on January 13, 2021, whichever is earlier.

3. Licensee understands and agrees that the Commission is not representing or guaranteeing that a new owner will have an approved license on or before January 13, 2021. Licensee understands and agrees that any new owner will have to fully complete the application process, and the application has to receive final approval by the Commission, prior to a license being issued.

4. Licensee agrees, represents, and warrants that the business will not be sold to the entity and/or individuals alleged to have obtained an unapproved financial and/or ownership interest in the licensed business, namely MJAI Oregon 1, LLC or Bruce Burwick, or to Kaya Holdings, Inc., the parent company of MJAI Oregon 1, LLC, or any parent, subsidiary, affiliate, or successor of Kaya Holdings, Inc.

5. Each licensee agrees to accept a letter of reprimand for the violations specified above. This letter of reprimand will become a permanent part of the licensee’s
Commission file and may be considered in any future application for any license or permit by the licensee.

6. Licensee hereby relinquishes any and all interest in any marijuana items in its inventory that have not been transferred before the effective date of license surrender, and agrees that the Commission may seize and destroy any such marijuana items.

7. Licensee withdraws its Request for Hearing in this matter.

8. In consideration of the forbearance stated herein, Licensee agrees to release and waive any and all claims of any kind, known or unknown, past or future, against the State of Oregon or its agencies, instrumentalities, employees, officers, or agents arising out of the matters set forth in the Third Amended Notice (including any prior versions of the Third Amended Notice) or this Settlement Agreement and the final order based hereon, including but not limited to any claim under federal or state law for damages, declaratory or equitable relief, under 42 USC §1983 et. seq., and for attorneys fees or costs.

9. The terms of this Settlement Agreement and the Final Order entered based on this Agreement are binding on Licensee and any of its agents, employees, representatives, successors or assigns.
10. This agreement is conditioned upon final approval of the Oregon Liquor Control Commission and will be reviewed by the Commissioners at their October 2020 Commission Meeting. If the agreement is not accepted and approved in its entirety by the Commission it is deemed null and void and Licensee’s hearing rights, if any, will be restored. If the agreement is accepted and approved in its entirety by the Commission, Licensee waives any and all rights to a contested case hearing under the Administrative Procedures Act (ORS Chapter 183) and to judicial review, or to otherwise challenge this agreement and the final order.


Sunstone Marketing Partners, LLC Robert Frey, Member/Manager dba KAYA FARMS (#035C) (Producer)
OAR 845-025-1160(4) – On or before August 29 18, 2018, Licensee or Licensee’s employees, agents, or representatives failed to notify the Commission of a change to its corporate or ownership structure, or in who has a financial interest in the business prior to making such a change when Bruce Burwick and/or MJAI Oregon 1, LLC obtained an ownership and/or financial interest in the licensed business without notification to or approval from the Commission prior to making the changes. Bruce Burwick obtained an ownership interest, as described in OAR 845-025- 1045(3), and/or a financial interest, as defined in OAR 845-025-1015(26), in the licensed business by becoming a 50% member of the licensed entity, Sunstone Management Partners, LLC, and/or providing it with approximately $3 million in capital investments. MJAI Oregon 1, LLC obtained an ownership interest, as described in OAR 845-025- 1045(3), and/or financial interest, as defined in OAR 845-025-1015(26), in the licensed business by, including but not limited to: entering into a contract or contracts that allowed them to operate the licensed business, and subsequently operating the business, such that the performance of the business caused, or was capable of causing, them to benefit or suffer financially; and/or allowed them to exercise control over the business; incur debt or be entitled to incur debt or a similar obligation on behalf of the business; and/or enter into or be entitled to enter into a contract or a similar obligation on behalf of the business, other than as employees acting under the direction of the owner.

