State Market Analysis: Early Assessment of Oregon’s New Rec Market

Rec Analysis

By Marguerite Arnold

 

As of Oct. 1, 2015, Oregon became the third state in the United States to sell legal recreational cannabis to adults over 21. The state has begun to allow limited amounts of flowers to be sold recreationally even though the final regulations are still in draft form. Oregon is also not implementing the state recreational tax of 25 percent until Jan. 4, 2016.

Within the first week of October, Oregon sold more than $11 million of recreational cannabis.

“This toppled Washington, and grossed twice as much as Colorado” said Eli Bilton, the CEO of Attis Trading Company in Oregon. Bilton’s business saw a 1,200 percent increase in sales during the first week. “This is a staggering number due to being limited to only flower sales unlike Colorado, and Washington. Policy makers are doing a great job with smoothly moving into a regulated market with the limited amount of time they have,” he said.

These differences, however, between Oregon’s approach to implementing recreational sales and other states, are not the only ones and the clearest signs to date that the state has paid attention to its predecessors’ successes and failures. As a result, many industry watchers, if not members of the industry itself, believe such developments could well create an interesting new market that avoids the pitfalls of previous legalizing states.

The other notable difference between Oregon and the first two rec markets in Colorado and Washington state? Medical outlets can sell a quarter ounce a day to recreational customers over the age of 21 who do not have a doctor’s recommendation.

Medical marijuana has been legal in Oregon since 1998. The idea behind this recent decision to incorporate dispensaries into the recreational and licensing stream, in fact, was to jump start the legal recreational market and limit black and grey market sales. According to the Oregon Liquor Control Commission, approximately 200 of the registered 345 dispensaries in Oregon have already registered to be able to sell recreational marijuana.

It may be that other states are already taking notice. Almost concurrently with this decision in Oregon, Washington state has begun to reach out to medical dispensaries, offering them a “recreational license” option after repeatedly saying that they would have to merge with existing, and far fewer, rec shops that opened after the passage of I-502.

The positive reaction from the industry outside the state has also been swift. “The state of Oregon is doing many things right as they move into being a fully regulated adult use state for cannabis. Oregon businesses generated more than $11 million in revenue during their first week of sales, which was more than Colorado and Washington combined,” said Kyle Sherman, CEO of Flowhub, a compliance tracking software company. “We believe this is due to the government allowing many existing medical dispensaries to begin selling retail cannabis tax free since October 1, 2015. This decision alleviated production bottlenecks and issues shown to be problematic in other states that legalized adult use cannabis.”

And that means that the industry here may develop far quicker than in any legalizing state so far. As Sherman added, “The experimentation process was done in Colorado and we know what works. Bringing this regulatory environment into Oregon from day one is going to mean higher tax revenues for the state and simplifying business and supply chain operations for our Oregon customers. We couldn’t be more excited.”

Guest Contributor designates a writer who is guest publishing content with MJINews.

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