Businesses across the recreational cannabis industry in Oregon are facing some of the worst economic conditions since marijuana was legalized over seven years ago.
The average price per gram of marijuana has fallen to four dollars, a record low according to a .
TJ Sheehy is the director of analytics and research at the Oregon Liquor and Cannabis Commission. He said Oregon retailers are running out of new customers, which is lowering demand.
鈥淭he people who were more price sensitive and were making their buying decisions based on price relative to the illicit market or whatever else, they already entered the market,鈥� said Sheehy. 鈥淎nd so we just don鈥檛 have those people on the sidelines coming in anymore.鈥�
Sheehy said because farmers are planning how much marijuana to grow at least a year in advance, it鈥檚 hard to anticipate changes in customer demand. That helped create the current oversupply.
Sheehy added around 85% of cannabis in Oregon is grown outdoors.
鈥淢ost of that outdoor canopy is brought down in one month, in October,鈥� he said. 鈥淎nd they鈥檙e being planted in April or May. And so you have people planting in one market where it鈥檚 really good, and then it grows over the course of 6-9 months and then they鈥檙e harvesting it and selling it into very different market conditions.鈥�
Last year, there was almost twice as much supply of cannabis as there was demand, according to Sheehy.
鈥淲e鈥檙e quite worried,鈥� said Mason Walker, CEO of East Fork Cultivars, a grower and producer with a farm in the Illinois Valley. 鈥淲e鈥檙e projecting a loss this year and sort of bracing for that. We鈥檙e in it for the long-haul, our plan is to be around as a company for a long time and continue our work. However, it鈥檚 looking like it鈥檚 gonna be a hard year for us.鈥�
Walker said he鈥檚 seeing a price war between retailers as they struggle to attract new customers and face steep federal taxes.
鈥淚 think a lot of retailers are doing steep discounts on their inventory in order for them to remain solvent because consumer demand is dipping,鈥� he said. 鈥淭here鈥檚 a bit of a price war at the retail shelf level.鈥�
Walker said the future of many marijuana businesses in the state depends on a successful summer season this year. Without that, many businesses across the industry could shut down or be forced to lay off workers.
