CBD OIL

We’re still seeing a lot of small, one-off acquisitions. A lot of them are actually growing but not looking to necessarily become a huge MSO, although some of them are.

Fox Rothschild | foxrothschild.com

JS: I don’t think it’s dying. I think it’s difficult, especially the small farmers up in Northern California are struggling. But I think through struggle comes perseverance. There is something to be said about these small farms and these small kind of craft brands that there still is a market for them, and there will continue to be a market for them.

TL: How can some of the small-scale cannabis businesses make themselves attractable for sale, if that’s the path they want to go?

MS: If they want to make themselves attractive, the biggest thing is getting everything in order, making sure they’ve got records or descriptions, depending on how old the company is; there was a time when companies weren’t keeping great records. If they don’t have them, they don’t have them, but getting whatever they do have in order, looking at where there are holes to the extent that they’re fixable, to work on those, and also just getting kind of all of their paperwork in order to make sure they’re tracking things will help. When an acquirer comes in, they’re going to want to do a lot of due diligence on the business and legal side. And, so, being able to present those materials quickly is important.

JS: I second that. Clean books are very important so there’s no questions on ownership or taxes or anything like that. And, generally speaking, good cashflow, not a lot of debt on the books, that type of stuff is important too.

TL: How can MSOs stay on top of the competitive M&A market so they can take advantage of opportunities as they arise?

MS: That’s a good question. A lot of it is just staying on top of who all of the operators are in the areas that make sense for you strategically. I think MSOs are going to acquire strategically this year, and making sure that they understand who the players are in each market, and whether those players might be open to sale, can help them approach the right people at the right time.

JS: Knowing who to acquire, what licenses, where, what states are opening up and doing your own market research is valuable in making sure that if you want to enter into a market in a different state, that that’s going to work for your business. Just doing your own due diligence and research in the market is essential to taking advantage of those opportunities.

TL: What sparks companies to decide whether a merger is right for them, or they’re better off pursing an acquisition?

MS: The same deal could really, in most cases, be structured as a merger or an acquisition just depending on certain legal points and tax points. I think we are seeing a lot of the larger deals as mergers, in large part because it’s going to be stock-for-stock and not a lot of cash. A lot of the stock deals are more merger-oriented and a lot of the cash deals may be structured as acquisitions, but that’s not 100% across the board. And definitely the smaller one-off deals, those are almost always structured as acquisitions and not mergers.

JS: Generally speaking, the bigger deals are to be more of a merger, when two bigger companies come together, whereas when you have a bigger company looking to just expand its market in a specific area, just buying a small business here and there, those are going to be obviously acquisitions.

TL: What states or regions do you forecast being hotbeds for M&A activity in the U.S.?

MS: I do think states that recently passed adult-use legalization, especially those that previously had medical programs, a lot of times there are going to be procedures for them to convert their companies, and those states will probably see M&A activity.

JS: California has a bunch of independent operators, and I believe the market is right for consolidation if companies can find synergies within themselves. Regardless of what happens in Congress, I think that we’re going to see continued M&A activity just because the market, the industry itself, is in its infancy and people are growing. But if the federal government decides to deschedule or legalize cannabis this year, I believe we will see a significant uptick in that activity.

Editor’s Note: This interview has been edited for style, length and clarity.

Anarkoooo | Adobe Stock

As the state-by-state markets continue to grow, major players outside the cannabis industry are looking for a way in. And those already with a footprint in the sector are poised to go bigger.

Earlier this month, a blockbuster deal kicked off the 2021 cannabis merger-and-acquisition season, when Ireland-based Jazz Pharmaceuticals inked a $7.2-billion deal to acquire United Kingdom-based GW Pharmaceuticals, the manufacturer of the Food and Drug Administration-approved Epidiolex. It was the biggest handshake yet for the cannabis industry, and it could be just the beginning of what’s to come in a global market still in its infancy.

At Fox Rothschild, a Philadelphia-based law firm with a national cannabis practice group, Partner Melissa Sanders and Associate Jared Schwass told clients there is much more room for businesses to expand in an alert they released Feb. 1.

Sanders advises corporate clients on a wide range of business matters, with a particular focus on mergers and acquisitions, private placements of securities, financing transactions and ownership transition programs. Schwass is an attorney in the corporate department and a member of the firm’s Cannabis Law Practice Group. He advises businesses entering and operating in the legalized cannabis market on regulatory compliance, risk mitigation and business transactions.

“At the end of 2020, we saw an uptick in merger-and-acquisition activity as the industry shook off some pandemic-related instability, and we expect that trend to increase significantly in 2021,” they said in the alert.

“Despite abundant money available to the large multi-state operators (MSOs), most cannabis companies still have relatively limited avenues to raise capital due to the federal illegality of the industry,” they said. “However, that may change soon with the democrats now controlling both houses of Congress and the White House.”

When cannabis is descheduled, Sanders and Schwass said they anticipate an influx of cash into the sector, as previously reluctant investors and institutions enter the market without fear of federal repercussions.

Here, Sanders and Schwass share more about M&A activity trends, anticipations and indicators, and how MSOs and smaller businesses alike can position themselves for possible growth opportunities.                        

Tony Lange: What stood out most about how M&A activities shaped up in the 2020 cannabis industry?

Fox Rothschild | foxrothschild.com

Melissa Sanders: I think we were seeing a lot of the distressed assets being snapped up. And even outside of the distressed assets, there were some good deals to be had. As we’re moving into 2021, that’s continuing. But I think that with the change in the Senate and legalization potentially on the forefront, additional capital is coming in and we’re going to see more M&A overall.

Jared Schwass: When COVID-19 first hit, there was kind of a lull in activity. Then, when medical necessities and distressed assets became available, that’s when the serial acquirers were buying up. And then we did see, towards the end, a couple of mergers that that were big news. I feel like more of that’s going to happen in 2021.

TL: How much would cannabis legislation at the federal level impact M&A activity?

MS: Federal legislation has some weight. I don’t want to overstate it, because we have to wait and see, but I do think it will bring in some potential money of folks who were still a little hesitant to maybe get into the business and essentially raise capital or put capital into other companies. The actual operators, they’ve already made the bet on cannabis. So, for them, a lot of it has been dependent on where the capital’s at.

JS: In addition to the increased capital that we can see, I believe with the descheduling on the Controlled Substances Act, that we’ll see major players outside of the cannabis industry start looking at trying to get into the industry.

TL: Regardless of the makeup of Congress, what are your anticipations for the rest of 2021?

MS: Regardless of what does happen at the federal level, I think M&A activity is going to be on the upswing. There are still a lot of good deals to be had out there. I also think people are anticipating and hopeful for an economic turnaround. So, deals are going to continue to happen and continue to grow.

I do think that we’re in a little bit of a different position than we were the last time there was this huge amount of M&A activity in the sense that companies are more mature. They’re seeing the things that maybe went wrong or weren’t ideal in former deals. So, although the increase is going to make for more competition for acquirers, I don’t think it’s going to be the same as it was in 2019, when people were really overlooking some real blemishes in companies just to keep growing and get in there. Now people really are looking at the fundamentals of the business and making sure they’ve got the corporate books and things like that.

-Melissa Sanders, Fox Rothschild partner 

JS: To add to that, regardless of what happens in Congress and the Senate, I think that M&A activity is going to still continue. We’re going to see a significant activity in that area, and there’s going to be a lot of consolidation in the coming years.

