Blunt Q&A: Straight Talk for Cannapreneurs from Oregon's Mark Pettinger

Bluntness Team

By Jeff Klingman, theBluntness Feature Writer

There are more weed dispensaries in Oregon state than there are Starbucks franchises. (And the Pacific northwest is, famously, pretty into coffee.)

The bar of entry into the open Oregon market for cannapreneurs is low, at least in theory. “We have a different system than Colorado and Washington, they have a cap on the number of licenses they issue. Oregon does not have a cap,” says Mark Pettinger, the Oregon Liquor Control Commission’s (OLCC) spokesman for recreational marijuana.. “We continue to see significant applications, and there was never any let up.”

The steady volume of applications for weed-related licenses led the OLCC to pause processing this June. New applications would still be accepted, just set aside until the backlog pile could be gradually worked through. An official guidance letter released in August loosely predicted that pause would continue on for well over a year.

We asked Pettinger to walk us through Oregon’s regulatory system to offer some gentle guidance for those seeking to get into the state market now. We also got a read of what OLCC needs to manage what’s become perhaps the most competitive pot market in the country.

Once the pause on new applications is lifted, what’s the life cycle of an application from the time you receive it, to when it’s processed?

It could be up to a year wait for those who are seeking a producer license [for cannabis growers].

A retailer, a wholesaler, a processor, a lab -- [they’re] likely to have four walls and a roof. Because of that, it’s a lot easier to lay out, contain and implement the security that’s required. When you are on a grow site, those are all more challenging. Before an applicant receives their license, we have to inspect their premises to make sure it’s up to snuff. Generally, there aren’t many producers that are able to get that go ahead on their first inspection.

It’s taking less time to do retailers. Somewhere in the two-to-four-month range. And a little bit longer for wholesalers and processors.

So any entrepreneur who’s looking to get into the Oregon market has got to be planning with a fairly long lead time?

If they are trying to do it from scratch, yes.

They could buy an existing business and then we would transfer the license. Imagine there are two lines, the renewal line and the new application line. Existing licensees who decide to sell their business to someone else…the purchaser of that business will then go to the front of the new applications line and, essentially, be on equal footing with those getting license renewals. We want to keep those folks on the market.

I imagine that’ll be a pretty attractive option going forward?

We’re currently not compiling those interactions, so I don’t know how many people have taken advantage of that. But yes, it is an opportunity.

How much regulatory input does OLCC give to marijuana-related businesses for managing their marketing and advertising strategies?

There are some specific things. One of the things we’ve emphasized is you cannot have packaging with strain names that could be appealing to minors — “Girl Scout Cookies,” or “Bruce Banner” — on the actual package that exits a retailer. Inside the retail premises you can call it “Girl Scout Cookies,” you can market it at point-of-sale display, it just can’t be something that would appeal to kids [and leave the store].

That notwithstanding, most of the rules are boundaries for excluding what can’t be done, as opposed to prescribing what can be done. Oregon has a fairly liberal constitution, so there’s a limit on what our folks thought would be enforceable with respect to free speech. It’s broad and the boundaries are kinda staked out, but beyond that we’re not in the business of approving or disapproving marketing and advertising.

What’s the single biggest mistake you see businesses seeking government licensing make as they enter the system? How do people screw themselves up?

Not reading the rules. [laughs] There are a number of different folks who are licensees. There are business people who come with a significant amount of enterprise experience but don’t know a thing about cannabis, and then others who know a lot about cannabis but don’t know anything about business. It’s particularly that latter group that are probably failing out of the system.

Does it seem that cannabis law in Oregon is growing as a sector in response to businesses navigating these regulations?

It has. There’s one law firm that kind of first and foremost that specializes in cannabis, called Emerge. One of its principles was co-author of Measure 91. A lot of their activity right now is around the transactions of [mergers and acquisitions for marijuana] businesses, particularly those who have been given offer sheets from Canadian investment and Canadian holding firms.

Some of the major firms in Portland and elsewhere have now started cannabis law practices. You wouldn’t have seen them two or three years ago, especially right after 91 passed.

Is there any one burning issue that you think needs to be amended in Oregon’s marijuana regulatory system?

We’re a fee-generated agency, so application fees and license fees pay our freight in terms of our operational budgets. Nevertheless, we have to go to the legislature for authorization of [additional] personnel. The [cannabis] industry is very entrepreneurial, very creative and it’s moving very quickly. As our executive director likes to say, “State government doesn’t do startups well.”

We’re going to be asking for 40 plus additional heads going into the next legislative session, and that will take the agency from around 230 employees pre-cannabis to close to 400. It’s kind of unheard of in state government.

But the industry and others are asking us to get more people, in order to provide the level of service that’s expected by licensees, and to provide the level of public safety that law enforcement and the general public would like us to put in place.