How to Open a Dispensary in Oregon

How to Open a Dispensary in Oregon in 2024

Anyone interested in opening a cannabis retail shop in the state must obtain a dispensary license from the Oregon Liquor and Cannabis Commission (OLCC). On the other hand, a prospective medical marijuana dispensary owner must apply to the Oregon Health Authority (OHA) for a dispensary license. However, it is important to determine whether a municipality permits cannabis businesses and understand their requirements (if any), before opening a dispensary there.

Why Open a Dispensary in Oregon?

According to the OLCC Market Data, medical and recreational cannabis retailers in Oregon recorded almost $6 billion in sales between October 2016 and September 2023. There are about 833 recreational dispensaries in the state, with more than 400 retailers approved to sell cannabis to medical marijuana patients. Oregon also has two medical marijuana dispensaries licensed by the Oregon Health Authority (OHA). Each of these cannabis retailers has generated at least $100,000 in monthly marijuana sales since 2020.

Being a very competitive market, cannabis prices have declined by 50% from $1,200 per pound in 2020 to $600 in 2023. However, the state benefits from the booming cannabis market through tax revenues because of the increasing demand for marijuana products. The average tax income from marijuana sales between 2019 and 2022 is $100 million. This indicates that Oregon is an attractive destination for prospective dispensary owners.

Types of Dispensary Licenses in Oregon

Oregon offers the following dispensary licenses:

• OLCC Recreational Retailer License: The Oregon Liquor and Cannabis Commission (OLCC) issues this license, allowing interested parties to sell recreational cannabis products to consumers aged 21 years or older. Licensees may also apply to dispense medical cannabis or operate home delivery services
• OMMP Dispensary License: The Oregon Medical Marijuana Program (OMMP) issues this license, allowing the establishment of medical marijuana dispensaries. Licensees can sell cannabis products to registered medical marijuana patients and their caregivers

How to Get an Oregon Dispensary License

Follow the steps below to get an Oregon dispensary license:

• Meet basic requirements by registering the business with the Oregon Secretary of State. Also, check the OLCC opt-out list to know which city or county prohibits cannabis dispensaries
• Register online:
• For an OLCC dispensary license, open the Recreational Marijuana Licensing System and click on “Register for a Business Account”
• For an OMMP dispensary license, use the MMD Online Portal
• Complete and upload all required documents through the online portals. OMMP license applicants can also mail their applications, including all the required documents, to:

OMMP, Oregon Health Authority ATTN: Compliance Unit P.O. Box 14450 Portland, OR 97293

• Pay the non-refundable application fees:
• $250 for an OLCC license
• $500 application fee and $3,500 registration fee for an OMMP license
• Wait for review and approval from regulatory agencies

The OLCC is responsible for ensuring that applications received comply with the Oregon recreational cannabis laws. On the other hand, medical marijuana dispensary licenses are reviewed and approved by the OMMP. Before issuing licenses, the relevant state agency may visit applicants’ proposed dispensing locations for inspection. There are no dispensary license caps in Oregon. However, the OLCC is not accepting new dispensary license applications until March 31, 2024.

Information and Documents Required for a Dispensary License in Oregon

Required documents for an OLCC Dispensary license:

• A Land Use Compatibility Statement (LUCS) signed by the city or county
• Business details, including company name, address, and the Secretary of State number
• The Marijuana Applicant Questionnaire containing the names of all dispensary stakeholders
• Each individual named in the questionnaire must provide the following documents:
• A completed Individual History Form
• Valid IDs
• Fingerprints for background check information
• Details of funding sources
• Business operating plan
• Floor plan and an aerial view of the proposed facility as required under the premises map instructions
• Lease agreements or any other proof of right to use the proposed dispensary facility

Required documents for an OMMP Dispensary license:

• A written statement from a city/county official that the proposed dispensing location is not zoned for residential use”
• Documents showing that the business entity is registered with the Oregon Office of the Secretary of State
• Each individual named in the application must submit the following:
• A valid photo ID (driver’s license, passport, or military ID)
• Fingerprints for background check
• The completed Individual History Form
• Completed and signed School/Dispensary Proximity Affirmation Form
• A signed lease agreement or deed of the proposed dispensing location
• A scaled site plan and floor plan of the proposed location

What Plans Do You Need to Open a Dispensary in Oregon?

