Meet the Potrepreneurs

TUMALO —

On land where goats once grazed to make award-winning artisan cheese, a new venture is taking shape.

The former Tumalo Farms, 84 acres off U.S. Highway 20, is now the site of a proposed marijuana growing and processing plant, a plan by Oregrown Industries Inc., a business partnership that operates a dispensary near downtown Bend. The four partners in Oregrown, all 31 years old, envision a business they say will become a huge presence in Central Oregon.

“Really, what I think we’re trying to do is, in three years, we see ourselves as the leading job provider in Central Oregon,” said Aviv Hadar, one of the four. “We see ourselves as providing 401(k)s to people and their families, providing real careers. A dad can say, ‘I grow cannabis for a living,’ and his kid can still go to school, and he can be proud of it.”

Oregrown has sunk $600,000, at least, into the venture, thus far, and they’re not alone.

Deschutes County officials, real estate brokers and others reported sustained interest in property and development proposals linked to plans for commercial marijuana when licenses become available next year. Oregon is still drawing up rules to govern the business of recreational marijuana and uncertainty clouds the future of that business as long as the drug remains illegal under federal law. More immediately, Oregrown and similar businesses still face a potential ban in Deschutes County on new permits to grow and process medicinal marijuana or commercial licenses to grow, process and sell recreational marijuana.

Local bans

So far, 14 cities and five counties, including Crook County, have used an opt-out law passed in June to ban commercial marijuana in their jurisdictions, according to the Oregon Liquor Control Commission. Seven of those cities and one county must put the question before voters in November 2016. Crook County, where a majority of voters last year opposed Measure 91, which legalized recreational marijuana, imposed an outright ban.

The three-member Deschutes County Commission discussed but did not opt for a ban Aug. 17. Instead, the commission scheduled a work session Wednesday to discuss further options, including land-use regulations. A ban, however, is not completely off the table, said Commission Chairman Tony DeBone. He said he’d prefer to zone commercial marijuana operations away from rural residential settings.

“An opt-out is still an option if we’re still up in the air over some things,” he said. But, he added, “I don’t know that I see an opt-out for (marijuana) production in the rural county.”

The notion of a ban strikes panic into the Oregrown partners. Hadar and his business partner Hunter Neubauer have met at least twice with DeBone and shared their fears.

“It’s definitely concerning to have three people basically decide if we’re able to conduct our business or not. It’s a very scary and unfair situation,” Neubauer said. “But from everything, every conversation I’ve had with Tony and other members of the councils for the county and the city of Bend, along with (Deschutes County Community Development Director) Nick Lelack and others constructing laws for the city and county, I don’t see them going in the direction of a moratorium. I think they truly want to make this work for Deschutes County.”

Pot proponents

As well as business partners, Hadar and Neubauer are marijuana advocates. They have appeared at local forums, and both serve on OLCC rule-making advisory committees for recreational marijuana. They helped raise money for U.S. Rep. Earl Blumenauer, D-Portland, who supports an easing of federal law on marijuana. As members of the political action committee representing marijuana growers, the two met Democratic presidential candidate Hillary Clinton at a private fundraiser Aug. 4 in Portland, where she appeared supportive of the marijuana industry, Hadar said.

“This is the sickest joke to people we went to high school with,” he said, “that we just met with Hillary Clinton the other day.”

Meanwhile, the former goat farm and cheese factory is empty except for a kitchen where Oregrown makes a cannabis resin that is sold at the dispensary at 1199 NW Wall St. That’s the extent of the operation until the OLCC starts awarding licenses for commercial marijuana next year. Plans for the site are ambitious.

Hadar and Neubauer during a site tour outlined a farming operation that will start with greenhouses and move indoors to sealed growing rooms where light, temperature and carbon dioxide levels will be strictly controlled. In a room where the previous owner milked goats, the Oregrown partners foresee a locker room where employees and visitors will suit up in hospital scrubs before entering the processing areas. Standing on a hillside where a pumice mine once operated, they point to a site for a lodge where tourists may one day stay and enjoy the product Oregrown produces nearby.

“Oregon, in general, nationwide, has a reputation for having the best cannabis,” Hadar said. “As this becomes legal and people book their vacations to Mount Bachelor, based on recreational (marijuana’s) availability, there has to be someone that lives up to that name, that provides that top-shelf, high-end, oh-my-god Oregon product. And that’s what we’re going to do.”

High school buds

The road to Tumalo for the Oregrown partners began at New Trier High School in Winnetka, Illinois, a Chicago suburb on Lake Michigan, Neubauer said. Hadar remembers his friend and classmate Neubauer as a skateboard-riding, dreadlocks-wearing misfit, a lot like himself.

