Interest in Oregon’s recreational cannabis industry is not slowing down. The most common question new clients ask is: “How do I get a license?” Because of the OLCC pause on processing new license applications, the answer is, “Buy a business with an existing license!” Whereas the OLCC will not process brand new license applications, they are continuing to process changes in the ownership of existing licenses.
The first step for aspiring entrepreneurs is to identify and vet target licensed businesses. At Gleam Law, many of our clients come to us with a target already selected. These are often business owners already involved in the Oregon cannabis industry who are expanding or integrating their operations. We also work with clients who are new to the industry and often new to Oregon. These clients need assistance in identifying target companies.
Negotiating the terms of the purchase agreement and vetting the target company require an understanding of OLCC rules. The OLCC must approve the license transfer before the buyer can take over the company or the seller can receive and start spending the sale proceeds. The OLCC will need to vet the buyer. If the buyer cannot be licensed, the deal will likely fall apart. OLCC violations on the seller’s record could risk the buyer’s license. They will need to assign or negotiate a lease, or transfer real estate. All of these issues and more need to be considered in drafting a purchase agreement.
Once they sign a purchase agreement, the parties will have to work together to get the business licensed. The buyer will have to complete myriad licensing requirements and then wait an estimated three to six months (as of this writing) for approval. Meanwhile, the seller will need to provide assistance to the buyer and the OLCC and continue running their business, even as they look forward to getting paid and moving on.
The Oregon cannabis industry is evolving quickly. There are many hoops to jump through for clients who want to get in as well as those who want to expand their existing businesses. With so many questions as to what will happen when the legislature comes back into session and the OLCC gets through its backlog of applications, now is as good a time as any to start a licensed business. If you have any questions or want to start the process of acquiring a licensed business, call our offices to speak to one of our attorneys.