Too much marijuana in Oregon has become a problem for retailers
Oregon has a marijuana problem. This year it has produced four times the amount consumed in all of last year, leading to a large surplus that will more than like go to waste. With an abundance of supply and shrinking bottom lines, dispensaries across the state are partnering together, consolidating their efforts and limiting their losses while they weather the storm.
In Astoria, for example, “Hi Cascade” is now merged with “Mr. Nice Guy.” Hi Cascade brought in Mr. Nice Guy as an attempt to overcome the weak market by seeking outside capital. According to Mr. Nice Guy Assistant Director of Operations Will Wiedenmann, “Strength in numbers is a big thing.”
Oregon has created a marijuana monster. The overproduction has led to a rapid and sharp fall in prices and this, combined with stiffer competition, drives the prices down even more. Beau Whitney, a New Frontier Data economist, points out, “That creates a pricing differential relative to the smaller mom and pops that don’t have the purchasing power. To me, this is a natural evolution of the market. It’s starting to increase now lately.”
The increase in stores, falling prices and consolidation of activity will ultimately push out smaller shops and growers. Says Whitney, “Those mom and pop shops that don’t have access to capital, they’re the ones that are going to be priced out of the market first.”
To survive, the small businesses are going to have to be creative. The Farmacy, a marijuana store located in Astoria, was purchased earlier this year by April Smith and her family. Smith is a former behavioral health and addiction therapist who saw the benefits of cannabidiol. The Farmacy was converted into a retail shop and grow operation, each operating under a separate company. Through the vertical integration from seed to sale, the company is allowed more tax write-offs per IRS codes that cover cannabis deductions. Explains Smith, “To be able to be successful, you have to have a way to optimize everything.”