After a rollercoaster open market experiment, Oregon lastly raised the partitions on its hashish program earlier this yr. Usually, there are two broad approaches a state could absorb walling off a regulated hashish program, dormant commerce clause points however. The primary is by enacting residency necessities for marijuana enterprise possession. Oregon did away with these in 2016. The second is by capping the pool of accessible licenses.
Oregon selected the second path early final month, when it adopted a license software moratorium retroactive to January 1, 2022, extending by way of March 31, 2024. This weblog publish is oriented towards individuals unfamiliar with the Oregon market. It provides a high-level overview of how entry works on this new, moratorium context.
It’s important to purchase your means in to the regulated Oregon hashish market
There is no such thing as a strategy to get a brand new Oregon Liquor and Hashish Fee (OLCC) marijuana license immediately from the Fee, with one attainable exception. I’ll focus on that within the subsequent part. As an alternative, you need to discover one other licensee prepared to promote. In that case, OLCC will work with the vendor to “give up” its license in favor of a alternative marijuana license of the identical kind, issued to the customer. We’ve been dealing with these gross sales for years. They usually take the type of an asset buy settlement and there’s some artwork to the method.
Previous to the present moratorium, a extra restricted moratorium existed solely within the class of producer licenses. A really massive variety of these licenses modified fingers going again to 2018 or so, with costs floating within the $200K – $250K vary. We haven’t seen any motion on this pricing following the 2022 moratorium, but it surely’s nonetheless very early and market elements could inform the evaluation– beginning with the truth that wholesale flower costs appear to be decrease in Oregon than any other state.
Previous to this yr, we additionally ran a ton of offers on different courses of licenses and companies, partly as a result of OLCC “paused” software acceptance for a spell; but additionally as a result of OLCC was very sluggish in processing functions main as much as that time and for a while after. These offers are typically priced in a different way than the producer gross sales. With retailers, for instance, events tended to allocate little worth to the license itself. As an alternative, pricing was typically pegged to multiples of income. That mentioned, over the previous few years extra refined purchasers are pricing shops (and different going considerations) with modified EBITDA and different proprietary fashions.
Now that the quantity of retail licensees can be capped in Oregon, we may even see these licenses change fingers for a higher premium on the secondary market. I’m guessing this can even be true of wholesalers and processors to a lesser extent. We’ve solely bought a few these gross sales going proper now within the workplace and once more, it’s early.
One other means into the regulated Oregon hashish market? The “marijuana license reassignment program”
Final month, my colleague Jesse Mondry wrote a superb publish on this newly envisioned, different level of entry. You could find it right here. In brief, the legislature and OLCC have concocted a obscure nod to social fairness by way of the opportunity of a “marijuana license project program” briefly described in House Bill 4016.
Do we all know who would possibly represent a “certified applicant” beneath this new marijuana license reassignment program? No. The truth is, we don’t even know if this system will ever take maintain. HB 4016 offers solely that OLCC “could” set up this program, and it provides no timeline for OLCC to determine.
Anybody who offers with OLCC usually understands that the Fee is nicely intentioned however overworked, understaffed, and extra reactive than proactive in nature. That mentioned, my guess is OLCC will finally discover a means to usher in social fairness candidates–and maybe different deserving candidates–beneath a reassignment program. I say this not simply because OLCC is at the moment beneath an fairness audit from the Secretary of State, however as a result of it looks as if the fitting factor to do.
If and when the license reassignment program launches, it’s going to doubtless be restricted to a discrete variety of licenses for a restricted pool of candidates. For now, everybody on the skin of the Oregon marijuana program is in the identical boat, from hashish MSOs to victims of the Struggle on Medication. Everybody has to purchase their means in. Everyone knows who that favors.