The Changing Landscape of Marijuana Licenses

As marijuana becomes less socially controversial, the industry grows. While 27 states have yet to make medical marijuana legal, states like Oregon are leading the way for those that have, and two marijuana bills that Oregon Governor Kate Brown signed into law this month show how marijuana licenses are expanding.

Oregon is one of only four states (Oregon, Washington, Colorado, and Alaska) along with the District of Columbia that have legalized marijuana for medical and recreational use, so it’s not surprising that the state is progressive in many of its marijuana laws. After all, Oregon is also one of the states that is known for really listening to what residents want when it comes to forming marijuana laws.

The two bills that Governor Brown signed into law this month cover a lot of areas such as impaired driving, probation, reduced registration fees for veterans, and a number of issues related to home growing. The bills also include some provisions that directly affect marijuana licenses, expand the marijuana license pool, and impact marijuana license valuations.

Let’s take a closer look at some of the key changes.

1. Removal of Some Paperwork Requirements

Under the newly signed Senate Bill 1598, it will be easier for marijuana growers to enter the recreational marijuana market in Oregon because some of the marijuana license application paperwork requirements have been removed.

Effect on Marijuana Licenses: As Noelle Crombie of The Oregonian explains, the provision creates a “micro-canopy license” that should expand the pool of marijuana license holders in the state to include smaller growers.

2. Increased Access to Medical Marijuana

Senate Bill 1598 also aims to make medical marijuana more accessible to people in areas of the state that don’t have adequate dispensaries and retailers. Specifically, the state’s health authority will be required to study the problem.

Effect on Marijuana Licenses: Increased consumer access means higher sales for licensed marijuana dispensaries and retailers because more of the people who want to purchase medical marijuana will actually be able to get it.

3. Removal of Two-Year Residency Requirement for Licenses

Previously, recreational marijuana producers, processors, and retailers had to prove that they were residents of Oregon for two years prior to applying for a license. When Governor Brown signed HB 4014 earlier this month, that two-year residency requirement was removed.

Effect on Marijuana Licenses: Removing the residency requirement opens the marijuana industry up to a larger pool of license applicants. Furthermore, as the marijuana industry crosses state lines, the removal of this type of residency requirement becomes more important.

4. Business Expense Deductions on State Tax Returns

Currently, marijuana businesses are not allowed to deduct business expenses from their federal tax returns. HB 4014 allows them to deduct federally allowed business expenses from their Oregon state tax returns.

Effect on Marijuana Licenses: This change doesn’t solve the federal tax issue that is financially problematic for marijuana businesses, but it does provide a small amount of financial relief. By deducting business expenses from their state tax returns, marijuana-related businesses in Oregon have a chance to be a bit more profitable, which also makes the value of their licenses increase.

The Future of the Marijuana License Landscape

This is just the beginning of the evolution of the marijuana license landscape. Already in Oregon, House Bill 4094 is awaiting Governor Brown’s signature. That bill would help to solve the marijuana industry’s banking crisis by allowing banks and credit unions to work with marijuana businesses without breaking the law.

Could other states follow Oregon’s model and introduce new licenses that require less paperwork and lower fees to expand their own marijuana license markets? Might they remove residency requirements for marijuana-related business licensees and allow them to deduct business expenses from their state tax returns?

Only time will tell, but Oregon isn’t the only state that’s charting the industry’s course. Alaska started considering new types of marijuana licenses last year, and Washington is known for its progressive marijuana laws, which include matching the number of marijuana licenses to the number of consumers.

As the industry evolves, Cannabiz Media will be tracking marijuana licenses and bringing you all of the updates. Subscribe to our newsletter so you don’t miss anything!

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