Should You Pay $250,000 for an Oregon Cannabis Producer License?

CANNANNEW REPORT

LexBlog Article By Vince Sliwoski on August 8, 2021 People familiar with the Oregon cannabis industry know of its strange and lucrative secondary market for cannabis producer licenses. For the past few years, but especially the past year, we’ve helped many farmers buy and sell these licenses (or, more accurately, “interests in successor licenses”). To be clear, most of these sales involve no equipment, no inventory, no name rights, nothing. Just the right to be licensed in lieu of another producer. We’ve even “pre-sold” a number of these, with four such sales in process as I type. By “pre-sold” I mean we have clients in the application queue and buyers have committed up to $300K for the right to apply for a successor license– after our clients’ licenses issue. It’s a really hot market. You may ask why people are paying a quarter million dollars or more on the secondary market for license rights that cost ~$5,000 annually from the Oregon Liquor and Cannabis Commission (“OLCC”). It’s a great question. The answer is because OLCC currently is not issuing producer licenses (or any class of license) to most new Oregon cannabis applicants— whether the applicant is an existing licensee seeking to expand its holdings, or a new market entrant. The only way to acquire one of these licenses is to find someone willing to surrender a license of their own, typically via an asset purchase agreement. In such transactions, the buyer purchases all right, title and interest to a successor license, at the seller’s premises or elsewhere. OLCC will process those buyer applications in conjunction with a seller license surrender. This strange set of circumstances is a long time in the making. From an administrative perspective, it all started with the famous license processing “pause” of June 15, 2018– which is still ongoing for better…

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