Although no one asked, I have some predictions for the cannabis landscape in Oregon, and it has nothing to do with the corrupt, race-baiting shitholes in Washington, DC, who are ruining this country and enforcing outdated laws.
This July will mark three years since Oregon implemented Measure 91, our adult-use recreational cannabis program. It’s been great for adults who, prior to Measure 91, did not have access to clean cannabis and canna products. It’s raised millions in taxes and fees to fund important programs and services, created thousands of jobs, and offered some great choices to those seeking an alternative to opioids and other big pharma medications.
(A downside? Despite assurances otherwise, it’s gutted the Oregon Medical Marijuana Program, which has moved many medical growers to abandon the program, and, in turn, their patients.)
But aside from that, everything is great, right?
Perhaps you’ve noticed a price drop for flower at your friendly neighborhood dispensary. Grams that were $12 or $14 are now $9 or $10, or even lower. Which is a boon to your wallet, but may not bode well for the future. I’m hearing a widespread concern from a number of licensed growers and dispensary owners that we could be looking at some painful changes in 2018.
Because, you see, that price drop isn’t coming from a place of benevolence and generosity. Rather, the market has become flooded with cannabis. Like, Tennessee Valley Authority-type flooded (Google it, yankee). A dispensary owner recently told me she had picked up a pound of some beautiful light-deprivation flower for the absurd price of $600. That’s a wholesale price of $37.50 an ounce.
Local indoor flower-producing growers are struggling, preparing a large harvest of new crop while much of the last one sits languishing, still awaiting buyers. Price cuts haven’t helped their efforts very much, nor have newly licensed producers entering the scene every week.
So we are just about at that point where we see a widespread emergence of the C-word—consolidation.
Craft cannabis, like craft fill-in-the-blank, is great. But as with any commodity, it’s not always terribly profitable. And we have come to a point where cannabis is now a commodity—like copper, pork bellies, or soybeans. And as any economist will tell you, commodities become more profitable when they are consolidated to reduce production, marketing, and distribution costs. (Example: Walmart.)
Another dispensary owner told me that he recently took a meeting with a Canadian company that’s shopping the Oregon cannabis industry with fervor.
“They told me a farm had approached them and said, ‘Name your price,’” said the owner. “They have millions to invest, and they are arriving to scoop up anyone looking to sell. And maybe a few who aren’t.”
Being bought out is every tech startup’s dream, and more power to those in the cannabis industry who want to achieve that dream.
But as a consumer, how good for the industry would it have been if, during Oregon’s microbrew startup days, the regulatory and legal system was so stacked against it that craft breweries were forced to sell themselves to Coors, Budweiser, or Corona? Cannabis businesses face an unfair tax burden (Section 280E of the Internal Revenue Code says they can’t deduct any business expenses), and beer makers never faced the problem of losing their license for having customers taste their products on site.
To what degree would what made those craft beers special remain in place after a takeover, hostile or not? There are exceptions to this, of course, and anyone who has struggled with the ownership of a small business can attest to the benefits of having access to a larger team, more capital, vertically integrated systems, and so on.
But not everyone wants to be eaten up by a larger fish, and the road of business history is littered with the wreckage of consolidation efforts that didn’t work out. Small businesses are what drive our economy, and it would be great if the deck were not so firmly stacked against the cannabis industry so as to allow smaller operators to flourish.
So don’t be surprised if your favorite craft grower soon becomes a part of CannaCo Inc., a division of Lockheed Martin.