Oregrown, a Bend-based cannabis company, has had a difficult time in the past 12 months.
First there was the publicized ouster of one of the directors and chief brand director. Then a break-in at its Portland location during the city’s civil unrest. And finally, a court filing involving a former grower.
And all of that as the pandemic raged on.
But as fall arrives, Oregrown is trying to put all that in the rearview mirror and foster an atmosphere of communication and working together. It’s promoting workers from within. It’s talking to employees one-on-one to hear what they have to say. And, Oregrown has expanded to Cannon Beach and Portland. It employs 87 workers, but like every other business owner in Oregon, has had to cultivate its staff.
“Our journey has been a difficult one,” said Hunter Neubauer, co-founder and chairman of the board of directors. “And a challenging one. We’re all aligned on the same page. We’re excited about the future of the industry.”
Neubauer considers it a hard reboot, a retooling and a fundamental shift toward employee focused that places a premium on trust and communication.
These are the steps of a maturing business, one that remains flexible as situations dictate.
“Entrepreneurs are tenacious in the pursuit of getting to market and tend to focus on making money in the early days,” said Adam Krynicki, Oregon State University-Cascades Innovation Co-Lab executive director. “But the things that they ignore, like establishing a well-functioning team, positive culture and good policies, don’t go away — they grow over time.”
It’s like a debt that goes unpaid and keeps accruing interest, Krynicki said.
The pandemic generated record sales in recreational cannabis, according to the Oregon Liquor & Cannabis Commission data. More than $1 billion in sales were recorded in Oregon in 2020 while most businesses in the state were locked down as a way to curb the spread of COVID-19. Recreational cannabis, however, was deemed essential like a grocery store or medical facility and could remain open.
Revenues from the 20 states that recreational marijuana use is legal is forecast to be $25 billion this year and $44.9 billion by 2045, said economist Beau Whitney from his Portland office at Whitney Economics. In Oregon, because it’s a closed market — cannabis growers and producers can only sell their product in Oregon — revenues are projected to grow a modest 2% to 4% this year, Whitney said.
And as more people go back to work, there’s been a softening in the marketplace, causing demand to fall as fewer people consume at home, he said.
The business of selling recreational cannabis products is not an easy one to be in, even with record sales, said Whitney.
High taxes, an inability to bank and a lack of federal tax breaks because marijuana is not federally legal, has dampened profitability for cannabis companies, Whitney said.
“I’ve been in the cannabis industry for seven years and every year during that time, I’ve heard that full federal legalization is going to happen within five years,” Whitney said.
Companies that grow their own product and sell them often can make more profit, but that doesn’t provide a full spectrum of products for customers, Whitney said.
At Oregrown, which does produce and package its own products, the sale of these contributes about 25% to the total revenues that are north of a Dunn & Bradstreet 2019 projection of $2.63 million.
Oregrown began in Bend among a group of former high school buddies, evolving into a full-fledged business with three Oregon locations. What started out as a spark of an idea among Neubauer, Kevin Hogan and Aviv Hadar, Oregrown launched in 2013 first as a medical outlet, with five employees. Recreational use became legal in Oregon in 2015.
But in 2020, communication began to fail and company shareholders voted to remove Hadar and his wife, Christina Hadar, the chief brand officer, from their positions for allegedly jeopardizing the interest of the company, according to a lawsuit filed in Deschutes County Circuit Court.
All but one shareholder, Tsiona Bitton, who is Aviv Hadar’s mother, voted earlier this year to remove the couple, according to the lawsuit. According to court records, a lawsuit is still pending between Aviv Hadar and Oregrown over his position and the status of a possible fourth location in Eugene.
The Hadars are also accused of creating an atmosphere where employees were fearful of losing their jobs, according to court filings.
This is not the first time Oregrown has settled disputes in the courts among board members. In 2018, the founders of Oregrown tried to rein in a disgruntled former partner who took marijuana plants and seeds from the company’s Tumalo grow house, spread misinformation and anti-semitic harassment on Instagram.
The lawsuit was ultimately dismissed in May 2019 when Oregrown and the former head grower came to terms.
Hogan said that the future now includes a purpose-built company that fosters a collaborative environment with the employees. The business model is a hub with locations in other high traffic markets, Hogan said. With each of these locations the model is the same: creating a customer experience that is on-brand offering the best products that Oregon has to offer, he said.
“We’re focusing on homing in on our team members’ strengths and pushing them to success,” Hogan said. “We’re not focusing on micromanagement and things that foster an unhappy workplace.”