PORTLAND, Ore. (KOIN) — Due to a supply and demand issue, retailers and harvesters in Oregon’s once-booming cannabis industry are starting to see a decline in prices.
The Oregon Liquor and Cannabis Commission reports that in October 2021, nearly $94 million went to the state’s cannabis industry. That number dropped in October 2022, with the industry receiving about $79 million in sales.
This is also reflected in how many pounds of cannabis were harvested for the past two "Croptobers." In October 2021, the OLCC reported 5.3 million wet pounds harvested by all producers. This year, that number fell to 4.1 million.
“The September/October time frame is a harvest 'window' for outdoor cannabis grows in southern Oregon,” Mark Pettinger, spokesperson for the OLCC, said. “The actual harvest time is based on when cannabis farmers get their crop in the ground. Late rains pushed out the planting time this year. Also, the lengthy sunny and warm weather this fall probably affected decisions about when to harvest.”
But weather isn’t the only factor that cannabis retailers and harvesters have to take into consideration. According to Pettinger, the pandemic also had a great impact on the market.
“On the demand side, cannabis sales saw some significant spikes during the pandemic when consumers had fewer choices on how to use their discretionary income. Also, there was a fair amount of federal stimulus money that probably accounted for some of those increases. Since legalization in 2016 Oregon cannabis sales had been experiencing steady year-over-year increases,” Pettinger said.
Now, with the increasing cost of living and no recent economic impact payments on the horizon, some people are hesitant to spend their hard-earned money on marijuana.
Because the plentiful supply of marijuana overpowers the demand, many Oregon weed retailers and harvesters are re-evaluating how they conduct business.
Beau Whitney, the founder of cannabis consulting company Whitney Economics, says that regulations on cannabis sales across states impact the industry as well.
“The way that all states have set up their system is that whatever you grow and produce and do product manufacturing for and retail, it all has to be contained within the state,” Whitney said. “When you have an ‘everything contained in the state’ mentality, there's not enough consumers to go around to handle all of that supply right in the state… when there's oversupply and not enough demand, then prices go down because firms will get desperate. They'll want to sell their product.”
The drop in prices may benefit consumers who want the same quality of cannabis for less money, but buyers and sellers in the industry are put at a disadvantage.
“What cultivators have done is they've stopped cultivating,” Whitney said. “They’ve reduced the amount of square feet or acres that they're deploying for further cannabis cultivation because if they grow it, but they can't sell it, then what's the point? It's just like throwing money down the toilet.”
The OLCC has already seen significant consolidation in the cannabis industry, according to Pettinger. This could be an ongoing trend as prices continue to drop.