With cannabis and its derivatives slowly becoming legal in most states, there are plenty of ways to make money. Over half of US states have legalized cannabis for medical or recreational use. One of the early pioneers in legalization is Oregon, which approved the use of medical marijuana almost two decades ago in 1998 and finalized the law by allowing recreational use in 2014. This post explains how to start your own cannabis business in Oregon the right way.
What Is The Law
Before going too deep into the weeds, it is worthwhile discussing the existing laws surrounding cannabis use in this state. As mentioned in the introduction, marijuana legalization in Oregon has a long history and was one of the first states to implement regulations surrounding the use of medical marijuana in 1998. Furthermore, voters in the state voted to legalize the recreational use of cannabis in 2014. Nevertheless, this came with some caveats and regulations, including:
- Users must be 21 years or older.
- They may only possess up to one once in public.
- Users may possess up to eight ounces in private.
- It is still illegal on the federal level.
- Cannabis can only be grown and distributed by those registered with the Oregon Liquor Control Commission (more on that later).
- It is illegal to drive under the influence of cannabis.
Laws You Should Know Before You Start
Just because it is legal to consume cannabis doesn’t mean it is free from a swathe of regulation. Therefore, before you start selling, you should familiarize yourself with several laws.
- Oregon Revised Statutes 475B: Introduces the law allowing recreational marijuana use.
- Oregon Revised Statutes 475B.400-525: This law is also known as the Oregon Medical Marijuana Act.
- Chapter 845 – Division 25: This sets out the administrative rules for recreational use.
Aside from the usual staid regulations regarding legislation, there are several rules you must follow before setting up shop. For instance, new businesses must register their land usage and keep impeccable records of how much they grow. Additionally, there are different pesticide usage regulations if you plan on using them on your farm.
How To Open Your First Cannabis Business
Once you have read up on the various laws and regulations surrounding this subject, it is time to consider the business side.
Acquire Sufficient Funding
As with any business, you must ensure you have enough capital to open your business. This includes not only the cash to get your business off the ground, but also to apply for official licenses. Application fees can range anywhere from $100 to $5,000, depending on the size and scale of your intended operation. Moreover, you will have to pay franchise fees if you intend to become a franchisee. Nevertheless, some estimates put the cost of opening a cannabis business in Oregon as high as $1 million (depending on a wide range of factors). Most people don’t have this kind of money lying around and will often resort to taking out a loan. However, this can be problematic in some cases as many banks are unwilling to lend to businesses involved in this industry. Nonetheless, you should find an institution willing to lend you money with some digging.
Get A License
Once you have your business plan and capital ready, your first step is to apply for a permit. These are handled by the Oregon Liquor and Cannabis Commission (OLCC), which regulates all intoxicating substances in the state. You can apply online by following their instructions and submitting all relevant documentation. You are also obliged to notify the commission about all parties involved, including but not limited to:
- Partners with more than a 10% stake in the business
- Financial backers
- Private lenders
- The legal entities that help you set up and run your business
You will also have to submit your business plan, so the commission can assess your overall plan for the company. Once you have entered all pertinent information, you can pay the fee and submit your application. In addition to these details, you must submit the fingerprints and background checks of all parties involved in the business. Once you have completed this step, you will need to wait to find out whether you have been successful or if you need to reapply.
Understand Your Competition
Aside from the technical details of opening a marijuana business, you need to understand that cannabis has been legal in Oregon for a long time. There are many established players with loyal customers and a reputation in this market. Nonetheless, don’t let this dissuade you, as there is still plenty of room as long as you know what you’re doing. Therefore, in your business plan, you should have already dedicated a section to how you will differentiate yourself from existing businesses in your area. In some cases, this will manifest in your advertising and marketing efforts, while in others, it could develop new and exciting strains.
Get The Right Premises
Location is vital if you want to succeed in this game, as it can make or break your business. However, Oregon law states that your premises must be 1,000+ feet away from all schools and other marijuana businesses.
Hire The Right Team
If you want to make money in any business, you need to surround yourself with the right people. In the cannabis industry, this is especially important due to its technical nature. Therefore, you should consider hiring those with expertise in:
- Growing: Just because you have grown weed in your backyard before doesn’t mean you understand the complexities of a large-scale operation. Do yourself a favor and hire those who do.
- Marketing: You can choose to hire an in-house team or outsource it, but it needs to be on point. You will not be able to sell your business if people are unaware of its benefits.
- Quality control: If you really want to stand out, you need to hire a quality control team.
- Accounting: The more legal something is, the more tax you pay… that’s just how it is. Therefore, you should get yourself a quality accountant who can keep tabs on your operation and ensure you pay the right amount of tax.
- Transportation: These days, you might need to deliver your product to compete. Your best option is to hire a warehouse manager who can oversee the logistical side of things.
Hopefully, this post has provided you with some vital information regarding setting up your first cannabis business in the great state of Oregon. As long as you comply with the industry-specific regulations, selling cannabis is much like selling any other product. Have a great concept, hire the right team and invest in marketing.