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First Year of Decline Marks a New Chapter of Uncertainty for Oregon's Cannabis Industry

By: Buz Deliere | January 18, 2023

Oregon's cannabis industry has experienced a significant drop in the past year, with licensed retailers seeing 16% less overall sales since 2021. According to figures from the Oregon Liquor & Cannabis Commission (OLCC), cumulative cannabis sales fell below $1 billion for 2022 - though this could still be subject to change after amended reporting is taken into account.

Oregon's remarkable run in cannabis sales came to a halt last year, as the state failed to reach its billion-dollar goal. Although Oregon had achieved consecutive annual growth since launching the adult-use retail market more than seven years ago, 2021 marked the first time that total industry sales were unable to rise above the prior year's total.

After experiencing record-breaking sales during the pandemic boom, the cannabis industry is now seeing its first significant market correction due to unprecedented downturns.

Oregon saw an incredible surge in sales throughout the pandemic, with monthly averages more than doubling pre-COVID levels. From March 2020 to May 2021, Oregon's average monthly sales broke past $99 million—a 49% jump from its near $67 million baseline before COVID struck.

After the pandemic subsided, Oregon's cannabis industry saw a drop in sales - to an average of $83 million each month in 2022. This number is for Oregon's combined sales of recreational and medical cannabis.

In 2022 Oregon's cannabis market was mainly supported by recreational adult-use customers, driving the majority of sales at over $900 million. Medical patients still made up a 6% slice of the pie, generating more than sixty million dollars in revenue for dispensaries across the state.

Oregon cannabis sales faced a significant decline in 2022 after the passing of House Bill 4016, legislation signed into law by former Gov. Kate Brown that created a licensing moratorium to address the state's over-saturated market conditions.

The moratorium is on the issuance of new licenses, but existing licensees will not be affected. Licensing renewals as well as any changes in location or ownership remain unaffected by this bill.

As of December 2022, the cannabis industry in Oregon was overcrowded with nearly 2,900 active business licenses and 833 adult-use retailers statewide - a rate topping all other Western states at almost 20 dispensaries per 100,000 people.

The state of Oregon is home to over 2800 active licenses engaged in cannabis-related activities. In total, there are 833 retailers as well as 1,422 producers, 279 wholesalers, and 333 processors with valid licenses approved by the OLCC (Oregon Liquor Control Commission).

OLCC recently reported a decrease in average sales figures per retailer for the first time since April 2019. During seven months, March 2022 to November 2022 - when there was a moratorium on retail cannabis license applications - these averages dropped from $163K to just over $100k; their lowest level recorded thus far.

A huge drop in the price of flower can be linked to the loss of revenue for business owners in the state. After a dramatic pandemic price surge in October 2020, flower prices experienced an unprecedented 15% decrease from the beginning of 2022 and plummeted to their lowest average on record at $116 per ounce for November-December. This 28% dip compared to last year's peak was reported by OLCC.

December saw a startling reduction in average wholesale flower prices, reaching their lowest-ever rate of $550 per pound. This was an unexpected 42% dip from the beginning of 2022.

The cannabis industry in Oregon has seen a dramatic shift over the past year. Although sales were booming during the pandemic, they have since declined due to increased competition and changes in legislation.

Prices of flower have dropped significantly, which has had a large impact on business owners' revenue streams. The OLCC's licensing moratorium is likely to continue having an effect on market conditions for some time; however, it will be interesting to see how this situation develops as more data becomes available.

It is clear that businesses need to adapt their strategies if they wish to remain competitive within such a crowded marketplace. With careful consideration of customer needs and trends in the industry, there may still be opportunities for success even with these recent challenges facing retailers throughout Oregon.


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