Having a business plan when applying for a dispensary license in Oregon demonstrates the applicant's readiness to comply with local and state regulations. An Oregon dispensary business plan should show the following details:

• Business description, showing the business’ name, proposed location, legal structure, description of the dispensary’s operations, and goals
• Legal funding sources and stakeholders
• Market research
• Financial projections showing realistic revenue forecasts and expected cash flow for the dispensary
• Products
• Staff management and training process
• A security plan, which is mandatory under OAR (845) 025-1400, should include the following measures:
• Installation of commercial-grade locks on every external door and gate
• 24/7 security personnel
• Safe vault to store marijuana items
• Backup system to keep electronic records
• Physical storage to keep video recordings and archived records
• Installation of fully operational alarm systems
• Installation of 24/7 video surveillance recording systems
• Site plans should show the following:
• Cardinal directions of the dispensing location
• Adjacent roads and street names
• Dimensions of the proposed dispensary's premises
• Other buildings situated on the dispensary premises

Are There Municipal Requirements for Opening a Cannabis Dispensary in Oregon?

In Oregon, local municipalities (cities, towns, and counties) may adopt ordinances to prohibit medical and recreational marijuana dispensaries. Currently, up to 100 cities and counties have enforced a ban on marijuana dispensaries within their jurisdictions. The OLCC or OMMP cannot issue dispensary licenses for these municipalities.

How Long Does It Take to Get an Oregon Dispensary License?

Obtaining an Oregon dispensary license may take up to two months or more, depending on the applicant’s preparedness. After applying for a dispensary license, the OLCC typically sends a Request for Assignment to the applicant to know if they are ready for the licensing process. Applicants must complete the licensing process within 60 days. However, if an applicant is not fully ready, they may schedule different dates to start their application.

Where Can You Locate a Cannabis Dispensary in Oregon?

Cannabis dispensaries in Oregon can operate in local municipalities that are not on the OLCC opt-out list. Most municipalities have zoning ordinances requiring a minimum distance between dispensaries and other sensitive use areas. Some of the general zoning requirements in Oregon include the following:

• Dispensaries must maintain at least 1,000 feet distance away from daycares, schools, and playgrounds
• Dispensaries must not be located on federal properties
• Dispensaries must not have the same physical locations as other dispensaries or liquor stores

Here is a list of cannabis dispensaries in Oregon.

Can Licensees Have More Than One Dispensary Location in Oregon?

According to ORS § 475C.061, a business entity can obtain multiple dispensary licenses to establish more than one dispensing location in Oregon.

How Much Does It Cost to Open a Marijuana Dispensary in Oregon?

Opening a marijuana dispensary in Oregon can cost between $350,000 and $2 million, depending on the dispensary's size and other factors. Here are some costs to consider to open a cannabis dispensary in the state:

• Rent: Renting a 2,000-square-foot space in high-end cities like Hillsboro and Portland often costs between $150,000 and $200,000 annually. In other areas, the same retail space is between $100,000 and $150,000 annually
• Licensing Fees: Apart from the application fees, OLCC license holders must pay a $4,750 registration fee. The registration fee for a medical marijuana dispensary license is $3,500. Licensees must also include background check fees ($50 per person) for each individual named on the application
• Inventory and Initial Product Purchase: The amount spent on the initial inventory of cannabis products can vary greatly. Note that the average cost of cannabis flowers is $630/pound
• Security Measures: Comprehensive security systems, including surveillance cameras, alarms, and access control, can cost between $35,000 and $40,000
• Compliance Costs: This includes legal fees, compliance consulting, and ensuring that the dispensary meets all state and local regulations
• Marketing and Branding: Costs associated with branding, advertising, and promotional efforts may be around $20,000
• Staffing costs: The average salary of a budtender in Oregon is about $25/hr. License holders may budget up to $150,000 annually for five employees
• Utilities and Operating Costs: Some mandatory operational fees include:
• $480 for the annual cannabis tracking system
• $100 for labeling pre-approval
• $100 for packaging pre-approval
• $100 annually for each employee permit
• $1,000 to change or review business location

Do You Need an Insurance Policy for a Cannabis Dispensary in Oregon?