TL: Do you think small-scale cannabis businesses are a dying breed?

MS: I personally don’t think so, because there is a market for these independent companies and independent brands. That market is going to remain in cannabis and other industries. I do think that it’s going to be a lot harder for them to survive and compete, but I don’t think it’s a dying breed.

We’re still seeing a lot of small, one-off acquisitions. A lot of them are actually growing but not looking to necessarily become a huge MSO, although some of them are.

Fox Rothschild | foxrothschild.com

JS: I don’t think it’s dying. I think it’s difficult, especially the small farmers up in Northern California are struggling. But I think through struggle comes perseverance. There is something to be said about these small farms and these small kind of craft brands that there still is a market for them, and there will continue to be a market for them.

TL: How can some of the small-scale cannabis businesses make themselves attractable for sale, if that’s the path they want to go?

MS: If they want to make themselves attractive, the biggest thing is getting everything in order, making sure they’ve got records or descriptions, depending on how old the company is; there was a time when companies weren’t keeping great records. If they don’t have them, they don’t have them, but getting whatever they do have in order, looking at where there are holes to the extent that they’re fixable, to work on those, and also just getting kind of all of their paperwork in order to make sure they’re tracking things will help. When an acquirer comes in, they’re going to want to do a lot of due diligence on the business and legal side. And, so, being able to present those materials quickly is important.

JS: I second that. Clean books are very important so there’s no questions on ownership or taxes or anything like that. And, generally speaking, good cashflow, not a lot of debt on the books, that type of stuff is important too.

TL: How can MSOs stay on top of the competitive M&A market so they can take advantage of opportunities as they arise?

MS: That’s a good question. A lot of it is just staying on top of who all of the operators are in the areas that make sense for you strategically. I think MSOs are going to acquire strategically this year, and making sure that they understand who the players are in each market, and whether those players might be open to sale, can help them approach the right people at the right time.

JS: Knowing who to acquire, what licenses, where, what states are opening up and doing your own market research is valuable in making sure that if you want to enter into a market in a different state, that that’s going to work for your business. Just doing your own due diligence and research in the market is essential to taking advantage of those opportunities.

TL: What sparks companies to decide whether a merger is right for them, or they’re better off pursing an acquisition?

MS: The same deal could really, in most cases, be structured as a merger or an acquisition just depending on certain legal points and tax points. I think we are seeing a lot of the larger deals as mergers, in large part because it’s going to be stock-for-stock and not a lot of cash. A lot of the stock deals are more merger-oriented and a lot of the cash deals may be structured as acquisitions, but that’s not 100% across the board. And definitely the smaller one-off deals, those are almost always structured as acquisitions and not mergers.

JS: Generally speaking, the bigger deals are to be more of a merger, when two bigger companies come together, whereas when you have a bigger company looking to just expand its market in a specific area, just buying a small business here and there, those are going to be obviously acquisitions.

TL: What states or regions do you forecast being hotbeds for M&A activity in the U.S.?

MS: I do think states that recently passed adult-use legalization, especially those that previously had medical programs, a lot of times there are going to be procedures for them to convert their companies, and those states will probably see M&A activity.

JS: California has a bunch of independent operators, and I believe the market is right for consolidation if companies can find synergies within themselves. Regardless of what happens in Congress, I think that we’re going to see continued M&A activity just because the market, the industry itself, is in its infancy and people are growing. But if the federal government decides to deschedule or legalize cannabis this year, I believe we will see a significant uptick in that activity.

Editor’s Note: This interview has been edited for style, length and clarity.

On January 15, 2021, the USDA published its final rule on US hemp production. The rule, which becomes effective on March 22, 2021, expands and formalizes previous guidance related to waste disposal of noncompliant or “hot” crops (crops with a THC concentration above .3 percent). Importantly for the industry, the new disposal rules remove unduly burdensome DEA oversight and provides for remediation options.

Producers will not be required to use a DEA reverse distributor or law enforcement to dispose of noncompliant plants. Instead, producers will be able to use common on-farm practices for disposal. Some of these disposal options include, but are not limited to, plowing under non-compliant plants, composting into “green manure” for use on the same land, tilling, disking, burial or burning. By eliminating DEA involvement from this process, the USDA rules serve to streamline disposal options for producers of this agricultural commodity.

Alternatively, the final rule permits “remediation” of noncompliant plants. Allowing producers to remove and destroy noncompliant flower material – while retaining stalk, stems, leaf material and seeds – is an important crop and cost-saving measure for producers, especially smaller producers. Remediation can also occur by shredding the entire plant to create “biomass” and then re-testing the biomass for compliance. Biomass that fails the retesting is noncompliant hemp and must be destroyed. The USDA has issued an additional guidance document on remediation. Importantly, this guidance advises that lots should be kept separate during the biomass creation process, remediated biomass must be stored and labeled apart from each other and from other compliant hemp lots and seeds removed from non-compliant hemp should not be used for propagative purposes.

The final rules have strict record keeping requirements, such rules ultimately protect producers and should be embraced. For example, producers must document the disposal of all noncompliant plants by completing the “USDA Hemp Plan Producer Disposal Form.” Producers must also maintain records on all remediated plants, including an original copy of the resample test results. Records must be kept for a minimum of three years. While USDA has not yet conducted any random audits, the department may conduct random audits of licensees.

Although this federal guidance brings some clarity to hemp producers, there still remains litigation risks associated with waste disposal. There are unknown environmental impacts from the industry and there is potential tort liability or compliance issues with federal and state regulations. For example, as mentioned above, although burning and composting disposal options for noncompliant plants, the final rule does not address the potential risk for nuisance complaints from smoke or odor associated with these methods.

At the federal level, there could be compliance issues with the Resource Conservation and Recovery Act (RCRA), Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and ancillary regulations like Occupation Safety and Health Administration (OSHA). In addition to government enforcement under RCRA and CERCLA, these hazardous waste laws also permit private party suits. Although plant material from cultivation is not considered hazardous, process liquids from extraction or distillation (ethanol, acetone, etc.) are hazardous. Under RCRA, an individual can bring an “imminent and substantial endangerment” citizen suit against anyone generating or storing hazardous waste in a way the presents imminent and substantial endangerment to health or the environment. Under CERCLA, private parties who incur costs for removal or remediation may sue to recover costs from other responsible parties.

At the state level, there could be issues with state agency guidance and state laws. For example, California has multiple state agencies that oversee cannabis and hemp production and disposal. CA Prop 65 mandates warnings for products with certain chemicals, including pesticides, heavy metals and THC. The California Environmental Quality Act (CEQA) requires the evaluation of the environmental impact of runoff or pesticides prior to issuing a cultivation permit. Both environmental impact laws permit a form of private action.

Given the varied and evolving rules and regulation on hemp cultivation, it remains essential for hemp producers to seek guidance and the help of professionals when entering this highly regulated industry.

Anarkoooo | Adobe Stock

As the state-by-state markets continue to grow, major players outside the cannabis industry are looking for a way in. And those already with a footprint in the sector are poised to go bigger.

