For the first time in Oregon’s history, marijuana is included in the state’s economic forecast presented to Gov. Kate Brown each fiscal quarter.
Presented by the Office of Economic Analysis’ Department of Administrative Services (DAS), the purpose of this statewide economic forecast is to “provide information to planners and policy makers in state agencies and private organizations for use in their decision making processes.”
As hopeful entrepreneurs pour millions of dollars into the Oregon cannabis industry, this economic outlook can advise business owners on trends in their nascent enterprise.
So far, Oregon’s first year of recreational marijuana sales has exceeded Washington’s first year, while only slowly trailing behind Colorado’s first year (after adjusting for population size).
Since Oregon has only been selling recreational marijuana for one year, and the Oregon Liquor Control Commission (OLCC) purposely staggered licenses to not overwhelm their small workforce, the numbers for this year should not be completely relied upon as a forecast for the future. The document states that the sales and tax collections of recreational marijuana remain “highly uncertain” and that there “have been substantial changes during this time that complicated any analysis.”
To clarify these substantial changes, one year ago recreational sales began for only dried cannabis flower. As the months went on and more businesses were granted production licenses, a full range of products began flooding the market. Oregon has yet to see a complete year with sales of cannabis flower, extracts, edibles, and topicals.
There were also changes in the tax rates halfway throughout the year — early-start sales through medical dispensaries were taxed at 25%, while OLCC licensed retailers are now taxed at 17%, with the option for each city to vote on adding an additional 3%.
With all the changes in the last year, it is difficult to gain a solid understanding of the economic forecast. Luckily, we have two other legal states, Washington and Colorado, to look to for economic trends — both states have seen booming growth in terms of sales and tax revenue in year two.
While optimism for the future is strong, the DAS office is “not forecasting revenues to be quite as strong as those seen in Colorado over their second and third years.” Simply because of the highly uncertain nature of this industry.
One risk pointed out in the document is that the supply might not be able to meet the demand. Oregon has already experienced regulatory bottlenecks where companies are unable to get their licenses, renewals, or tests completed in a timely manner — and this may happen again as the OLCC adjusts regulations over the next couple of years.
While there are certainly many threats to the next year of recreational marijuana tax revenue such as the federal government, the overall price of marijuana decreasing, and the aforementioned regulatory bottlenecking — there are also many encouraging factors that could increase sales such as more social acceptance, more conversions from the medical market to recreational market, and more conversions from the black market to the recreational market.
The overall feel of the economic forecast was cautiously optimistic. Sales and tax revenue are increasing but the last year of numbers is not solid enough to make a reliable prediction.
However, a current bill in the Oregon Senate that would allow marijuana smoking lounges would certainly boost cannabis sales and Oregon tourism. It’s a controversial bill, but currently, public consumption of marijuana is illegal — the only place where it is legal to consume marijuana is in a private residence which leaves those renting, living in government housing, or visiting from out of state with nowhere to consume legally.
Read the Complete Oregon Economic and Revenue Forecast here.