An introductory guide to setting up a retail marijuana business in Oregon
There are several types of marijuana businesses in Oregon, including production (growing), laboratory testing, processing, wholesaling, and retail.
If you are just beginning to research your business options, you should know that the OLCC has a moratorium on production applications until the year 2022, and huge backlogs on other applications. We are going to look at the first steps for starting a retail business.
Oregon Dispensary Application
Starting a marijuana business in Oregon is not going to be easy, and it may take years before your store is fully operational.
The good news is that the application process, managed by the Oregon Liquor Control Commission (OLCC), is designed to ensure you have everything in place to start a safe and successful dispensary.
The OLCC application will require you to put together a business plan, find and clear a retail location, and get all your permits in place. After your application is submitted, OLCC will assign an investigator. If your application is approved, you can pay the retail licensing fee and get started.
By the time you are done applying for your retail license, you will be very familiar with OLCC Division 25 Section 845-025-1030, which outlines the requirements and process for setting up a dispensary.
What you need for the Oregon Marijuana Retailer Application:
- A completed Application form, including a business plan and security plan
- A Land Use Compatibility Statement (LUCS) that shows how your dispensary would be consistent with your local government’s land use laws.
- Proof of the lease or property deed for your proposed location.
- The floor plans and a premises map.
- Completed questionnaires about the business organization;
- Completed individual history forms;
- $250 non-refundable application
- $4,750 retailer licensing fees (due when your application is granted)
- (Download PDF- short dispensary checklist)
The application is a lot of work. Here’s a breakdown of what you’ll need to complete it.
How To Choose A Location For Your Dispensary?
Your dispensary location is integral to your business plan and application. If you consider taking over an existing location, you’ll want to confirm that the previous owners covered all of these bases.
How Many Dispensaries Does Oregon Have?
Oregon currently has about 16.5 dispensaries per 100,000 residents, a higher proportion than any other state that allows for recreational marijuana sales. Despite this high proportion—and our reputation as a green-friendly state—retail marijuana is still prohibited in parts of Oregon. The OLCC maintains a Record of Cities and Counties Prohibiting Licensed Recreational Marijuana Facilities (pdf). As other markets become saturated, we may see more pressure exerted on local governments to review their prohibitions, but as of now, these underserved markets aren’t an option.
List Of Oregon Approved Retailers
Review the OLCC list of approved retail licenses to see where dispensaries are already established. While all of these locations have been approved for a recreational marijuana license, a few are still pending based on licensing fees.
OLCC approved retail licenses (pdf)
How To Choose The Retail Space For Your Dispensary?
There are commercial real estate agents who specialize in these properties, and there are some cities and towns that encourage the development of existing properties into recreational marijuana retail spaces.
Your store location must:
- be commercially zoned,
- at least 1000 feet away from a school,
- with separate consumer and storage areas.
The application security plan addresses this in detail, but there are significant security requirements for a retail dispensary in Oregon. The Operating and Security Plan portion of the Retail Application asks detailed questions about your plans for:
- A security alarm system;
- Commercial grade door locks are installed on every external door and gate;
- 24-hour high resolution video surveillance and back-up;
- A surveillance observation room or restricted area; and,
- A safe or vault for storing all products.
Again, if you are taking over the license and location of an existing marijuana business in Oregon, then it should be set up to meet all of these requirements.
There is a lot to recommend this course of action, which is out of reach for anyone without significant financial support. Namely, the transfer of licenses is happen within in a matter of months, while new retail applications are reportedly taking years for OLCC approval.
How To Create A Site Plan?
A Land Use Compatibility Statement (LUCS) is required to submit an application for a new retail license. The LUCS is supposed to show how your dispensary would be consistent with your local government’s land use laws.
After you’ve identified your potential dispensary location, you will need to contact the county’s Public Works department to get started on the LUCS. In Lane County, among others, you will need to apply for a Zoning Determination, and submit a detailed site plan to obtain approval.
You’ll also need to provide detailed floor plans and a premises map with your security plan.
How To Find Funding For A Dispensary?
hundred dollar bills
This is one of the most difficult aspects of starting any marijuana business in Oregon. It can take a couple of years to get a dispensary open, and you still have to secure the retail space before your application can be approved. As noted above, OLCC is still considering some applications filed back in 2018.
Prominent cannabis attorney Amy Margolis says that her clients include producers and other small businesses are “stretched thin by the delays”, and losing a lot of money waiting for application approval.