Earlier this month, a blockbuster deal kicked off the 2021 cannabis merger-and-acquisition season, when Ireland-based Jazz Pharmaceuticals inked a $7.2-billion deal to acquire United Kingdom-based GW Pharmaceuticals, the manufacturer of the Food and Drug Administration-approved Epidiolex. It was the biggest handshake yet for the cannabis industry, and it could be just the beginning of what’s to come in a global market still in its infancy.

At Fox Rothschild, a Philadelphia-based law firm with a national cannabis practice group, Partner Melissa Sanders and Associate Jared Schwass told clients there is much more room for businesses to expand in an alert they released Feb. 1.

Sanders advises corporate clients on a wide range of business matters, with a particular focus on mergers and acquisitions, private placements of securities, financing transactions and ownership transition programs. Schwass is an attorney in the corporate department and a member of the firm’s Cannabis Law Practice Group. He advises businesses entering and operating in the legalized cannabis market on regulatory compliance, risk mitigation and business transactions.

“At the end of 2020, we saw an uptick in merger-and-acquisition activity as the industry shook off some pandemic-related instability, and we expect that trend to increase significantly in 2021,” they said in the alert.

“Despite abundant money available to the large multi-state operators (MSOs), most cannabis companies still have relatively limited avenues to raise capital due to the federal illegality of the industry,” they said. “However, that may change soon with the democrats now controlling both houses of Congress and the White House.”

When cannabis is descheduled, Sanders and Schwass said they anticipate an influx of cash into the sector, as previously reluctant investors and institutions enter the market without fear of federal repercussions.

Here, Sanders and Schwass share more about M&A activity trends, anticipations and indicators, and how MSOs and smaller businesses alike can position themselves for possible growth opportunities.                        

Tony Lange: What stood out most about how M&A activities shaped up in the 2020 cannabis industry?

Fox Rothschild | foxrothschild.com

Melissa Sanders: I think we were seeing a lot of the distressed assets being snapped up. And even outside of the distressed assets, there were some good deals to be had. As we’re moving into 2021, that’s continuing. But I think that with the change in the Senate and legalization potentially on the forefront, additional capital is coming in and we’re going to see more M&A overall.

Jared Schwass: When COVID-19 first hit, there was kind of a lull in activity. Then, when medical necessities and distressed assets became available, that’s when the serial acquirers were buying up. And then we did see, towards the end, a couple of mergers that that were big news. I feel like more of that’s going to happen in 2021.

TL: How much would cannabis legislation at the federal level impact M&A activity?

MS: Federal legislation has some weight. I don’t want to overstate it, because we have to wait and see, but I do think it will bring in some potential money of folks who were still a little hesitant to maybe get into the business and essentially raise capital or put capital into other companies. The actual operators, they’ve already made the bet on cannabis. So, for them, a lot of it has been dependent on where the capital’s at.

JS: In addition to the increased capital that we can see, I believe with the descheduling on the Controlled Substances Act, that we’ll see major players outside of the cannabis industry start looking at trying to get into the industry.

TL: Regardless of the makeup of Congress, what are your anticipations for the rest of 2021?

MS: Regardless of what does happen at the federal level, I think M&A activity is going to be on the upswing. There are still a lot of good deals to be had out there. I also think people are anticipating and hopeful for an economic turnaround. So, deals are going to continue to happen and continue to grow.

I do think that we’re in a little bit of a different position than we were the last time there was this huge amount of M&A activity in the sense that companies are more mature. They’re seeing the things that maybe went wrong or weren’t ideal in former deals. So, although the increase is going to make for more competition for acquirers, I don’t think it’s going to be the same as it was in 2019, when people were really overlooking some real blemishes in companies just to keep growing and get in there. Now people really are looking at the fundamentals of the business and making sure they’ve got the corporate books and things like that.

-Melissa Sanders, Fox Rothschild partner 

JS: To add to that, regardless of what happens in Congress and the Senate, I think that M&A activity is going to still continue. We’re going to see a significant activity in that area, and there’s going to be a lot of consolidation in the coming years.

TL: Do you think small-scale cannabis businesses are a dying breed?

MS: I personally don’t think so, because there is a market for these independent companies and independent brands. That market is going to remain in cannabis and other industries. I do think that it’s going to be a lot harder for them to survive and compete, but I don’t think it’s a dying breed.

We’re still seeing a lot of small, one-off acquisitions. A lot of them are actually growing but not looking to necessarily become a huge MSO, although some of them are.

Fox Rothschild | foxrothschild.com

JS: I don’t think it’s dying. I think it’s difficult, especially the small farmers up in Northern California are struggling. But I think through struggle comes perseverance. There is something to be said about these small farms and these small kind of craft brands that there still is a market for them, and there will continue to be a market for them.

TL: How can some of the small-scale cannabis businesses make themselves attractable for sale, if that’s the path they want to go?

MS: If they want to make themselves attractive, the biggest thing is getting everything in order, making sure they’ve got records or descriptions, depending on how old the company is; there was a time when companies weren’t keeping great records. If they don’t have them, they don’t have them, but getting whatever they do have in order, looking at where there are holes to the extent that they’re fixable, to work on those, and also just getting kind of all of their paperwork in order to make sure they’re tracking things will help. When an acquirer comes in, they’re going to want to do a lot of due diligence on the business and legal side. And, so, being able to present those materials quickly is important.

JS: I second that. Clean books are very important so there’s no questions on ownership or taxes or anything like that. And, generally speaking, good cashflow, not a lot of debt on the books, that type of stuff is important too.

TL: How can MSOs stay on top of the competitive M&A market so they can take advantage of opportunities as they arise?

MS: That’s a good question. A lot of it is just staying on top of who all of the operators are in the areas that make sense for you strategically. I think MSOs are going to acquire strategically this year, and making sure that they understand who the players are in each market, and whether those players might be open to sale, can help them approach the right people at the right time.

JS: Knowing who to acquire, what licenses, where, what states are opening up and doing your own market research is valuable in making sure that if you want to enter into a market in a different state, that that’s going to work for your business. Just doing your own due diligence and research in the market is essential to taking advantage of those opportunities.

TL: What sparks companies to decide whether a merger is right for them, or they’re better off pursing an acquisition?

MS: The same deal could really, in most cases, be structured as a merger or an acquisition just depending on certain legal points and tax points. I think we are seeing a lot of the larger deals as mergers, in large part because it’s going to be stock-for-stock and not a lot of cash. A lot of the stock deals are more merger-oriented and a lot of the cash deals may be structured as acquisitions, but that’s not 100% across the board. And definitely the smaller one-off deals, those are almost always structured as acquisitions and not mergers.

JS: Generally speaking, the bigger deals are to be more of a merger, when two bigger companies come together, whereas when you have a bigger company looking to just expand its market in a specific area, just buying a small business here and there, those are going to be obviously acquisitions.

TL: What states or regions do you forecast being hotbeds for M&A activity in the U.S.?

MS: I do think states that recently passed adult-use legalization, especially those that previously had medical programs, a lot of times there are going to be procedures for them to convert their companies, and those states will probably see M&A activity.

JS: California has a bunch of independent operators, and I believe the market is right for consolidation if companies can find synergies within themselves. Regardless of what happens in Congress, I think that we’re going to see continued M&A activity just because the market, the industry itself, is in its infancy and people are growing. But if the federal government decides to deschedule or legalize cannabis this year, I believe we will see a significant uptick in that activity.

