This is the second installment on our state by state series on “The Top Ten Things You Need to Know to Start a Cannabis Business.” Our first entry, on Washington, is here. Today’s entry covers Oregon, a pot friendly state with two separate programs: a recreational marijuana program run by the Oregon Liquor Control Commission (OLCC), and a medical marijuana program run by the Oregon Health Authority (OHA). Below are the top ten things you should know before making a run at starting a cannabis business in the Beaver State.
- You need a license from the OLCC or OHA. In both the recreational and medical programs, you need a license for almost every class of marijuana related activity. In the recreational program, license categories include producers, processors, wholesalers, retailers and research labs. In the medical program, license categories include dispensaries and processors. To grow medical marijuana, you don’t need a license per se, but you do need to grow for designated patients registered to your grow site, and you need to track plants and report monthly to OHA.
- The OLCC program is generally better for new entrants. We have written time and again about the fact that Oregon’s medical and recreational programs appear to be merging. There are many reasons for this, but a big one is that many medical operators are moving toward the recreational market. When you also consider the fact that the OHA program is laced with two-year residency restrictions for certain key positions, the recreational market is a better bet for new entrants.
- If you want to go both ways, you can. Under recently passed SB 1511, recreational program licensees can register with OLCC to produce, process, transfer or sell pot for medical purposes. So, to the extent the medical market seems attractive, you can participate in both programs concurrently.
- Barriers to entry are relatively low. In a landmark step, Oregon recently did away with all residency requirements related to ownership and investment in recreational pot ventures. There are also no formal capital requirements for starting a pot business in the state. If you are able to pay an annual state license fee (around $5K) and pass a criminal background check, the only barrier to entry is the general overhead that comes with starting any business.
- Location is key. Location location location. This is critical in any business venture, but especially with Oregon marijuana. Currently, the state is a curious patchwork of friendly and unfriendly marijuana jurisdictions, and even in the friendly locales, zoning rules and time, place and manner restrictions may govern where pot ventures can exist. Before even applying for any species of OLCC license, you must submit a local Land Use Compatibility Statement (LUCS), showing that you are approved by the local jurisdiction to operate. Finding a suitable location is a challenge, but with some diligence it can be done.
- Wherever you find yourself, there you are. Each activity and license in the OHA and OLCC programs is tied to a specific address. So, if you acquire a cannabis producer license, for example, that license is not mobile; nor can it be renewed elsewhere in the state. This underscores not only the importance of finding a location where your activity is permitted, but finding one that makes sense from a business planning perspective.
- You can probably get a bank account. While the local banking scene has been slow to warm to Oregon marijuana, many of our clients now have accounts. Oregon recently passed a law designed to encourage banks to service pot business, and with federal FinCEN guidelines in place, things are looking better and better.
- Oregon has a hemp program. If you are in the cannabis game for hemp, we recently wrote that Oregon is a great place to land. The hemp application is a two-page walk in the park, and the Oregon Department of Agriculture is currently turning applications around in a couple of weeks. Because hemp, like marijuana, is statutorily defined as a “crop” in Oregon, hemp cultivation is protected by Oregon’s “right to farm” laws. These laws afford cannabis farmers ample room to operate.
- Compliance is going to be a big and constantly changing part of your life. In our last entry, we wrote that Washington State’s cannabis regulations change on at least a monthly basis. The same is true in Oregon. The legislature recently passed four new marijuana bills, and OHA and OLCC are scrambling to write rules around all of them. For the first time in 17 years, medical program growers are now required to report online, effective June 1, and OHA is still fussing with concentration limits for edible products. The only constant here is change, and it will be that way for a while.
- Things are looking good. Oregon has always been a small business state, but friendly to large companies too, like Nike and Intel. Beginning with HB 3400 last summer, the legislature, OLCC and OHA generally have done a fantastic job of creating a viable marijuana industry. Oregon is an open cannabis market where everyone gets to bring ideas, capital and expertise, and everyone gets to compete. Oregon should continue to be a great state for pot start-ups and an ideal launching pad for national ventures.