As federal law enforcement is always an underlying threat for any cannabis-related business, the start-up borrowing options are limited compared to other business ventures, and lenders have to accept a different kind of risk.
Keep in mind that your investors will need to be disclosed in your application. Consult with an attorney and accountant before accepting private funding or borrowing against your future potential profits. This will also be helpful in planning for the expenses of your supply and staff.
OLCC Rules and Regulations - Summary
There are some things you can’t delegate to others.
If you want to start a marijuana business in Oregon, it’s in your best interest to understand what you can sell, to whom, when, and where, how to pay taxes on it, how to train a staff, and how to use the Cannabis Tracking System (CTS).
The numbers: OLCC limits how much you can sell to one recreational customer in a 24-hour span:
- One ounce of usable marijuana
- 16 ounces of a cannabinoid product in solid form;
- 72 ounces of a cannabinoid product in liquid form;
- Five grams of cannabinoid products intended for inhalation (smoking or vaping);
- Five grams of cannabinoid extracts or concentrates, whether sold alone or contained in an inhalant delivery system;
- Four immature marijuana plants;
- Ten marijuana seeds.
In addition to the premises-based rules for your retail space, you’ll need to be familiar with operational rules. For example, every person who works in your store will need a marijuana worker permit.
Everyone will have to use CTS. Your store will need to keep a daily log of all the employees, contractors and license representatives. They all need to be publicly identifiable by a badge or clothing. You will also have to maintain a daily log of all the customers, including their full names and dates of birth.
Keep track of any local rules or regulations that come up when you complete your LUCS for your application. There are also marketing and advertising rules specific to selling recreational marijuana.
How To Stock Your Dispensary?
In 2019, Oregon producers grew far more cannabis than the market could handle. The result of that oversupply was OLCC effectively capping the number of growers by halting application reviews. The wholesale market has fluctuated since then and will probably continue to be affected by wildfires in the state.
As a retail operator, you’ll need to understand the wholesale market, because it will have a big impact on how you supply and price products in your store. Research wholesalers licensed to sell in Oregon and check their current status. Some post their inventory on an online catalog, which is a good starting point for a new proprietor—but you’ll need your OLCC license in place before you can view and order.
In the meantime, think about what you want to carry to meet the needs of your target customers. Considerations for researching wholesalers and inventory:
- Is the wholesaler well-established?
- Is there a delivery system for your potential market?
- What’s available in the wholesale market?
- Will you focus on marijuana flower, edibles or extracts?
- How much inventory can you store on premises?
- How much you can afford to carry?
- What are other local shops selling—or not selling?
- Are there particular brands that do well in your market, or emerging brands that might help your shop stand out?
How To Market Your Cannabis Dispensary?
New pot shop owners may find it useful to consult with an experienced advertising agency to market their new business. You will probably be competing for customers who are already shopping elsewhere, as many of the Oregon markets are pretty saturated.
A few things to know:
- Your advertising—including your branding and logo—has to be clearly aimed at adults 21 and over.
- In Oregon, media outlets can refuse advertisements at their own discretion.
- You can only target an audience in Oregon (no out-of-state pot tour advertising).
- You must include the required disclaimers for marketing and advertising materials:
- Keep out of the reach of children
- For use only by adults twenty-one years of age and older
- Do not operate a vehicle or machinery under the influence of this drug.
A good marketing plan can be built alongside your business plan. Clearly identify your target audience, where and how you plan to reach them, how much you can invest, and how you will earn your customer’s loyalty.
Take time to develop clear brand guidelines for consistent color, language and image use. Your brand will need to be clear and distinct from others;
This is tricky because you’ll be selling many of the same products, and have to follow the same legal guidelines, without infringing on any copyrighted or trademarked material.
In addition to advertising, consider your internet presence and Search Engine Optimization (SEO) strategy. At the very least, invest time in accurate and complete business listings in Google My Business, Facebook, Yelp, local business directories and guides, and on marijuana-specific search sites.
Final Thoughts …
It’s not easy to start a marijuana business in Oregon; even in the Wild West days of 2015-16, proprietors still had to follow the OLCC process and fight their way through confusing and sometimes contradictory regulation.
Now, the backlog of applications and the recent shutdowns have made the process even more complex. Keep in mind that we are still in the early days of recreational marijuana business, and there are real opportunities for smart entrepreneurs.
This introductory guide is for informational purposes only; the information may not apply to your situation. We recommend you thoroughly review all of the OLCC material yourself and consult with an experienced cannabis attorney.