Editor’s Note: This interview has been edited for style, length and clarity.

Photo by DJ Davis | hotboxfarms.com

It was 5 a.m. when he heard somebody banging on his window from the darkness outside.

Dan Cummings, the community development director in Ontario, Ore., a city of roughly 11,000 people in the eastern part of the state, had spent some early mornings at his office in the days leading up to that clatter.

Earlier that week, in November 2018, Ontario voters overturned the city’s ban on cannabis sales, with 56.8% of 3,383 balloters showing their support for a local measure that would impose a 3% tax on adult-use retail.

Four years earlier, when Oregonians approved Measure 91 to legalize cannabis cultivation and adult-use statewide during the 2014 general election, residents in Malheur County, where Ontario is located, were on the other side, voting 68.3% against that measure. Under the state law, counties and cities that opposed the measure by at least 60% had the option to outlaw cannabis legalization in their municipalities. The Ontario City Council did just that when its members voted to prohibit cannabis retail in 2015.

But when a citizen-led petition gathered enough signatures to get a new pro-cannabis retail measure added to the Ontario ballot in 2018, Cummings said he started writing community development codes ahead of time in case voters lifted the ban. A couple statutes he wanted to establish included a licensing and permit program for dispensaries as well as 1,000-foot buffer zones between fellow retailers and between a retailer and schools, city parks and residential areas. In addition, potential dispensary owners had to show proof they owned property that met those buffer-zone parameters before receiving city permits.

“We had things in place prior to that so we didn’t get stuck like a lot of cities with your pants down,” Cummings said. “I came in at 4:30 in the morning, which I had been doing a lot to try and get all the codes and everything written up and prepared, and about 5 o’clock I heard somebody bang on the window out front. I looked out there and there was somebody sitting on my bench out there. And, at first, I thought, ‘What are they doing?’ And then it hit me like a rock, ‘Oh, I know what they’re doing. They’re lining up.’ And sure enough, that’s exactly what they were doing.”

While the 2018 measure wouldn’t take effect until Jan. 1, 2019, experienced dispensary owners and aspiring dispensary owners alike started camping outside Cummings’ office the same week of the general election in a mad rush to stake a claim in one of the most promising locations in Oregon. Nestled on the state line with Idaho, Ontario is positioned to take advantage of the most populated area in the Gem State, with Boise residents no farther than 50 miles from town.

Without medical or adult-use legalization in their own state, Idahoans have easy access to Ontario via Interstate 84. In southeastern Oregon and southwestern Idaho, in an area known as Treasure Valley, there are north of 700,000 residents whose major roadways link up in Ontario, and that population is expected to grow.

While state and local law enforcement might have something to say about the matter, the business opportunity was tremendous.

Photo by Danny Ramirez | burntriverfarms.com

Shawn McKay was one of the dispensary entrepreneurs eyeing the opportunity to take advantage of retail space in Ontario after the 2018 ballot measure passed. He and business partner Guss Young, the co-owners of Burnt River Farms, already had a cultivation operation in place in Huntington, Ore., about 30 miles northwest of Ontario. When it came to standing in line outside Cummings’ office to turn in their application for the possibility of opening their first dispensary, there were no guarantees, McKay said.  

“It was definitely an unknown,” he said. “I mean, we just had to keep, you know, just sticking to it and looking for a place. And we happened to be fortunate enough to find the place that we did, and we were able to secure it. And we had been through the licensing process a little bit and were familiar with that. So, we just kind of went after it.”

Oregon’s “Highest County”

After push came to shove, three dispensaries opened in 2019 in Ontario, including Weedology in July, Burnt River Farms in August and Hotbox Farms in October. By January 2020, those three retail operations were combining to sell more than $5 million of cannabis products a month, according to data from the Oregon Liquor Control Commission (OLCC).

Five more dispensaries gained traction in 2020, including Top Crop and Zion Cannabis opening their doors in May, Treasure Valley Cannabis Company opening in October, and then The Bud House and Cannabis & Glass setting up shop at the end of the year. Cummings said six more dispensaries are approved for 2021, and there might be around 20 in all before the city is maxed out of space with the requisite buffer zones spread across its 5 square miles.

As cannabis sales in Oregon soared past $1.1 billion in 2020, according to OLCC data, Malheur County concluded 2020 with a whopping $91,713,684 in sales, all coming from the dispensaries in Ontario. The No. 1 county in the state on a per-capital basis, with roughly $3,000 in cannabis sales per resident, Malheur took over the unofficial title of Oregon’s “Highest County,” dethroning three-time defending champion Baker County, which neighbors to the north.

According to Ontario Finance Director Kari Ott, the city is expected to receive approximately $3 million in tax revenue from cannabis sales for fiscal 2020-2021, which ends June 30, to add to its annual general fund budget of almost $10 million.  

Photo by DJ Davis | hotboxfarms.com

Steven Meland, who co-owns Hotbox Farms with Jeremy Breton, said he hopes to champion the “Highest County” title as a means to attract even more consumers to the dispensary landscape in Ontario.

“There’s certainly a huge opportunity for cannabis tourism,” Meland said. “And I think the Oregon Liquor Control Commission has been fairly supportive of us marketing Ontario as a cannabis tourism destination. It’s somewhere where people can come and enjoy legal access to cannabis. Of course, we certainly don’t recommend that they take it back to their state, or have it leave Oregon at all, but it certainly has been somewhere that sees a very high capita of customers.”

Meanwhile, Multnomah County, which includes Oregon’s most populated city, Portland, remained the state’s leader with $313.4 million in total cannabis sales in 2020, which registers to roughly $385 in sales per person.

While Meland and Breton opened the doors to their Hotbox Farms dispensary in Ontario in 2019, they opened their first dispensary four years earlier in nearby Huntington (in Baker County), a town of about 400 people, where city council members voted in favor of legalizing cannabis sales after state Measure 91 passed. About a 30-minute drive from Ontario, along I-84, Huntington used to be the nearest locality for Idahoans seeking cannabis retail.

But once dispensaries opened in Ontario, it became the closer, go-to destination for travelers from the Treasure Valley region. While Ontario cannabis sales rocketed to $91.7 million in 2020, cannabis retail out of Baker County plummeted from $30.2 million in 2019 to $7.9 million in 2020, roughly a 74% decrease, according to OLCC data. Based on location, Meland said that was to be expected.   

“I would certainly say that Huntington was a great place for us to learn the industry and get our feet underneath us,” he said. “When we were able to switch over to running both the Huntington and the Ontario store, we certainly saw an increase in [Ontario] sales right away. There was no drop-off or ramp-up period that was needed for Ontario.”

Overturning the Ontario Ban

Childhood friends, Meland and Breton moved to Ontario in 2015 to start their medical grow, and sold product to dispensaries throughout Oregon. They halted their medical cultivation when the opportunity came to open their Hotbox Farms dispensary in Ontario.

But opening another dispensary wasn’t necessarily the major hurdle they had to clear. Just getting a pro-cannabis initiative on the 2018 ballot was work in itself, Meland said. What started as a grassroots effort to gather signatures for a citizen-led petition turned into organized canvassers and political advisers to run a structured campaign, after Meland and Breton helped fund it.  

