When weed was legalized, a lot of people wanted in on the action but, for whatever reason, didn’t want to go through the licensing process, according to Jesse Bontecou, CIAO’s executive director. “Starting an ancillary business was the easiest way for some investors to get a toehold in the industry.” But, they soon learn, even the pick-andshovel merchants are affected by bust cycles. “Nine years in and you’re seeing fewer booths at the conventions,” Bontecou says. “After the boom times, there’s been a lot of bust. And it goes beyond healthy competition.” A number of once notable ancillary companies have gone under, including security firm CannaGuard Security and law firms Lotus Law Group and Green Light Law Group. In fact, most of the Oregon companies ranked on Cannabis Business Executive’s top ancillary businesses lists from the years prior to the pandemic no longer exist. Portland point-of-sales service provider Greenbits, which sold to Dutchie in 2021, is a rare exception. Though most ancillary pot businesses are small mom-and-pops, some — like Bendbased retail software platform Dutchie — have received billions in investment and today operate in nearly all states. Some were well established in the traditional economy prior to legalization. These include ScottsMiracle-Gro, now a major player in the ancillary space through subsidiaries like General Hydroponics and Botanicare. Oregon’s cannabis economy bears some similarities to the Silicon Valley tech boom of the early 2000s, according to accountant Andrew Hunzicker, who runs a training company for CPAs in the marijuana industry called Dope CFO. In the prior tech boom, investors regularly injected capital despite heavy losses and uncertainty because they believed in their products and their industry. “It’s very typical in a startup industry,” Hunzicker says. “Facebook didn’t make money for 10 years. Neither did Amazon or Google.” POOR PROSPECTS In human terms, the outbreak of delinquent payments has led to countless lawsuits, home-loan defaults, repossessed vehicles and arrests as desperate business owners turn to the illicit market. Predatory lenders circle desperate business owners offering loans of up to 40% interest. According to Portland-based marijuana economist BeauWhitney, the market downturn in 2017 was trailed by a wave of grower suicides. And the fact that cannabis is still illegal at the federal level means there are few legal remedies for those ripped off. In Oregon, a policy of Gov. Tina Kotek mandates businesses to pay all tax debt before they’re allowed to renew their cannabis license. Whitney says the law has hindered pot companies trying to catch up on late payments. In late 2022, cannabis and psychedelics- focused Green Light Law Group sued seven former clients for around a quarter-million dollars in unpaid legal bills. The next year, the firm itself was sued by its landlord for $1 million for breaking its lease two years early. It was a stark reversal for a once high- flying firm. Only two years earlier, managing partner Brad Blommer trumpeted a new headquarters that occupied the entire 13th floor of the Wells Fargo Center, calling it a commitment to downtown Portland and a call to action for their industry. “We see a bright future for Portland and we strive to be part of the tide that will revitalize our great city,” reads a news release. “Because we have a lot of office at the new space — more than we need for our law firm, in fact — we have some exciting plans in the works.” Those plans involved strengthening lobbying efforts and assuming a greater role in the national-legalization debate. But Blommer hadn’t made a great bet. Downtown Portland is still struggling. Legal clients failed to materialize in sustainable numbers. And many of those who did show up asking for help couldn’t pay. Attorney Matt Goldberg says “At a certain point, cannabis law is just business law.” 26
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