As Oregon marks the one-year anniversary of recreational marijuana sales, big questions remain about what the cannabis industry will look like as it evolves and what impact it will have on public health and the economy.
But two clear winners already have emerged from Oregon’s short experience with legal marijuana:
State coffers are now lined with millions in pot tax revenue and consumers can shop for a staggering array of products from flowers to balms for sore muscles at one of 380 places statewide selling to anyone 21 and older.
Starting Oct. 1, those stores – and the producers and processors who supply them – begin a gradual conversion to a new system where for the first time state regulators will track the once-illicit crop from seed to sale.
The Oregon Liquor Control Commission will issue 26 licenses on Saturday. Those first licenses will go to existing shops converting to the commission’s system. By the end of the year, any medical marijuana retailer who plans to continue selling to the recreational market must make the switch.
Under the new system, medical marijuana patients can shop tax-free at recreational stores. Stores selling only to medical marijuana patients will remain under the Oregon Health Authority, which regulates the state’s medical marijuana program.
Shoppers at newly licensed stores will spot some differences, like a 17 percent sales tax on recreational marijuana instead of the 25 percent they’ve paid since January. They can buy larger amounts of cannabis than they have since early sales began.
And over the next several months, as Oregon phases in a series of new rules, shoppers will encounter products with detailed labels and packaging that have gone through the state’s vetting process.
Consumers also will find products tested for dozens of pesticides, as well as potency, by state-accredited labs. The requirement, a centerpiece of Oregon’s marijuana system, represents a major departure from previous policy, which let tainted products into the system.
Russ Belville, a longtime legalization advocate and news director at Cannabis Radio in Portland, said marijuana is easy to come by in Oregon, home to one of the country’s oldest medical marijuana programs.
But the new recreational market, he said, offers what individual growers can’t: variety.
“Your guy grows strain X, Y or Z and that’s what you get,” he said. “But now I can go into numerous dispensaries to price compare and select from dozens of different flowers to try from.”
Matt and Meghan Walstatter own Pure Green, one of a dozen marijuana shops dotting Northeast Sandy Boulevard – informally known as Portland’s “Green Mile.” The couple worry about competing in Portland’s thriving market and meeting the blizzard of new requirements.
Yet one thing is certain:
“It’s a great time to be a pot smoker in Oregon,” Matt Walstatter said.
Many of those consumers are flocking to the regulated market.
The state estimates that 2.9 to 3.7 tons of marijuana moved through the regulated medical and recreational markets in June alone – enough for more than 3 million joints. That doesn’t include edibles and concentrates, which became available to recreational consumers in June.
Recreational sales have translated into $33.5 million in taxes between January and the end of July, the latest data available.
The estimated value of the recreational marijuana sold between January, when the state began imposing a 25 percent sales tax, and the end of July: $134 million. (Medical marijuana isn’t subject to sales taxes and will continue to be untaxed under the new system.)
By comparison, Colorado, the first state in the country to sell marijuana to anyone 21 and older, sold $700 million worth of medical and recreational marijuana in 2014, its first full year of sales. Washington, meanwhile, sold $260 million worth of recreational marijuana.
As for the economy, the emergence of a regulated marijuana market in Oregon has created about 2,000 retail jobs, such as budtenders, in the past two years, according to the latest state data.
State economists caution that it’s too early to tell what broader effect the industry will have on the state’s economy.
“Those are relatively low- or moderate-paying jobs,” said Josh Lehrer, an economist with the Oregon Office of Economic Analysis. “That is not where you are going to get a lot of value added or bang for your buck.”
Meanwhile, Oregon’s new recreational market has also fed a constellation of traditional businesses, from marketing to accounting to security.
Noah Stokes said his Beaverton-based security system quadrupled since last fall. His company, CannaGuard Security, installs security systems ranging from $15,000 to $200,000 depending on the size of the marijuana production operation and sophistication of the equipment.
This fall, he plans to launch another business that will transport cash for state-licensed businesses, which have difficulty accessing conventional banking services because of federal prohibition of marijuana.
“It’s been a huge boost,” said Stokes, who started out in commercial and residential security and expanded to the marijuana industry in 2011.
Not everyone sees recreational marijuana as a boon.
The glut of stores in places like Portland and the proliferation of marijuana advertising raises questions about legal marijuana’s implications for public health.
Josh Marquis, longtime Clatsop County district attorney who opposed the 2014 ballot measure that legalized marijuana, said while recreational cannabis sales took off this year, state regulation so far has been “almost non-existent.”
“For those who wanted weed widely available with minimal or no regulation, I guess they’d consider it a great success,” he said. “For those who thought it would be taxed and regulated like booze, that’s an illusion.”
Kristen Anderson, an associate professor of psychology at Reed College who specializes in the development of alcohol and marijuana use among young people, worries about marijuana-related marketing and billboards that target adults but may unintentionally attract youths.
Government health surveys taken before the 2014 vote to legalize marijuana found that young people in Portland use cannabis at rates higher than their peers in the rest of the state and the country. Studies are underway in Oregon looking at how regulation, including local bans on pot shops, affects public health. Public health experts also are studying rates of treatment for marijuana dependence and emergency room visits.
Anderson said cannabis-related advertising is ubiquitous in Portland, home to 148 medical marijuana dispensaries selling to recreational consumers.
“If you drive through town,” she said, “you can’t go 10 feet without seeing a marijuana leaf on a billboard or an advertisement when you drive through neighborhoods.”
For now, Oregon’s cannabis industry is focused on making the transition into a fully regulated system. The agency has received more than 1,400 applications for one of the five license types the state issues: producer, processor, wholesaler, retailer and researcher.
Already, there are early indications of a troubled start.
Businesses made an unsuccessful last-minute push to extend the state’s original deadlines for packaging and labeling, arguing that many business owners would not be able to meet them. The state on Friday temporarily relaxed its pesticide testing requirements in response to worries about the lack of labs ready to process marijuana.
By next spring, however, the state plans to move ahead with its full pesticide testing policy.
In general, producers and processors worry about growing stockpiles of harvested marijuana as they wait for more state-authorized labs to come online and stores to open. And companies that make edibles and extracts fear the state’s approval process for their packaging delay their production schedules. Other challenges loom ahead for the new industry.
Brad Zusman, owner of Cannadaddy’s, a shop in Southeast Portland, said the state hasn’t done enough to bring reluctant longtime medical marijuana producers into the system. Zusman argued that medical marijuana growers operating outside of the licensed recreational system should be allowed to bring their harvests to state-licensed processors who make extracts at least for the next year.
“If they don’t, it’s all going to be driven to the black market,” said Zusman, who isn’t a medical marijuana grower.
He and others see the state’s long-established and lucrative illicit market for marijuana as a significant threat.
Don Morse, owner of the Human Collective, a marijuana shop in Southwest Portland, said legal home grows undermine licensed retailers who are already competing in a tight market. The law allows up to four marijuana plants per household.
“I know a lot of people are getting the weed they need from people they know,” he said. “It’s so readily available.”
Walstatter, owner of Pure Green, said problems facing the industry are the result of shifting from an illegal enterprise to a legitimate one.
“There are going to be some people who lose in this transition. There always are when you have upheaval of this kind.
“At the end of the day,” he said, “I hope I am not one of them.”
News Moderator: Katelyn Baker
Full Article: Oregon Marijuana Sales Produce $33 Million In Sales Taxes In 7 Months
Author: Noelle Crombie
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