With Malheur County historically a conservative stronghold—69.4% of its voters cast ballots for Donald Trump in 2020—citizens of Ontario previously voted down pro-cannabis legislation following state-passed Measure 91 in 2014, which left city council members asking what warranted a new measure on the 2018 ballot, Meland said.

“The general sentiment of the town was that they did not want cannabis and that they had already voted to not have cannabis,” he said. “So, there was certainly a large hurdle of even trying to get the conversation. There would have been a much easier path to getting it on the [2018] ballot, which would have simply just had been the city council vote to put it onto the ballot and let the people decide. Once again, however, they weren’t really interested in that, as they felt that people had already spoken.”

But once the 2018 ballot initiative picked up steam, with campaign drives and events attracting petition signatures, city officials created a Marijuana Ad Hoc Committee, to ensure they had their laws and regulations intact. Meland said they asked him to sit on that committee, because of his background and expertise in running cannabis businesses, and then the members of that committee nominated and voted him to be the chairman at their first meeting.

In his responsibility to his community, Meland said he wanted to make sure that he helped create a system that was fair and equitable. While Hotbox Farms did end up getting several dispensary licenses through the award process, it wasn’t the first company to receive those licenses and it wasn’t the first dispensary to open up shop in town.

“A lot of that really was because the system that we created was so fair,” he said. “There was no guarantee who was going to get dispensaries.”

The same day the voters of Ontario bubbled their ballots to overturn the ban on cannabis sales, they also elected a mayor—in a four-candidate race—who ran on a “No Pot” platform. Riley Hill took office with 40.1% of the vote. When the election results came in, those two outcomes created quite the paradox, Meland said.

Photo by Danny Ramirez | burntriverfarms.com

The general preconception of Ontario residents might have been that they’d see a bunch of kids standing in line to buy smokable flower outside dispensaries, Meland said. But, if they drove by his Hotbox Farms retail location 30 minutes down the road in Huntington, what they’d actually see were retirees, ex-schoolteachers or business leaders who were there to purchase non-smokable products like topicals, Meland said.

“That started to break down those walls for the community,” he said. “So, even people that maybe were typically a supporter of the new mayor, who’s also somebody who’s been in town a long time, they may have also said, ‘Well, you know, Riley [Hill], we like you. And we like a lot of your policies. But we actually also like this cannabis cream too.’”

The Competitive Market

Once voters gave the greenlight for dispensaries to sell adult-use cannabis in Ontario, it didn’t take long for that line to form outside Cummings’ community development office in anticipation for the application process. After all, to make the process fair, the city adopted a first-come, first-serve system.

But with his door shut and people camping outside at 5 a.m., Cummings heard that bang on his window. In anticipation of a competitive rush to stake a claim in the market—even before the law was in effect—Cummings said he came up with a pre-application stage to maintain order outside his office.

“So, I went out there and painted numbers to keep the people under control out there, because the first thing happened and we had people bullying the other people,” Cummings said. “So, I went out there and painted marks on the sidewalk and separated them and said, ‘You stay in this circle. You don’t harass anybody else or you will lose your spot.’ So, that made them all behave standing in line there.”

In his heyday in the 1960s, Cummings said he was a cowboy who enjoyed his whiskey. Cannabis was never his thing. He moved to Ontario in 1974 and owned an engineering land surveying business up until 2015, when he retired. When city officials got wind of his retirement, they coaxed him into taking on the community development directorship, he said. A few years later, he was at the center of the biggest cannabis retail rush in Oregon.

“Had I only known,” Cummings said and laughed.

Ontario is historically an agricultural community, he said, but it’s always had a big retail hub being on the border with Idaho, which has a 6% sales tax. Oregon’s sales tax is zero.

Photo by Danny Ramirez | burntriverfarms.com

But business traffic is more than just Idahoans stopping in town to take advantage of the Ontario retail market, which now includes cannabis. Off I-84, Ontario has two rest areas as well as a Pilot Travel Center and a Love’s Travel Stop. McKay said that brings in even more customers to his Burnt River Farms dispensary.

“We’re right next to the truck stop,” he said. “So, we serve clients from all over the United States on a daily basis. I mean, being next to that border definitely has some influence, but we’re in a really high-traffic area anyway. So, yeah, we want to serve everybody regardless of where they’re from.”

With eight dispensaries now in Ontario, and more coming, owners have to market their businesses in a competitive cannabis landscape. At Burnt River Farms, McKay said he and co-owner Young market their shop as the homegrown company, where they locally produce a lot of the products in their store with a farm-to-table environment. In addition, Burnt River Farms offers the only detached drive-through service in town, McKay said.

“Our customers order online and they show up to the drive-through and pay for their order, and they’re in and out in about two minutes, and it’s pretty much contactless service,” McKay said. “They’re able to stay in their car. They can have their kids in the car. It’s just a great situation for everybody. And we’ve been doing that now since about April of last year.”

Meanwhile, Meland said his Hotbox Farms operation is also vertically integrated, with two grow facilities in Oregon, a processing facility and two wholesale distribution licenses he and co-owner Breton use in Ontario and in Portland to act as a depot for both purchasing and selling to other dispensaries.

Photo by DJ Davis | hotboxfarms.com

In addition to being hometown residents in Ontario, Meland and Breton market their dispensary as the go-to spot for VIP and celebrity appearances. For their grand opening in October 2019, they had Snoop Dogg come out for an impromptu concert that Meland said attracted 10,000-plus people. They only had about a 48-hour window from the time the OLCC told them their license would be issued and actually receiving that license, which meant Meland and Breton didn’t give city officials much of a notice about bringing in Snoop Dogg for a free concert.

“The city was a little flustered,” Meland said. “We sat down with the city manager before it happened, and he certainly expressed his frustrations, as did the city police chief. We kind of let them know that the cat was out of the bag a little bit on this one, and we apologize for the lack of communication, but that the show was going to go on. Again, they were pretty frustrated.”

Photo by DJ Davis | hotboxfarms.com

Ontario Police Chief Steven Romero, who had just joined the city’s department four months earlier, said his early encounters with Meland weren’t as he had hoped.

“[The Snoop Dogg concert] caught me by surprise, but fortunately all went well,” Chief Romero said. “I don’t hold grudges. I don’t believe [Meland] does, either, or hasn’t. But I’ve had very limited contact with him since then.”

Meland said there were no incidents to speak of, like fights or anyone getting hurt, and he and Breton smoothed things over in a follow-up conversation with the city manager, Adam Brown, when they agreed to pay around $10,000 in a settlement to cover the costs of paying overtime for police officers, firefighters and other city officials.

Photo by DJ Davis | hotboxfarms.com

“The city agreed to participate with us next time we want to have an event,” Meland said. “So, that’s the next big thing is that Hotbox isn’t done having events. It’s certainly something that we’ve grown to be known for and grown to love. It’s just a really neat thing for a community of our size to be able to have folks of [Snoop Dogg’s] stature coming to do a show in Ontario”

Hotbox Farms went on to host events with celebrities like Jim Belushi; B-Real of Cypress Hill; and Doggface, the viral TikTok sensation from his longboard skateboarding video with Fleetwood Mac’s song “Dreams.”  

Local Law Enforcement

When Oregonians passed Measure 91 in 2014, the state was granted the right to tax adult-use cannabis sales 17%, which, in part, would be dispersed to local municipalities based on population and number of dispensaries. In Ontario, city officials planned to budget much of that money for law enforcement.

