Ohio has legalized recreational cannabis. Click HERE to learn more about cannabis business opportunities in Ohio.

How to open a dispensary in Oregon

Overview

Are you considering how to open a dispensary in Oregon? For those looking to enter the cannabis market, a deep understanding of Oregon’s state regulations is essential. This page offers valuable insights into upcoming developments and changes within the state’s cannabis industry. Stay informed with the most recent updates and information about starting a cannabis business in Oregon. 

History of Cannabis Legalization in Oregon

Oregon’s path to cannabis legalization and reform is a testament to its role as a pioneer in cannabis policy in the United States. The journey began in 1973, marking a significant milestone as the first U.S. state to decriminalize the possession of small amounts of cannabis. This progressive move laid the foundation for future cannabis-related reforms.

In 1998, Oregon took a major step forward with the passage of the Oregon Medical Marijuana Act through Ballot Measure 67. This act legalized the use of marijuana for medical purposes, allowing patients with qualifying medical conditions to use cannabis for treatment. This legislation positioned Oregon as a leader in recognizing the medicinal benefits of cannabis.

The landscape of cannabis legalization in Oregon underwent a significant shift with the approval of Measure 91 in 2014. This measure, which received a 56% majority vote, legalized the non-medical cultivation and use of marijuana for individuals aged 21 and over. It established a regulated system for producing, selling, and taxation of marijuana, overseen by the Oregon Liquor and Cannabis Commission (OLCC). This marked a substantial shift in Oregon’s cannabis policy, transitioning from medical to recreational use.

In 2015, Oregon enacted Senate Bill 460, a crucial law that permitted medical marijuana dispensaries to sell cannabis for recreational use to adults over 21, effective from October 1, 2015. Initially, this served as a temporary measure, allowing dispensaries to sell recreational cannabis without needing a specific license from the Oregon Liquor Control Commission (OLCC), but they were required to follow certain guidelines set by the Oregon Health Authority. The regulatory landscape evolved on January 1, 2017, when it became mandatory for dispensaries to obtain an OLCC license to continue recreational sales. This marked a transition to a more formal and structured regulatory framework under the OLCC. Senate Bill 460 played a key role in establishing Oregon’s comprehensive system for the regulation and taxation of marijuana sales.

Recent legislative changes have continued to refine Oregon’s cannabis policies. Notable bills include HB3000, regulating artificially derived cannabinoids and overseeing hemp processing and sales; HB2284, proposing a state commission for hemp operators; and SB408, aimed at streamlining licensing processes for marijuana businesses. Additionally, HB2519 allows for the delivery of marijuana items by retailers to consumers in adjacent cities or counties, and SB808 grants OLCC inspectors “peace officer” status, enhancing enforcement capabilities.

In 2019, Oregon took a significant step toward adapting to potential federal cannabis law changes by legalizing interstate cannabis commerce. Governor Kate Brown signed Senate Bill 582, allowing Oregon’s cannabis operators to export their products to neighboring states with legal cannabis programs. This bill aims to address the oversupply in Oregon’s cannabis market, where a study found that the state’s current cannabis stock could last over six years at current consumption rates. Implementing this interstate commerce program depends on federal government approval, as no federal policy currently exists on this matter. Additionally, the transportation of exported cannabis products is restricted to roadways and is limited to states where cannabis is legal, such as Washington, California, and Nevada.

Other significant legislation includes Senate Bill 420, introducing a cannabis expungement process for individuals with minor possession charges, and Senate Bill 218, which allows the Oregon Liquor Control Commission to temporarily halt new cannabis production licenses based on market supply and demand. Senate Bill 970 protects medical cannabis patients from housing discrimination, specifying that landlords cannot discriminate against renters based on their medical marijuana patient status or convictions for marijuana use or possession. These legislative efforts collectively underscore Oregon’s commitment to fostering a balanced, equitable, and progressive cannabis industry.

