By Eli McVey
Fighting a slow-moving bureaucracy, the overwhelming majority of companies seeking recreational marijuana business licenses in Portland, Oregon, are stuck in various stages of the city’s application process.
It’s a frustrating and potentially disastrous scenario for many entrepreneurs hoping to enter the state’s largest cannabis market.
Portland requires that all recreational businesses receive a license from the city before they’re allowed to operate. This is in addition to the mandated state license required by the Oregon Liquor Control Commission (OLCC).
The city’s licensing requirement is intended to ensure public safety and livability in Portland. But it’s instead causing major delays between the time an application is submitted to when it’s approved by the city.
The latest data from the Portland Office of Neighborhood Involvement shows that since late October, just four cultivators and three producers have been able to successfully move their applications through the process to receive a license, representing 6.3% and 4.7% of segment applicants, respectively.
The numbers are significantly better for retailers, though more than 100 applicants are still working through the process.
Portland requires all recreational businesses to receive a host of permits and signatures from several agencies throughout the city before they will be inspected for marijuana licensure.
The list included certificates of compliance from the Office of Management and Finance, electrical and commercial building permits from the Bureau of Development Services, and security alarm permits from the Police Bureau. A more extensive permitting process is required if construction or changes to a building are needed.
This has created a deep bottleneck for businesses trying to win licenses.
Just before the Jan. 1 deadline that required all recreational marijuana sales in Oregon to go through fully licensed adult-use businesses, the city issued an ordinance that eased some permitting burdens for retailers. In particular, it granted rec licenses to certain applicants that already operated medical marijuana dispensaries.
The new ordinance prevented a severe shortage of recreational stores in the city, which can source their product from cultivators and producers outside the city.
While cannabis businesses in every state are faced with a certain degree of regulatory burden, the problem in Portland is how lengthy and slow-moving the process has become.
All these permits and signatures eventually go through the city planning department, which serves all types of businesses in the state, not just those in the marijuana industry.
Beau Whitney, founder of Whitney Economics, a marijuana-focused business management and economic consultancy, believes this is the source of the problem.
“By making this requirement to have everything signed off on, the city is just creating this obstacle that is literally driving people out of business and into bankruptcy,” Whitney said.
Portland requires recreational marijuana businesses to have proof of a facility before receiving a license, causing major financial concerns for many businesses that aren’t generating revenue yet remain on the hook for major costs, like rent or a mortgage.
Whitney suggests this has caused some businesses on the processing and growing side – so fed up with the city’s slow application process – to move forward with their operations anyways, operating illegally in order to stay alive.
These illicit operators believe that if the city can’t effectively manage the licensing process, there’s a low probability of being inspected for compliance.
According to Whitney, several of these businesses still awaiting city licensure will end up moving out of Portland and setting up shop in a more reasonable jurisdiction.
“Others, they’ll just fold, and that will probably be a majority of them,” he said, “because I hear about it every day. Some, if they’re well-funded, then they’ll endure, but they’ll limp out of the gate.”
Eli McVey can be reached at [email protected]