Craft Cannabis: Oregon Leaders Explore the State's Opportunity, Challenges
There are challenges to overcome, but Oregon is in a position to develop a powerful cannabis industry, with valuable craft brands that mirror the state’s success in coffee and beer, industry leaders believe.
Despite the state’s small consumer base, “Oregon has an amazing track record of building companies in the craft products category,” said Hifi Farms President and CEO Sara Batterby, a panelist Thursday at a Business Journal Power Breakfast that addressed the status and future of cannabis in Oregon.
Batterby outlined a scenario in which smart, brand-focused companies “could see exits like Stumptown,” a reference to Portland-born Stumptown Coffee Roasters, which was acquired by Peet’s Coffee & Tea in 2015 for an undisclosed sum.
She sees a cannabis market growing more sophisticated and differentiated, particularly regarding where, how and by whom the product is grown.
“We’re going to see cultivators who reach the status of celebrity chefs,” she said.
But Batterby and her fellow panelists cautioned that the industry's trajectory could hinge on how pot's legal status at the federal level plays out.
The current status — illegal, but with states generally allowed to do their own thing — presents significant problems.
Donald Morse, chairman of the Oregon Cannabis Business Council, pointed to one problem in particular.
“The biggest challenge is banking,” Morse said.
A 2014 U.S. Justice Department memo laid out a set of criteria under which financial institutions could serve the cannabis industry in legal states and avoid prosecution, but big banks are still steering clear of cannabis out of fear, he said.
To address that, he said his organization, with more than 80 members, was working to establish a bank in Portland that could serve the industry.
On an encouraging note, he said the Federal Deposit Insurance Corporation, which is charged with maintaining the stability of the nation’s banking system, was supporting those efforts.
Chris Masse, a partner at Miller Nash Graham and Dunn, described having to step very carefully into working with cannabis businesses in Washington after that state voted to legalize in 2012.
That’s changed considerably, with many firms now serving the industry, she said, but cannabis’ federal status still makes “raising money, forming entities and dealing with employees” much more complicated than with typical businesses.
Generally, the panelists said they thought cannabis would eventually be legal in some fashion at the federal level. Morse said that a big factor in making that happen could unfold in 2018, when California's legal market is expected to get going, with huge revenues anticipated.
"A lot of us feel that 2020 is going to be the year" that the federal policy changes, he said.