Oregon and Washington recreational cannabis businesses will soon face greater pressure from outside competition as new regulations now allow out-of-state investors to fund and compete with local cannabis businesses.
This new legislation lifts residency requirements enabling once banned out-of-state investors to participate-in and fund Oregon and Washington cannabis operations.
Meghan Walstatter owner of Pure Green Dispensary in Portland, Oregon said she used to favor residency requirements, but now she welcomes outside influence.
“At first, I felt the requirements protected the local guys from the corporate machines, but I've come to realize that the opposite is true. New industries need capital to expand and limiting local business to in-state money only limits our ability to expand our industry.”
“This would be a huge disadvantage considering our inability to access traditional business funding sources,” she added.
Until recently, startup cannabis businesses like Walstatter’s only had access to limited funding options locally.
For many, that means friends, family, and the few regional Oregon investors are willing to cast chips into the pot. Regular banks and small business loans were, and still are, largely out of the equation as marijuana is illegal federally.
Lifting residency requirements allows existing cannabis businesses to access a larger pool of investors.
“We’re already seeing outside interests pairing with local collectives,” says Mike Schurr a national multi-industry marketing entrepreneur and consultant.
“Many local business owners have roots in other states. The new legislation helps brands establish themselves across state lines without exhausting their local resources,” Schurr said.
“It’s really a normalizing, taking cannabis from being an insular, underground network to a legitimized retail industry just like any other.”
However, fear is precipitating among local “Mom and Pop” style dispensary startups in the region—and they may be justified.
Some local cannabis business owners fear out-of-state investment would allow outside interests like Big-Cannabis to enter the playing field.
“Oregon has always had a chip on its shoulder about doing things better, keeping it tight and keeping what we do in the family."
While lifting the residency ban will loosen the logistical barrier to entry into to the Oregon Cannabis market, the powers that will still have their way,” says David Alport, creator/owner of the Bridge City Collective brand which already operates two locations throughout Portland.
Up in Washington State, Big-Canna tycoons are already entering the local marketplace.
Santa Monica based entrepreneur, James Shively, once a corporate strategist for the Microsoft Corporation, is opening his first dispensary beyond California next month. His new Seattle location will operate as a subsidiary of his publicly traded enterprise, Diego Pellicer Worldwide.
With further infusions of cash and capital into legal states on the horizon, local business owners are bracing themselves.
And whether or not out-of-state interests sweeten the pot or add unwanted competition depends largely on each businesses’ plan for growth.
Walstatter takes a pragmatic approach, “Oregon cannabis is already a national brand. We need to be able to compete with other states as they come online and limiting our financing options would hinder our progression at the national level.”
At the national level, we’re seeing a more relaxed stance by the federal government with each passing quarter. A recent Supreme Court case where both Nebraska and Omaha attempted to have the government override Colorado’s state recreational cannabis laws to slow the trafficking of Colorado’s cannabis into neighboring states saw the feds absolve themselves completely of the matter, continuing a streak at the federal level of honoring individual state’s rights on the issue of legal weed.
“We’re experiencing the dawn of a new retail industry for once prohibited goods and services.” Schurr reports.
“The roll-out across the country is slow moving but as this intensifies we’ll see the level of competition we see in other national industries. It’s already becoming a multi-state industry out in the West. The desire for any business here is to acquire excellent market position while keeping things manageable and yet the paradigm today is no different than ever before: while these businesses are busy duking it out, the customers and economy most clearly benefit from the competition.”