Starting a cannabis company in Oregon? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in an Oregon cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.
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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Oregon?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help
Overview of legal cannabis in Oregon
Recreational and medical marijuana are both legal in Oregon. Patients with a written recommendation from a doctor can possess up to 24 ounces of usable cannabis, as well as grow marijuana at home. There are over 22,000 patients have registered for medical marijuana use in the state (although this has continues to decrease since recreational use was legalized), and 2021 sales of medical marijuana via Oregon dispensaries are expected to be around $65 million.
The number of recreational marijuana customers in Oregon is estimated to be nearly one million. Adults can possess up to 8 ounces for recreational use (one ounce in public), as well as up to four marijuana plants per person. Cannabis sales at recreational dispensaries in Oregon could reach $1.4 billion in 2018.
Because Oregon has no statewide limit on the number of cannabis licenses that can be granted, over-supply is a common issue. In just the past two years, cannabis production has increased nearly 80%, forcing wholesale prices to drop.
Cannabis business license types
Oregon issues licenses for three broad categories of medical cannabis businesses: dispensaries, cultivators (aka grow operations), and processors. The state licenses five major types of recreational cannabis businesses: producers (cultivators), processors, wholesalers, retailers (dispensaries), and testing labs
Dispensary/retailer: This is a retail storefront where people can purchase marijuana. Dispensaries must follow strict state-mandated protocols for product tracking, security, recordkeeping, and signage.
Cultivator/producer: These businesses, also called grow operations, grow cannabis plants indoors or outdoors. Marijuana is then either sold through a dispensary, to a wholesaler, or to a processor that will create products with it, such as edibles or oils. Some cultivators are “vertically integrated,” meaning they grow, process, and sell cannabis to the public. Like dispensaries, grow operations are required to keep thorough documentation, including water sources, smell abatement procedures, and so forth.
Processor: Processors buy cannabis from licensed growers, then process and/or create infused products such as edibles and sell them to dispensaries.
Wholesaler: In Oregon, recreational cannabis wholesalers buy marijuana in bulk, then sells it to other cannabis business license-holders (not the public).
Testing lab: Oregon marijuana testing labs are accredited by the Oregon Environmental Laboratory Accreditation program (ORELAP) and test cannabis based on the rules of the Oregon Health Authority. Labs test marijuana for pesticides, solvents, THC and CBD concentration, and contaminants.
Ancillary business: There are plenty of other ways to be part of Oregon’s booming cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!
Fees and other barriers to entry
Local governments can forbid cannabis companies or certain locations, so check city and county regulations.
Application fees: Applying for a medical cannabis business license in Oregon costs $500 for a dispensary or processor, but there’s no application fee for a medical cannabis cultivator! Applying for a recreational cannabis business license costs $250 for all recreational license types.
License fees: It’s $3,500 for a medical cannabis dispensary or processor license in Oregon. The medical cannabis cultivator license fee is based on the number sites ($200 per site). For recreational marijuana, it’s $2,000-$3,750 for a producer (grower) and $4,750 for a processor, wholesaler, retailer (dispensary), or testing lab. Producer costs are based on the square footage of your immature canopy (the area used exclusively to propagate immature marijuana plants): up to 625 square feet for Micro Tier 1, up to 1,250 square feet for Micro Tier 2, up to 5,000 square feet for Tier 1, and up to 10,000 square feet for Tier 2.
Tracking: All recreational marijuana business licensees have to use Oregon’s CTS, cannabis tracking system, which involves training, tags on plants, ID numbers, and more.
Do you need a cannabis business plan in Oregon?
Oregon recreational cannabis companies are required to submit a “marijuana business operating plan” as part of their application, which must say how the business will follow the state’s rules for security, employee qualifications and training, product transport, and keeping out minors. A traditional business plan isn’t required, but it will certainly make the process easier. And if you plan on raising funding from investors, you definitely need a business plan.
What to include in your business plan
Here’s what an Oregon marijuana business plan should include:
- Product/service description: Will you run a dispensary, grow operation, testing lab, processor, wholesaler, consulting firm, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a marijuana dispensary, which strains of flower or whose manufactured products will you sell?
- Market research: If you’re opening a dispensary, how many people live within five miles? If you’ll wholesale flower or edibles, how many dispensaries will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).
- Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?
- Management team: Summarize your qualifications and those of others on your management team. (Think of it as a shorter, “greatest hits” version of your resume.) Include cannabis industry experience, as well as leadership skills, customer service, and business development experience in other industries.
- Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.
- Oregon-specific requirements: If not included elsewhere in your application, you should include details in your business plan about your security system, product tracking, secure product transport, manufacturing waste plan, and anything else required by Oregon.
- Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations
Google your city or municipality name and “cannabis regulations” or “marijuana laws” (here’s a list of Oregon cities and counties that prohibit recreational marijuana). If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage or contact your city clerk, city manager, or town hall.
Helpful Links
Get expert help
Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:
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