A Central Oregon cannabis dispensary has plans to expand in Bend and La Pine with retail outlets and a processing and growing facility.

Diamond Tree Inc., which has two retail outlets in Bend and another in Madras, bought four Oregon Liquor Control Commission license applications from a Portland broker last June and then found three locations in Bend that meet city codes for cannabis businesses.

Those locations, 3118 U.S. Highway 97, 345 SW Century Drive and 20161 Old Murphy Road, are being considered for the company’s third Bend location. The fourth is in Hines in southeast Oregon.

It’s a practice cannabis companies began after the Oregon Liquor Control Commission announced June 15 that it would not process new applications for cannabis businesses, said Jesse Bontecou, Oregon Retailers of Cannabis Association deputy director.

The OLCC allows the transfer of licenses from one address to another, Bontecou said.

“It’s a challenging marketplace now for all involved,” Bontecou said. “We have the most number of retailers per capita, but the farms are feeling the pinch more than most. The people making the most money generally have vertical integration and outside investors who can facilitate taking losses. There are a lot of people struggling.”

Meanwhile, Diamond Tree also is going forward with plans for a growing and processing facility it will build in La Pine, said Samuel Stapleton, Diamond Tree Inc. owner.

Diamond Tree was among the first recreational cannabis businesses to open in Bend.

It is among the few companies, including Tokyo Starfish and Substance, with multiple retail outlets in town.

“We see retail as the best position to be in now,” Stapleton said. “Retail is controlling the pricing.”

The retail market is dynamic with vendors scrambling for prime shelf space. Some companies have even agreed to print the Diamond Tree name on the product’s packaging, he said.

Stapleton said he plans to start this spring on plans for a retail outlet. Because of declining prices on the wholesale level, he will scale back on the La Pine processing and producing facility.

The La Pine facility, the first growing facility for the company, should cost more than $1 million, he said.

The La Pine site is a vacant lot with only stakes in the ground, Stapleton said. Building plans are with the city of La Pine for approval.

“The market bottomed out,” Stapleton said. “We aren’t as eager to dive into the market as we were initially. This way, we can ease into growing.”

Earlier this year, the OLCC reported that the recreational marijuana market has about 6½ years’ worth of supply in licensees’ inventory. Cannabis sales generated $82 million in taxes for the 2018 fiscal year.

Nicolas Lennartz, city of Bend assistant planner, said that seeking city approval for multiple locations lets cannabis businesses weigh expansion options, especially now that the OLCC is not processing new applications.

“It’s a strange shell game with these land use compatibility statements,” Lennartz said. “They don’t hold a boundary, not the actual land use, and they’re not indicative of what will be built.”

With more than 40 cannabis retail applications in Deschutes County, it is difficult to find new locations that meet the requirements: more than 1,000 feet from a day care center or school, 150 feet from a park or 1,000 feet from another cannabis retailer, Stapleton said.

“The city of Bend is tight,” Stapleton said. “We’re saturated here.”

— Reporter: 541-633-2117, sroig@bendbulletin.com