But Measure 91 stops short of considering a municipality’s broader customer base—which in this situation would include Idaho and other areas around eastern Oregon—which means that Ontario’s cannabis sales are technically subsidizing the bigger cities in the western part of Oregon. While state taxes amounted to roughly $15.6 million from Ontario’s cannabis sales in 2020, the city only received $65,869 back from the state through the dispersion formula in 2020, according to Ott.

Chief Romero said that money didn’t put much of a dent in the city’s need to grow its police department, which currently has a budget for 24 full-time personnel with four reserve police officers.

Ontario previously funded two officers through its local cannabis tax, so Romero is hopeful his police department will realize some of the anticipated $3 million in city-generated tax revenue for fiscal 2020-21 to expand his agency a bit more, he said. But that revenue stream is still open for discussion among Ontario’s elected officials and the city’s budget committee.

“I’m actually asking for more [full-time officers] now because this department has been underfunded and under structured for quite a long time,” Chief Romero said. “Based on the workload that it produces, and it responds to, it is way understaffed.”

In terms of his department’s relationship with dispensary owners, Chief Romero said his officers take a hands-off approach to being present anywhere around the city’s cannabis retail operations.

“They didn’t want the stigma that if police were visible in their area, that it would hurt their businesses,” he said. “So, I could tell you this —I have not conducted any real proactive outreach to the owners, nor have they in return. It’s not an adversarial relationship, I can guarantee you that. But we really don’t have a lot of communication at all other than when an event happens at their stores.”

In Chief Romero’s previous position, he was a bureau commander for the Hawthorne Police Department on the southwest side of Los Angeles. And he also worked some other assignments, including the deputy directorship at the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force (IMPACT), one of the largest transnational drug interdiction taskforces in the country.

But when it comes to Ontario law enforcement coordinating with Idaho law enforcement regarding cannabis dispensaries catering to out-of-state customers, Chief Romero said there is none.

Photo by DJ Davis | hotboxfarms.com

“There’s zero [collaboration with Idaho], because it is a legal activity here, and it’s not our position to, per se, set up marijuana traps,” he said. “Now, Idaho’s law enforcement takes a different stance. They’re still very much firm and it’s still very much illegal in their state. However, for what is considered legal in Oregon, there’s no reason for Oregon law enforcement to collaborate with out-of-state law enforcement.”

Both Chief Romero and Cummings said, if they had to guess, probably 90% of cannabis sales in Ontario come from buyers in Idaho.

Meland said his team at Hotbox Farms treats every customer the same, no matter where they’re from, because it’s legal for them to buy cannabis products at their dispensary in Ontario. What’s illegal is for customers from Idaho to take cannabis back home to their Gem State residences.

“We certainly don’t recommend for any of our customers to press that issue or try their luck with going against the laws of any other state,” Meland said. “But we certainly enjoy living in and operating within Oregon, where we’re able to take part in the industry.” 

Photo by DJ Davis | hotboxfarms.com

It was 5 a.m. when he heard somebody banging on his window from the darkness outside.

Dan Cummings, the community development director in Ontario, Ore., a city of roughly 11,000 people in the eastern part of the state, had spent some early mornings at his office in the days leading up to that clatter.

Earlier that week, in November 2018, Ontario voters overturned the city’s ban on cannabis sales, with 56.8% of 3,383 balloters showing their support for a local measure that would impose a 3% tax on adult-use retail.

Four years earlier, when Oregonians approved Measure 91 to legalize cannabis cultivation and adult-use statewide during the 2014 general election, residents in Malheur County, where Ontario is located, were on the other side, voting 68.3% against that measure. Under the state law, counties and cities that opposed the measure by at least 60% had the option to outlaw cannabis legalization in their municipalities. The Ontario City Council did just that when its members voted to prohibit cannabis retail in 2015.

But when a citizen-led petition gathered enough signatures to get a new pro-cannabis retail measure added to the Ontario ballot in 2018, Cummings said he started writing community development codes ahead of time in case voters lifted the ban. A couple statutes he wanted to establish included a licensing and permit program for dispensaries as well as 1,000-foot buffer zones between fellow retailers and between a retailer and schools, city parks and residential areas. In addition, potential dispensary owners had to show proof they owned property that met those buffer-zone parameters before receiving city permits.

“We had things in place prior to that so we didn’t get stuck like a lot of cities with your pants down,” Cummings said. “I came in at 4:30 in the morning, which I had been doing a lot to try and get all the codes and everything written up and prepared, and about 5 o’clock I heard somebody bang on the window out front. I looked out there and there was somebody sitting on my bench out there. And, at first, I thought, ‘What are they doing?’ And then it hit me like a rock, ‘Oh, I know what they’re doing. They’re lining up.’ And sure enough, that’s exactly what they were doing.”

While the 2018 measure wouldn’t take effect until Jan. 1, 2019, experienced dispensary owners and aspiring dispensary owners alike started camping outside Cummings’ office the same week of the general election in a mad rush to stake a claim in one of the most promising locations in Oregon. Nestled on the state line with Idaho, Ontario is positioned to take advantage of the most populated area in the Gem State, with Boise residents no farther than 50 miles from town.

Without medical or adult-use legalization in their own state, Idahoans have easy access to Ontario via Interstate 84. In southeastern Oregon and southwestern Idaho, in an area known as Treasure Valley, there are north of 700,000 residents whose major roadways link up in Ontario, and that population is expected to grow.

While state and local law enforcement might have something to say about the matter, the business opportunity was tremendous.

Photo by Danny Ramirez | burntriverfarms.com

Shawn McKay was one of the dispensary entrepreneurs eyeing the opportunity to take advantage of retail space in Ontario after the 2018 ballot measure passed. He and business partner Guss Young, the co-owners of Burnt River Farms, already had a cultivation operation in place in Huntington, Ore., about 30 miles northwest of Ontario. When it came to standing in line outside Cummings’ office to turn in their application for the possibility of opening their first dispensary, there were no guarantees, McKay said.  

“It was definitely an unknown,” he said. “I mean, we just had to keep, you know, just sticking to it and looking for a place. And we happened to be fortunate enough to find the place that we did, and we were able to secure it. And we had been through the licensing process a little bit and were familiar with that. So, we just kind of went after it.”

Oregon’s “Highest County”

After push came to shove, three dispensaries opened in 2019 in Ontario, including Weedology in July, Burnt River Farms in August and Hotbox Farms in October. By January 2020, those three retail operations were combining to sell more than $5 million of cannabis products a month, according to data from the Oregon Liquor Control Commission (OLCC).

Five more dispensaries gained traction in 2020, including Top Crop and Zion Cannabis opening their doors in May, Treasure Valley Cannabis Company opening in October, and then The Bud House and Cannabis & Glass setting up shop at the end of the year. Cummings said six more dispensaries are approved for 2021, and there might be around 20 in all before the city is maxed out of space with the requisite buffer zones spread across its 5 square miles.

As cannabis sales in Oregon soared past $1.1 billion in 2020, according to OLCC data, Malheur County concluded 2020 with a whopping $91,713,684 in sales, all coming from the dispensaries in Ontario. The No. 1 county in the state on a per-capital basis, with roughly $3,000 in cannabis sales per resident, Malheur took over the unofficial title of Oregon’s “Highest County,” dethroning three-time defending champion Baker County, which neighbors to the north.