“All we did was get high,” Hadar said.

A third partner, Kevin Hogan, also attended school there, Neubauer said. The three were friends in the same graduating class. Hogan, now a commercial real estate broker in Scottsdale, Arizona, could not be reached for comment.

“School was pretty boring to us,” Neubauer said. “It didn’t fit our frame of mind at that point. I played lacrosse and loved snowboarding, loved being outside. So being indoors in a little room all day didn’t really fit.”

Afterward, Neubauer enrolled at Northern Arizona University, in Flagstaff, where he also met his wife-to-be, Brittany, a Vancouver, Washington, native. Just three months short of graduation, he said, he dropped out to sell orthopedic equipment and services. He eventually spent nine years selling hip and knee replacement equipment and support for medical technology companies Stryker Corp. and Smith & Nephew, he said.

Meanwhile, Hadar spent his post-high school years following the rock band Phish, a journey that first brought him to Bend, he said. When the band broke up, he settled in Missoula, Montana, and started a small company, Think Brilliant, for Web applications. One of those, Perfect Menu, was a project Hadar in 2013 brought to a Bend Startup Weekend.

He also met his wife-to-be, Christina, in Montana and eventually moved to Portland, her hometown. In Portland, they met Justin Crawn.

“I literally met Justin in a mutual friend’s driveway when he opened a jar of his cannabis,” Hadar said. “And that was it, for me. I mean, that was the best cannabis I’d ever seen in my life.”

Crawn nurtured two strains of marijuana that became the staple brands at Oregrown, a name he also created, he and Hadar said. Crawn was painting cars and growing marijuana at the time. He eventually lost the job painting cars.

“I told myself that if they ever fired me, I was gonna just live off the plant,” he said. “So I started growing for patients and living off of it.”

Hadar and his wife moved to Bend about six years ago, he said. Neubauer and his wife, who had planned the move for years, arrived in February. Crawn lives in Boring. In January, Hadar and Hogan incorporated Oregrown Industries Inc.; the dispensary opened that month. Two greenhouses, one in Boring and another outside of Bend, supply the dispensary, Neubauer said. The company employs 13 people.

New territory

Oregrown, and businesses like it, face hurdles aside from raising capital and formulating a viable plan. State regulations that will govern their operations are still being written. Most banks refuse to lend marijuana businesses money because of remaining federal strictures surrounding the drug. Some in the businesses expect a shakeout of the many would-be entrepreneurs positioning themselves to take advantage of the recreational marijuana market when it opens fully in fall 2016.

Also, Hadar faces a potential hurdle to obtaining licenses. He pleaded guilty Aug. 11 to a single count of second-degree assault stemming from an incident in November, according to Deschutes County online court records. When it starts accepting applications in January, the OLCC may refuse a license based on a felony conviction, but not automatically, said Mark Pettinger, OLCC spokesman for the marijuana program. Hadar’s lawyer, Amy Margolis, of Portland, said she does not believe the law bars them from holding a recreational marijuana license.

Margolis, who founded Oregon Growers PAC, later the Oregon Cannabis PAC, gave Hadar and Neubauer credit for taking up leadership roles in public policy on marijuana.

“They’re progressive and forward-thinking in their business plan, but that’s not enough,” she said. They’re engaged on the political and regulatory sides, too, she said.

Oregrown leases the former Tumalo Farms property from a Portland real estate broker, Donald Sloan . Sloan, through his tenant, Matt Price of the Cannabliss dispensary in Portland, met Hadar and Neubauer and eventually the three became friends, Sloan said. He bought the former farm and cheese factory for $775,000 in June, according to Deschutes County property records. A friend in the insurance business helped finance the Tumalo Farms deal, Sloan said

“The cannabis industry is unusual in that most of the people that own these businesses are all friends and are trying to help each other out,” he said.

Because the federal government still considers marijuana an illegal drug, most banks refuse to handle accounts for marijuana businesses in states where it’s legalized. That means finding investors with cash, which comes at a higher cost to the entrepreneur. The lure of high returns is attracting money from private sources, Sloan said.

“If you can get 18, 19, 20 percent on your money, secured with a piece of property, why not? And it’s legal. I don’t see a downside,” he said. “Honestly, a lot of these guys are older and retired; they just like to be involved in the game. Their interests are piqued by new, exciting industries. They can tell their friends, ‘I’m invested in a marijuana facility.’ It gets some chuckles at the country club.”

Oregrown is a low-risk proposition, he said. The partners have a viable plan and a good product. Plus, they’re involved in the issue on a larger scale as advocates and policymakers.

“I know they’re going to be successful,” Sloan said. “In five years, they’re gonna buy (the property) from me. The risk is minimal.”