Dispensary license holders in Oregon need cannabis insurance policies to protect their dispensaries against unforeseen events or liabilities. Insurance policies are not mandatory for Oregon dispensary licensees, but it is recommended to ensure business stability. Here are some insurance coverages that are typically important for a cannabis dispensary:

• General Liability Insurance: This covers claims of bodily/personal injury and property damage that may arise from the dispensary's operations
• Product Liability Insurance: This covers costs associated with product-related claims, such as those arising from contaminated or defective products
• Property Insurance: This protects the dispensary's physical assets, including the building, inventory, security equipment, and vault, against risks like fire, theft, or vandalism
• Workers' Compensation Insurance: This provides coverage for medical expenses and lost wages for injured employees
• Business Interruption Insurance: This provides financial support in case the dispensary closes temporarily due to fire or natural disaster
• Auto Insurance: This policy is recommended for cannabis retailers using vehicles for home delivery. Auto insurance covers potential accidents, damages, and liabilities

In Oregon, factors that may affect insurance premiums for a cannabis dispensary include the following:

• The dispensary’s location
• The security measures in place
• The amount of coverage needed
• Compliance with state and local regulations

How to Get a Grant to Open a Dispensary in Oregon

The following are some ways to secure funds to open a cannabis dispensary in Oregon:

• Self-funding: A person can use personal savings or assets to finance a dispensary business. This grants them full control over the business's financial decisions and operations
• Family and Friends: This involves approaching close relatives and friends for financial support when opening a dispensary
• Crowdfunding and Online Platforms: This is another option that offers full control of the dispensary. Websites like GoFundMe, Kickstarter, or cannabis-specific platforms can be used to raise funds for your dispensary.
• Partnerships: Dispensary owners can partner with experienced individuals or businesses in the cannabis industry. They might be willing to invest in the dispensary in exchange for a share of the business.
• Private Investors: This requires seeking investments from private individuals or venture capitalists interested in the cannabis industry
• Cannabis-Focused Lenders: Some financial institutions specialize in providing loans to cannabis businesses. These lenders may be more willing to work with dispensaries, but they often require substantial collateral and high interest rates.
• Loans: Credit unions can offer loans to licensed dispensary owners
• Private Grants: Licensees can research private organizations or nonprofits that support cannabis businesses. These institutions may offer grants to help new dispensaries get started
• Social Equity Programs: Local municipalities may offer social equity programs to promote qualified dispensary licensees. For instance, Portland has Social Equity & Education Development (SEED) initiatives, which offer grants and fee reductions for eligible applicants

Does Oregon Have a Social Equity Program for Cannabis Dispensaries?

Oregon does not offer a social equity program. However, small businesses in Portland can benefit from the city’s SEED Grant Fund and participate in the Cannabis Reduced Fee Program. The SEED Grant Fund is for the following Portland residents:

• Business entities that were negatively affected by past cannabis laws
• Black, indigenous, and people of color (BIPOC)
• Women-owned businesses

Dispensary licensees and employees in Portland may qualify for the 15% - 25% reduced fee program if they meet the following requirements:

• Have a minimum of 25% of its stakeholders or 20% of its employees with past cannabis convictions before July 2015
• Have an annual income below $750,000
• Have less than two cannabis licenses in all U.S. states
• Patronize small business owners with Oregon MWESB (Minority-Owned, Woman-Owned, or Emerging Small Business) Certifications

Does Oregon Tax Marijuana Dispensaries?

Yes. Oregon cannabis laws impose a 17% sales tax on cannabis products purchased by recreational marijuana consumers. Local municipalities may impose an additional 3% sales tax. Retailers must indicate the correct tax amounts on the receipt provided to consumers. However, medical marijuana cardholders are exempt from local and state cannabis tax. Licensees are required to pay these taxes monthly to the Oregon Department of Revenue.