Local Cannabis Restrictions & Laws

In Oregon, there is a local option opt-out that allows individual cities and counties within the state to decide whether they want to permit the sale of recreational marijuana within their jurisdiction. This provision was established to respect local preferences and give communities the autonomy to decide whether or not they want to participate in the legal cannabis market. This document identifies areas where licensed recreational marijuana businesses are prohibited.

Medical Marijuana Program Opportunities

Medical marijuana has been legal in Oregon since the passage of Ballot Measure 67 in 1998, leading to the creation of the Oregon Medical Marijuana Act. Managed by the Oregon Medical Marijuana Program (OMMP) under the Oregon Health Authority (OHA), this legislation allows for the cultivation, production, and sale of marijuana for medical purposes. It provides a legal framework for patients and caregivers to access medical cannabis, emphasizing patient care and ensuring the quality of medical cannabis products.

Oregon’s medical marijuana program is a model of comprehensive and effective regulation. Administered by the Oregon Health Authority (OHA) through the Oregon Medical Marijuana Program (OMMP), it focuses on ensuring that dispensaries meet rigorous health and safety standards, provide accurate product labeling, and maintain easy patient access. This framework emphasizes patient care, ensuring the quality of medical cannabis, and facilitating safe access, thereby reflecting Oregon’s commitment to responsible and patient-centric medical marijuana management.

How to Apply for a Medical Marijuana Dispensary License in Oregon

In Oregon, the licensing process for medical marijuana dispensaries is more straightforward compared to the recreational sector. The Oregon Health Authority (OHA), through the Oregon Medical Marijuana Program (OMMP), oversees the primary licensing for these dispensaries. The essential license required is the Medical Marijuana Dispensary License. This license permits the operation of a medical marijuana dispensary, authorizing the sale of cannabis products to registered patients and their caregivers. It mandates compliance with state regulations, which cover aspects such as product quality, patient privacy, meticulous record-keeping, and robust security measures.

To apply for the Oregon Medical Marijuana Program, follow these steps:

  1. Online Application: Register and apply at mmdapply.oregon.gov. After submission, you’ll receive an MMD# for all future communications. Save the confirmation email and ensure your account is confirmed.
  2. Account Confirmation: You’ll need to verify your account through a separate email, which is essential for accessing your account. This email will also include your MMD#.
  3. Application Fee Payment: Pay a $4000 fee (including a $3500 registration fee and a $500 non-refundable application fee) within five days of application submission. This can be done online or via a link in the confirmation email. Your application won’t be processed until payment is received.
  4. Submitting Required Documents: After your initial application, you’ll be notified to submit the required documents within 30 days. These can be uploaded to your MMD account or mailed to the Oregon Health Authority. Avoid sending duplicates of uploaded documents.
  5. Background Check: Pay a $35 fee for each individual listed on the application. Visit the Background Check page for more details.
  6. Checking Application Status: Monitor your application’s progress by logging into your MMD account. Remember to include your MMD# on all submissions to ensure they are correctly matched to your application.

Medical Marijuana License Types

In Oregon, the medical marijuana industry encompasses various license types, each catering to different aspects of the medical cannabis sector. Aside from dispensaries, there are also other types of licenses available. Here’s a brief overview of each license type:

  • Growers: Grower licenses are for individuals or entities that cultivate medical marijuana. They are responsible for growing cannabis in compliance with state regulations, ensuring quality and safety standards.
  • Processors: Processor licenses are issued to businesses that transform raw cannabis into various medical marijuana products. This includes the creation of edibles, tinctures, concentrates, and other forms of medical cannabis.
  • Property Owners: This category involves property owners who lease or rent space for medical marijuana-related activities. They must comply with specific regulations and guidelines to ensure their properties are used lawfully for cannabis cultivation, processing, or sale.
  • Laboratories: Laboratories are licensed to test medical marijuana for potency and contaminants, ensuring product safety and compliance with health standards. They play a critical role in maintaining the integrity and quality of medical cannabis products.