According to Ontario Finance Director Kari Ott, the city is expected to receive approximately $3 million in tax revenue from cannabis sales for fiscal 2020-2021, which ends June 30, to add to its annual general fund budget of almost $10 million.  

Photo by DJ Davis | hotboxfarms.com

Steven Meland, who co-owns Hotbox Farms with Jeremy Breton, said he hopes to champion the “Highest County” title as a means to attract even more consumers to the dispensary landscape in Ontario.

“There’s certainly a huge opportunity for cannabis tourism,” Meland said. “And I think the Oregon Liquor Control Commission has been fairly supportive of us marketing Ontario as a cannabis tourism destination. It’s somewhere where people can come and enjoy legal access to cannabis. Of course, we certainly don’t recommend that they take it back to their state, or have it leave Oregon at all, but it certainly has been somewhere that sees a very high capita of customers.”

Meanwhile, Multnomah County, which includes Oregon’s most populated city, Portland, remained the state’s leader with $313.4 million in total cannabis sales in 2020, which registers to roughly $385 in sales per person.

While Meland and Breton opened the doors to their Hotbox Farms dispensary in Ontario in 2019, they opened their first dispensary four years earlier in nearby Huntington (in Baker County), a town of about 400 people, where city council members voted in favor of legalizing cannabis sales after state Measure 91 passed. About a 30-minute drive from Ontario, along I-84, Huntington used to be the nearest locality for Idahoans seeking cannabis retail.

But once dispensaries opened in Ontario, it became the closer, go-to destination for travelers from the Treasure Valley region. While Ontario cannabis sales rocketed to $91.7 million in 2020, cannabis retail out of Baker County plummeted from $30.2 million in 2019 to $7.9 million in 2020, roughly a 74% decrease, according to OLCC data. Based on location, Meland said that was to be expected.   

“I would certainly say that Huntington was a great place for us to learn the industry and get our feet underneath us,” he said. “When we were able to switch over to running both the Huntington and the Ontario store, we certainly saw an increase in [Ontario] sales right away. There was no drop-off or ramp-up period that was needed for Ontario.”

Overturning the Ontario Ban

Childhood friends, Meland and Breton moved to Ontario in 2015 to start their medical grow, and sold product to dispensaries throughout Oregon. They halted their medical cultivation when the opportunity came to open their Hotbox Farms dispensary in Ontario.

But opening another dispensary wasn’t necessarily the major hurdle they had to clear. Just getting a pro-cannabis initiative on the 2018 ballot was work in itself, Meland said. What started as a grassroots effort to gather signatures for a citizen-led petition turned into organized canvassers and political advisers to run a structured campaign, after Meland and Breton helped fund it.  

With Malheur County historically a conservative stronghold—69.4% of its voters cast ballots for Donald Trump in 2020—citizens of Ontario previously voted down pro-cannabis legislation following state-passed Measure 91 in 2014, which left city council members asking what warranted a new measure on the 2018 ballot, Meland said.

“The general sentiment of the town was that they did not want cannabis and that they had already voted to not have cannabis,” he said. “So, there was certainly a large hurdle of even trying to get the conversation. There would have been a much easier path to getting it on the [2018] ballot, which would have simply just had been the city council vote to put it onto the ballot and let the people decide. Once again, however, they weren’t really interested in that, as they felt that people had already spoken.”

But once the 2018 ballot initiative picked up steam, with campaign drives and events attracting petition signatures, city officials created a Marijuana Ad Hoc Committee, to ensure they had their laws and regulations intact. Meland said they asked him to sit on that committee, because of his background and expertise in running cannabis businesses, and then the members of that committee nominated and voted him to be the chairman at their first meeting.

In his responsibility to his community, Meland said he wanted to make sure that he helped create a system that was fair and equitable. While Hotbox Farms did end up getting several dispensary licenses through the award process, it wasn’t the first company to receive those licenses and it wasn’t the first dispensary to open up shop in town.

“A lot of that really was because the system that we created was so fair,” he said. “There was no guarantee who was going to get dispensaries.”

The same day the voters of Ontario bubbled their ballots to overturn the ban on cannabis sales, they also elected a mayor—in a four-candidate race—who ran on a “No Pot” platform. Riley Hill took office with 40.1% of the vote. When the election results came in, those two outcomes created quite the paradox, Meland said.

Photo by Danny Ramirez | burntriverfarms.com

The general preconception of Ontario residents might have been that they’d see a bunch of kids standing in line to buy smokable flower outside dispensaries, Meland said. But, if they drove by his Hotbox Farms retail location 30 minutes down the road in Huntington, what they’d actually see were retirees, ex-schoolteachers or business leaders who were there to purchase non-smokable products like topicals, Meland said.

“That started to break down those walls for the community,” he said. “So, even people that maybe were typically a supporter of the new mayor, who’s also somebody who’s been in town a long time, they may have also said, ‘Well, you know, Riley [Hill], we like you. And we like a lot of your policies. But we actually also like this cannabis cream too.’”

The Competitive Market

Once voters gave the greenlight for dispensaries to sell adult-use cannabis in Ontario, it didn’t take long for that line to form outside Cummings’ community development office in anticipation for the application process. After all, to make the process fair, the city adopted a first-come, first-serve system.

But with his door shut and people camping outside at 5 a.m., Cummings heard that bang on his window. In anticipation of a competitive rush to stake a claim in the market—even before the law was in effect—Cummings said he came up with a pre-application stage to maintain order outside his office.

“So, I went out there and painted numbers to keep the people under control out there, because the first thing happened and we had people bullying the other people,” Cummings said. “So, I went out there and painted marks on the sidewalk and separated them and said, ‘You stay in this circle. You don’t harass anybody else or you will lose your spot.’ So, that made them all behave standing in line there.”

In his heyday in the 1960s, Cummings said he was a cowboy who enjoyed his whiskey. Cannabis was never his thing. He moved to Ontario in 1974 and owned an engineering land surveying business up until 2015, when he retired. When city officials got wind of his retirement, they coaxed him into taking on the community development directorship, he said. A few years later, he was at the center of the biggest cannabis retail rush in Oregon.

“Had I only known,” Cummings said and laughed.

Ontario is historically an agricultural community, he said, but it’s always had a big retail hub being on the border with Idaho, which has a 6% sales tax. Oregon’s sales tax is zero.

Photo by Danny Ramirez | burntriverfarms.com

But business traffic is more than just Idahoans stopping in town to take advantage of the Ontario retail market, which now includes cannabis. Off I-84, Ontario has two rest areas as well as a Pilot Travel Center and a Love’s Travel Stop. McKay said that brings in even more customers to his Burnt River Farms dispensary.

“We’re right next to the truck stop,” he said. “So, we serve clients from all over the United States on a daily basis. I mean, being next to that border definitely has some influence, but we’re in a really high-traffic area anyway. So, yeah, we want to serve everybody regardless of where they’re from.”

With eight dispensaries now in Ontario, and more coming, owners have to market their businesses in a competitive cannabis landscape. At Burnt River Farms, McKay said he and co-owner Young market their shop as the homegrown company, where they locally produce a lot of the products in their store with a farm-to-table environment. In addition, Burnt River Farms offers the only detached drive-through service in town, McKay said.

