State of Cannabis in Oregon
On the eve of the first anniversary of the Trump reign, I attended the Oregon Cannabis Association’s Data and Compliance event in Portland at the Sentinel Hotel to see how the industry is faring. Speakers included OCA president Amy Margolis, Cy Scott (co-founder of Leafly and the founder of Headset, a cannabis intelligence software company), a representative from New Frontier Data, as well as multiple Oregon Liquor Control Commission (OLCC) officials. Here are some highlights:
1: The OLCC advised that sting operations at various dispensaries presented less-than-desirable results, with several dispensaries giving access to minors. Jesse Sweet, Administrative Policy & Process Director, admitted to one questioner in the crowd that the failure rate of dispensaries is roughly equivalent to that of alcohol retailers. However, he qualified that statement with a reminder that “the federal government doesn’t care” how, say, liquor stores perform in terms of preventing sales to minors. This is a good point that all marijuana licensees need to keep in mind when they’re feeling bitter about the higher standard to which they are held.
2: There are 495 retail marijuana dispensaries in Oregon, and a representative from New Frontier Data provided some troubling micro-economics faced by these dispensaries. In a survey of Oregon retail dispensaries during 4th quarter 2017, the approximate $94,000 average monthly revenue comes nearly $30k per month short in meeting the typical business expenses these retailers face (especially in light of 280e issues). With wholesale prices for flower falling, there is some relief in Costs of Goods Sold, but not a lot of options to increase sales (not to mention retails sales will fall as well). Raising prices won’t help, as consumers are becoming more and more price-sensitive in light of the excessive supply of marijuana. The most viable option for making it as a dispensary owner may simply be vertical integration (owning a producer/processor/wholesaler operation to offset the dispensary costs).
3: There are 1700 licenses in the state, with another 900 being assigned. And no, the process for getting licensed will not speed up. Make sure you’re prepared for the wait, and plan ahead with any of your marijuana change forms.
4: The Oregon legislative session runs from February 5th to March 11th this year, and cannabis lobbyists are putting forth a bill for their consideration that will provide flexibility in handing out METRC- tracked cannabis samples at events. Stay tuned.
5: Branding: According to Cy Scott, founder of Headset, consumers are getting more brand-savvy, and that is shaping the future of the industry. If you’re producing quality product, but not setting up your business structure to take advantage of state and federal trademarking, your expertise and skill may be for naught.