Recreational Marijuana Program Opportunities

Effective in 2016, Measure 91 led to the legalization of recreational marijuana under the regulation and taxation of the Oregon Liquor and Cannabis Commission (OLCC). The OLCC is in charge of overseeing all aspects related to recreational marijuana. This includes the regulation of businesses that sell marijuana. 

Recreational Marijuana Dispensary License Application

Here is an outline of a comprehensive process for obtaining a recreational marijuana license in Oregon based on the OLCC Recreational Marijuana License Application Flowchart.

  1. Application Submission: Applicants start by submitting their license application through the OLCC’s online licensing system, accompanied by the required application fee.
  2. Land Use Compatibility Statement: This crucial document is requested from the local government and must be included in the application. It determines if the proposed use of the premises aligns with local zoning regulations. If the proposed use is prohibited, the application will be denied.
  3. Completeness Review: The OLCC License Investigator reviews the application for completeness, working with the applicant to gather any additional necessary information.
  4. Premises Inspection: An OLCC Inspector visits the proposed site to check for compliance with physical requirements, including security and operational standards.
  5. Application Review and Possible Denial: The application undergoes a thorough review for compliance with administrative rules and Oregon law. If issues are identified, the applicant may have the opportunity to correct them. However, failure to meet standards or a second failed inspection can lead to application denial.
  6. License Fee Payment: Once the application and premises inspection requirements are satisfactorily met, the applicant is required to pay the licensing fee through the online system.
  7. License Issuance: Upon approval and fulfillment of all requirements, the OLCC issues the license, which the applicant can print and must display prominently at the licensed location.

This flowchart provides a detailed roadmap for applicants, emphasizing the importance of compliance with local zoning laws, thorough preparation for inspections, and compliance with OLCC regulations throughout the application process.

Recreational Cannabis License Types

Businesses operating in the cannabis industry are required to obtain a license from the Oregon Liquor Control Commission (OLCC). There are various types of licenses available, each catering to different aspects of the industry:

  • Recreational Marijuana Producer License: This is for growers, allowing them to sell their products to processors, wholesalers, and retailers.
  • Recreational Marijuana Processor License: Aimed at businesses that create products like concentrates, edibles, and extracts from purchased cannabis. These processors can sell their products to wholesalers or retailers.
  • Recreational Marijuana Wholesaler License: This license is for entities involved in the buying and selling of marijuana products among licensed businesses.
  • Recreational Marijuana Retailer License: Designed for businesses that sell marijuana products directly to the end consumer.

Additionally, there are specialized licenses:

  • Laboratory License: For testing cannabis products for THC, CBD, mold, and other elements.
  • Research Certificate: For conducting approved research on cannabis.

It is important to note that on April 4, 2022, the Governor signed House Bill 4016 (2022), requiring the OLCC to stop processing applications for new producer, processor, retailer, or wholesaler licenses. The moratorium will remain in effect until March 31, 2024. 

Understanding the Business Landscape

When embarking on the journey to open a dispensary in Oregon, the first step involves a deep understanding of the state’s cannabis laws and regulations. A solid foundation for your dispensary begins with a well-thought-out business plan. This plan should include a detailed market analysis to grasp the competitive landscape and understand your target customer demographics. It’s crucial to outline your unique selling points, marketing strategies, and plans for growth in the business strategy section.

Financial Planning and Management

Financial planning is another critical element. You need to project your revenues, expenses, and profitability accurately. Additionally, establish a clear management structure, outlining the roles and responsibilities of key team members.

Licensing Process

Before you embark on opening a dispensary in Oregon, it is important to thoroughly understand the state’s cannabis laws and regulations. The application process for a dispensary license, available through the Oregon Liquor Control Commission (OLCC) website, involves comprehensive background checks for all business owners and key staff, along with the submission of necessary compliance documents.

