Q: Does Photos work without using  Icloud

Photos doesn't NEED iCloud and it will import many RAW formats

Of course - iCloud services (there are several) are all optional

and Photos stores RAW and protects it as the original - all non-destructive edits are stored in the database and applied to the original when you view the photo or export the photo

to move your images to LR you need to select them in Photos and export the unmodified originals and then import those into LR

LN

Does Photos work without using  Icloud

Yes.  No need for iCloud at all.  As for RAW file compatibility this Apple document lists the RAW file formats competible with El Capitan and Photos:  Digital camera RAW formats supported by OS X El Capitan - Apple Support

If you use iCloud "tactically" for simply moving and syncing your photos it doesn't have to cost any money at all. The free 5GB account may be enough.

There is a tremendous benefit in copying a photo or folder and have that folder sync with other devices of yours in near real time.

If you are using LR to organize your photos and heavily use keywords. labels, collections and such. OSX Photos may not be the tool for you.