OREGON: Golden Leaf Holdings has released an update on GLH’s operating plan regarding the start of the recreational market in Oregon and the local Marion County referendum coming up for vote on November 8, 2016. On this day, voters in Marion County will decide whether or not recreational sales and production will be allowed.
While some counties have chosen to opt-out of allowing licensed marijuana business to participate in the recreational market, Oregonians have embraced the industry overall as shown by increased sales and a demand for high-quality branded products. It’s been over a year since recreational or “Adult Use” cannabis became legal in Oregon and sales are generating millions in tax revenue for the state.
Don Robinson, Chief Executive Officer of GLH commented, “The topic of Marion County has been discussed since the implementation of the Marion County Ordinance last year and we have taken necessary steps to minimize any impact that a moratorium would have on our business. We have secured another property in Multnomah County and we are well positioned in the Adult Use market regardless of the outcome in Marion County.”
As previously communicated, Golden Leaf Holdings has a facility in Marion County at its Aurora Campus that has been under a county wide ordinance allowing existing medical marijuana businesses to operate, but prohibiting the establishment of recreational or “Adult Use” businesses. GLH has been operating under its existing medical processor registration. Over the last nine months the Company has developed a strategic operating plan flexible enough to accommodate the eventuality of a negative or positive outcome of the Marion County referendum, including the leasing of another Portland based property in Multnomah County for recreational production, and is positioned to do well in either scenario. The cost of commissioning the Portland location has already been budgeted and accounted for in the Company’s financials. Regardless of the outcome of the vote, the Company believes its business prospects will be better because of the climate of certainty it will have with which to make decisions. This regulatory uncertainty led to inefficiencies as GLH has had to be prepared to deal with an outcome either way.
If the vote comes out in favor of the “opt out”, GLH will focus its operations at its leased facility in Portland and expand the operations there. In this scenario, GLH anticipates that it would sell the Marion County property and remove $3 million worth of debt off of its books. As an alternative, or during the period while the property is up for sale, the Company believes it could lease out a large portion of the property actually making it revenue positive. It has received many leasing inquiries from interested parties involved with traditional agriculture.
If the vote goes positively and recreational businesses are allowed in Marion Country, the ordinance will not be changed until around January 2nd 2017. Given the standard timelines associated with receiving a recreational marijuana license from the Oregon Liquor Control Commission, GLH would not anticipate the license to be in place prior to Q2 2017. As such, in order to sell products into the recreational market, the Company expects and already has plans ready to move all production to the Multnomah Country location for a period of time until the Aurora location would receive its recreational license. The Aurora location could be used for limited medical marijuana production during the remainder of 2016 and early 2017.