To operate legally, dispensary owners and staff must meet specific qualifications and undergo training in areas like safety and security. Local government approvals, including permits, are often required, and staying updated on cannabis laws through regular training is strongly recommended.

Financial Considerations

Opening a dispensary involves several financial considerations. Initial expenses encompass licensing fees, property costs, renovations, and security installations. Ongoing operational costs include buying inventory, employee salaries, utilities, and insurance. Additionally, compliance costs cover legal, accounting, and inventory tracking expenses. Financing options vary, ranging from traditional bank loans to cannabis-specific financial solutions. It’s vital to create a detailed budget that accounts for both startup and ongoing costs to ensure financial stability.

Taxation is a critical aspect to consider. Dispensaries in Oregon are subject to state and local taxes, including a state cannabis tax. To navigate this complex tax landscape, it’s advisable to consult regularly with a tax professional experienced in cannabis taxation.

Business Operations and Management

Effective dispensary management in Oregon requires careful attention to various components. Staffing is a primary consideration, so you’ll need to hire qualified personnel who can be compensated competitively. Providing professional training for your staff is essential to ensure compliance with state regulations and to deliver high-quality customer service.

Implementing a strong Point of Sale (POS) system is crucial for efficient inventory management, sales tracking, and compliance with state reporting requirements. Security measures are also of the highest priority, including the installation of surveillance systems, secure product storage, and protocols for handling cash and preventing theft.

Current Challenges and Opportunities 

The Oregon cannabis market presents a unique set of challenges and opportunities. One of the primary challenges is the market surplus, which has led to an oversupply of cannabis products. This situation demands strategic planning in inventory management and market differentiation. 

On February 1, 2023, the Oregon Liquor and Cannabis Commission released its fourth report on the state’s recreational marijuana market, highlighting issues such as oversupply and a decrease in demand, which have led to economic challenges and a buildup of unsold stock.

The 2023 report from the Oregon Liquor and Cannabis Commission shows that Oregon’s cannabis market faced difficulties recently. After a year of high sales in 2020, too much cannabis was grown in 2021, leading to more supply than needed. This oversupply caused a big drop in prices and the total sales fell from $1.2 billion in 2021 to $994 million in 2022. In 2021, the demand for cannabis was only about half of what was produced, and though it got slightly better in 2022, the market still struggled. Additionally, the report points out that customers are now buying less traditional marijuana and more products like edibles.

The 2023 outlook for Oregon’s recreational marijuana market is uncertain, with challenges like excess inventory and changing consumer tastes, despite a potential market correction due to reduced production in 2022. The report notes the market’s resilience but acknowledges the significant impact of federal laws and intense competition.

In October 2023, two prominent cannabis trade and lobbying organizations merged to create the Cannabis Industry Alliance of Oregon. This merger brings together over 500 member businesses with the goal of effectively advocating for Oregon’s cannabis industry, valued at nearly $1 billion. The new alliance focuses on tackling challenges like low market prices and sustainability, addressing recent industry scandals, and advocating for necessary federal policy changes, particularly in areas of interstate commerce and banking.

Additionally, banking issues remain a concern due to the federal status of cannabis, making financial transactions and access to traditional banking services more complex for cannabis businesses.

Despite these challenges, there are significant opportunities for growth and innovation in the Oregon cannabis industry. The evolving landscape offers potential for new product development, market expansion, and the adoption of sustainable practices. Dispensaries that can navigate the regulatory environment and adapt to market needs are well-positioned for success.

With the right approach, including a strong business plan, effective management strategies, and a focus on compliance, a dispensary in Oregon can thrive. 

Given the evolving landscape of Oregon’s cannabis industry, we will continue to keep you up-to-date on all relevant news and legislation on opening a dispensary in Oregon. By adding yourself to our Oregon Cannabis Mailing List (below), we will keep you updated on all relevant news that matters, and not so easy to find news and comments based on Oregon Legalization below. This includes but is not limited to:

  • What are the most recent developments regarding cannabis in Oregon?
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