“Our customers order online and they show up to the drive-through and pay for their order, and they’re in and out in about two minutes, and it’s pretty much contactless service,” McKay said. “They’re able to stay in their car. They can have their kids in the car. It’s just a great situation for everybody. And we’ve been doing that now since about April of last year.”

Meanwhile, Meland said his Hotbox Farms operation is also vertically integrated, with two grow facilities in Oregon, a processing facility and two wholesale distribution licenses he and co-owner Breton use in Ontario and in Portland to act as a depot for both purchasing and selling to other dispensaries.

Photo by DJ Davis | hotboxfarms.com

In addition to being hometown residents in Ontario, Meland and Breton market their dispensary as the go-to spot for VIP and celebrity appearances. For their grand opening in October 2019, they had Snoop Dogg come out for an impromptu concert that Meland said attracted 10,000-plus people. They only had about a 48-hour window from the time the OLCC told them their license would be issued and actually receiving that license, which meant Meland and Breton didn’t give city officials much of a notice about bringing in Snoop Dogg for a free concert.

“The city was a little flustered,” Meland said. “We sat down with the city manager before it happened, and he certainly expressed his frustrations, as did the city police chief. We kind of let them know that the cat was out of the bag a little bit on this one, and we apologize for the lack of communication, but that the show was going to go on. Again, they were pretty frustrated.”

Photo by DJ Davis | hotboxfarms.com

Ontario Police Chief Steven Romero, who had just joined the city’s department four months earlier, said his early encounters with Meland weren’t as he had hoped.

“[The Snoop Dogg concert] caught me by surprise, but fortunately all went well,” Chief Romero said. “I don’t hold grudges. I don’t believe [Meland] does, either, or hasn’t. But I’ve had very limited contact with him since then.”

Meland said there were no incidents to speak of, like fights or anyone getting hurt, and he and Breton smoothed things over in a follow-up conversation with the city manager, Adam Brown, when they agreed to pay around $10,000 in a settlement to cover the costs of paying overtime for police officers, firefighters and other city officials.

Photo by DJ Davis | hotboxfarms.com

“The city agreed to participate with us next time we want to have an event,” Meland said. “So, that’s the next big thing is that Hotbox isn’t done having events. It’s certainly something that we’ve grown to be known for and grown to love. It’s just a really neat thing for a community of our size to be able to have folks of [Snoop Dogg’s] stature coming to do a show in Ontario”

Hotbox Farms went on to host events with celebrities like Jim Belushi; B-Real of Cypress Hill; and Doggface, the viral TikTok sensation from his longboard skateboarding video with Fleetwood Mac’s song “Dreams.”  

Local Law Enforcement

When Oregonians passed Measure 91 in 2014, the state was granted the right to tax adult-use cannabis sales 17%, which, in part, would be dispersed to local municipalities based on population and number of dispensaries. In Ontario, city officials planned to budget much of that money for law enforcement.

But Measure 91 stops short of considering a municipality’s broader customer base—which in this situation would include Idaho and other areas around eastern Oregon—which means that Ontario’s cannabis sales are technically subsidizing the bigger cities in the western part of Oregon. While state taxes amounted to roughly $15.6 million from Ontario’s cannabis sales in 2020, the city only received $65,869 back from the state through the dispersion formula in 2020, according to Ott.

Chief Romero said that money didn’t put much of a dent in the city’s need to grow its police department, which currently has a budget for 24 full-time personnel with four reserve police officers.

Ontario previously funded two officers through its local cannabis tax, so Romero is hopeful his police department will realize some of the anticipated $3 million in city-generated tax revenue for fiscal 2020-21 to expand his agency a bit more, he said. But that revenue stream is still open for discussion among Ontario’s elected officials and the city’s budget committee.

“I’m actually asking for more [full-time officers] now because this department has been underfunded and under structured for quite a long time,” Chief Romero said. “Based on the workload that it produces, and it responds to, it is way understaffed.”

In terms of his department’s relationship with dispensary owners, Chief Romero said his officers take a hands-off approach to being present anywhere around the city’s cannabis retail operations.

“They didn’t want the stigma that if police were visible in their area, that it would hurt their businesses,” he said. “So, I could tell you this —I have not conducted any real proactive outreach to the owners, nor have they in return. It’s not an adversarial relationship, I can guarantee you that. But we really don’t have a lot of communication at all other than when an event happens at their stores.”

In Chief Romero’s previous position, he was a bureau commander for the Hawthorne Police Department on the southwest side of Los Angeles. And he also worked some other assignments, including the deputy directorship at the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force (IMPACT), one of the largest transnational drug interdiction taskforces in the country.

But when it comes to Ontario law enforcement coordinating with Idaho law enforcement regarding cannabis dispensaries catering to out-of-state customers, Chief Romero said there is none.

Photo by DJ Davis | hotboxfarms.com

“There’s zero [collaboration with Idaho], because it is a legal activity here, and it’s not our position to, per se, set up marijuana traps,” he said. “Now, Idaho’s law enforcement takes a different stance. They’re still very much firm and it’s still very much illegal in their state. However, for what is considered legal in Oregon, there’s no reason for Oregon law enforcement to collaborate with out-of-state law enforcement.”

Both Chief Romero and Cummings said, if they had to guess, probably 90% of cannabis sales in Ontario come from buyers in Idaho.

Meland said his team at Hotbox Farms treats every customer the same, no matter where they’re from, because it’s legal for them to buy cannabis products at their dispensary in Ontario. What’s illegal is for customers from Idaho to take cannabis back home to their Gem State residences.

“We certainly don’t recommend for any of our customers to press that issue or try their luck with going against the laws of any other state,” Meland said. “But we certainly enjoy living in and operating within Oregon, where we’re able to take part in the industry.” 

According to a press release published on February 8, a number of associations, advocacy organizations and cannabis businesses launched the U.S. Cannabis Council (USCC), which they claim is the largest coalition of its kind.

The 501(c)4 nonprofit organization goals are to advance social equity and racial justice, and end federal cannabis prohibition, according to their debut press release. The USCC says it will focus on federal reforms that achieve those goals above as well as promoting a safe and fair cannabis market on a national level.

The USCC’s Interim CEO is Steven Hawkins, who is also the executive director of the Marijuana Policy Project, which is one of the founding members of the USCC. “USCC is a unified voice advocating for the descheduling and legalization of cannabis,” says Hawkins. “Legalization at both the state and federal level must include provisions ensuring social equity and redress for harms caused to communities impacted by cannabis prohibition.”

In the press release, Representative Earl Blumenauer (D-OR) is quoted saying he is looking forward to working with the USCC on Capitol Hill. “As founder and co-chair of the Congressional Cannabis Caucus, I’ve seen firsthand that our most successful cannabis wins have been secured by a team,” says Rep. Blumenauer. “That’s why I am glad to see this first-of-its-kind alliance. We have a unique opportunity in the 117th Congress to advance cannabis reform, but we must remain united to create the change we know is possible.”

Founding members of the USCC include Acreage Holdings, Akerna Corp, the American Trade Association of Cannabis and Hemp, Canopy Growth, the Cannabis Trade Federation, Cresco Labs, MedMen, Marijuana Policy Project, PharmaCann, Vireo, Wana and much more. For a full list of its founding members, visit their website here.