(Category I)
OAR 845-025-7520(1)(c), (d) - On or about July 18, 2019, Licensee or Licensee’s employees, agents, or representatives failed to properly tag all marijuana inventory and marijuana plants that were at least twenty four inches or identified as female with unique identification (UID) tags pursuant to the system requirements of METRC Cannabis Tracking System when there were bags of marijuana trim in a freezer, marijuana in two different drying rooms, and immature marijuana plants that were identified as female on the licensed premises that did not have UID tags on them.


(1st Level Category III
OAR 845-025-1410(3)(b) - On or about July 18, 2019, Licensee or Licensee’s employees, agents, or representatives failed during all hours when Licensee was not operating to keep all useable marijuana enclosed in an area that was secured with a steel door with a steel frame when marijuana was stored in rooms that did not have steel doors and the exterior door leading into the licensed premises was not a steel door with a steel frame.

(1st Level Category III)
SYNOPSIS: An investigation showed that Licensee Sunstone Partners had entered into an agreement with Kaya Farms whereby Kaya Farms was able to obtain ownership and financial interests in the licensed business without prior approval by the Commission. Pursuant to the agreement, Kaya Farms operated and exercised control over the licensed business and Licensee was no longer involved. A site inspection revealed additional Category III violations at both premises. Licensee agreed to surrender its license, and warranted that any sale of the business would not be to the entity that had obtained the unapproved interest in the business.

TERMS OF AGREEMENT
1. Licensee accepts responsibility for the violations as set out in the Notice. Violation Number One was Licensee’s first Category I violation. Violations Number Two and Three were Licensee’s first and second Category III violations within two years.

2. Commission staff proposed license cancellation for these violations. Licensee has begun the process of selling the business. Licensee will surrender its license on the date the transfer of ownership of the business is completed or at 12:00 PM on January 13, 2021, whichever is earlier.

3. Licensee understands and agrees that the Commission is not representing or guaranteeing that a new owner will have an approved license on or before January 13, 2021. Licensee understands and agrees that any new owner will have to fully complete the application process, and the application has to receive final approval by the Commission, prior to a license being issued.

4. Licensee agrees, represents, and warrants that the business will not be sold to the entity and/or individuals alleged to have obtained an unapproved financial and/or ownership interest in the licensed business, namely MJAI Oregon 1, LLC or Bruce Burwick, or to Kaya Holdings, Inc., the parent company of MJAI Oregon 1, LLC, or any parent, subsidiary, affiliate, or successor of Kaya Holdings, Inc.

5. Each licensee agrees to accept a letter of reprimand for the violations specified above. This letter of reprimand will become a permanent part of the licensee’s Commission file and may be considered in any future application for any license or permit by the licensee.

6. Licensee hereby relinquishes any and all interest in any marijuana items in its inventory that have not been transferred before the effective date of
license surrender, and agrees that the Commission may seize and destroy any such marijuana items.

7. Licensee withdraws its Request for Hearing in this matter.

8. In consideration of the forbearance stated herein, Licensee agrees to release and waive any and all claims of any kind, known or unknown, past or future, against the State of Oregon or its agencies, instrumentalities, employees, officers, or agents arising out of the matters set forth in the Third Amended Notice (including any prior versions of the Third Amended Notice) or this Settlement Agreement and the final order based hereon, including but not limited to any claim under federal or state law for damages, declaratory or equitable relief, under 42 USC §1983 et. seq., and for attorneys fees or costs.

9. The terms of this Settlement Agreement and the Final Order entered based on this Agreement are binding on Licensee and any of its agents, employees, representatives, successors or assigns.

10. This agreement is conditioned upon final approval of the Oregon Liquor Control Commission and will be reviewed by the Commissioners at their October 2020 Commission Meeting. If the agreement is not accepted and approved in its entirety by the Commission it is deemed null and void and Licensee’s hearing rights, if any, will be restored. If the agreement is accepted and approved in its entirety by the Commission, Licensee waives any and all rights to a contested case hearing under the Administrative Procedures Act (ORS Chapter 183) and to judicial review, or to otherwise challenge this agreement and the final order.