Oregon Marijuana for Investors: The Round-Up

Oregon cannabis attorneys
Oregon is leading the way on cannabis

We had a lot of fun at last week’s three-hour webinar on “Oregon Marijuana for Investors.” If you missed it, the recorded session and written materials are available for purchase ($60) upon written request to [email protected]. As a courtesy recap to all of our clients and regular readers who do not have three hours to spare, here are the top five items of interest, as gleaned from questions we received throughout the session.

Residency. Attendees will recall several questions along the lines of “Can a non-resident invest in, or own, an Oregon marijuana business?” The answer on both counts is an unequivocal “yes.” We attribute any confusion on this issue to effectively moot administrative rules that haven’t yet caught up to HB 4014, which abolished residency requirements back in March. So, hear this now: today and for the foreseeable future, there are no residency requirements to hold a producer, processor, wholesaler, retail or even laboratory license in the Oregon market. You can be from any state other than Oregon, or from any other country. You can be from Mars.

Local Rules. We received many questions regarding the role of local jurisdictions, and three main pieces of advice came from this conversation. First, don’t bother trying to set up shop in an “opt-out” jurisdiction. If the local city or county won’t grant you a Land Use Compatibility Statement, the state will not review your application. Second, carefully vet the costs of local compliance in the context of your particular business plan. Some jurisdictions have taken a heavy hand to marijuana governance and local rules should be fly-specked before moving on to state level compliance. Third, see whether any local action appears likely. Some jurisdictions are still in the process of adopting marijuana ordinances, both proactively and reflexively, and just like the state rules, local rules may evolve.

Valuation. We received some good questions on how a cannabis investor (or cannabis business owner) can value the worth of a marijuana business. We have written about this here and here, and the answer is generally: it’s hard, and it’s very much a case-by-case analysis. The reason it’s hard is because state legal marijuana is very new, and the reason it’s a case-by-case analysis is similar: each business is a snowflake, and few comps exist. In general, we recommend an asset based approach for businesses that have not begun operations, and a market or income approach for established, going concerns. We also explained that in Oregon, starting values will likely be lower than states like Washington or Colorado, because Oregon will not limited the number of cannabis licenses awarded.

Timelines. We received several questions regarding the timing of Oregon’s recreational program roll out, and issuance of licenses. In short, the roll out has begun. Early sales of recreational marijuana have been ongoing in Oregon since last October 1, and sales of edibles, topicals and concentrates begin June 2 (all through licensed medical dispensaries). Our Oregon cannabis lawyers already have expedited licenses for licensed recreational marijuana producers and we have many more applications in the hopper for all classes of licensees. The OLCC’s stated goal remains to have Oregon’s recreational program fully up and running this October 1. Depending on the class of license sought, a well-organized applicant who submits today should be licensed in 3 to 5 months. Call us optimistic, but a year from today, we expect the program to be fully built out.

Big Picture. We received a few general questions about big picture trends in Oregon cannabis. We believe Oregon will continue to be the vanguard state for the marijuana industry, for three reasons: (1) the abolishment of residency requirements for entrepreneurs and investors; (2) the relatively low cost and compliance barriers to market entry, as compared to other states; and (3) the lack of any cap, hard or soft, on the number of licenses issued. Today, Oregon is wide open and we expect that the state will be a proving ground for entrepreneurs and innovation as the next wave of recreational marijuana states emerges.

NOTE: Given the success of the Oregon webinar, and the feedback we received, our California cannabis attorneys Hilary Bricken, Alison Malsbury and Tiffany Wu, will this fall be hosting a webinar on the California marijuana industry, which is about to undergo major changes with the prospective passage of AUMA. Stay tuned for dates and times. The presentation will be a can’t miss for anyone interested in cannabis in the Golden State. If you want us to be sure to alert you to the date, please feel free to email us at [email protected] with that request.