Oregon Hashish: State of the State (2024)

Welcome the ninth annual “State of the State” put up on Oregon hashish. I really feel like an outdated man. As in comparison with 2023, issues this yr had been fairly mellow. That’s to not say, nonetheless, that we don’t have traits, intrigues, controversies, mysteries, and many others., value writing about. Let’s dive proper in.

Gross sales and market information

In response to OLCC data, retail gross sales between January 1, 2024 and November 30, 2024 clocked in at $881 million. That’s remarkably in keeping with 2023, the place we noticed $874 million over the identical 11-month span. If issues stay regular for the following couple of weeks, Oregon ought to keep away from a 3rd consecutive drop in annual gross sales.

Costs are additionally comparatively static. The median value per gram within the extract/focus class was $15.83/gram in November, floating from $15.36 to $16.00 all year long. For “usable marijuana”, which incorporates dried flowers and leaves, costs fluctuated from $3.89/gram to $3.57/gram final month.

October noticed Oregon’s largest METRC harvest, ever, with 5,733,288 kilos reported. I’m certain the illicit market had a bumper yr too; climate is similar for everybody and the enforcement paradigm is static. Anyway, the October numbers equal 900,000 extra kilos than the identical month in 2023. Customers could profit, however that may’t be nice for pricing.

So far as what persons are truly shopping for at OLCC outlets:

• 46.2% of purchases are for usable marijuana
• 25% are extracts/concentrates
• 13.7% are edibles/tinctures
• 9.1% are “inhalable product with non-cannabis components”
• 5.4% is “different”; and
• 0.6% is industrial hemp commodity merchandise.

Sure, that equals 100%. In 2023, I famous a “years-long development of usable marijuana gross sales lowering per capital in favor of different classes.” The development continued in 2024 (usable marijuana gross sales dropped one other 2.5% yr over yr). Final yr, I wrote that “my impression is that near-term progress could also be restricted to pick SKUs and product classes.” Nonetheless really feel that approach.

Licenses and licensing

Our years-long OLCC licensing moratorium was made everlasting in 2024 (extra on that under). Total, license numbers declined marginally throughout the board. Right here’s a desk displaying present numbers as in comparison with 2023, which I wrote “was the primary yr I noticed license numbers fall for the reason that 2016 roll-out of the grownup use program.”

It’s good to see numbers dropping, I suppose. Most would agree that we have now too many licenses throughout all classes– besides maybe for labs and analysis. Count on numbers to proceed on a modest downward development in 2025.

Trade limping alongside

In the previous few State of the State posts, I’ve talked about companies struggling. We’re nonetheless serving to folks promote and even stroll away from issues we helped them purchase not way back. In 2023, the massive liquidation story was the Chalice receivership. In 2024, insolvency and hashish receivership actions are nonetheless a regular occurrence. The most important of 2024 was the Tumalo receivership, which we structured right here within the workplace, and which remains ongoing. We’re engaged on just a few others as effectively: some are voluntary, and others, effectively, not a lot.

Consolidation continues to be a truth of life in Oregon hashish, with bigger operators opportunistically choosing up belongings, largely at retail. A majority of purchase/promote transactions, nonetheless, appear to contain new market entrants and bare licenses. In these offers, a vendor will relinquish its rights to an OLCC license in favor of a substitute license for the customer— typically on the identical location and typically in a brand new spot. Pricing on these transactions, that are styled as asset buy agreements, has remained regular in every license class. That stated, pricing might be negotiable.

Many of the larger gamers are nonetheless round. A few folks have requested me how that could possibly be the case with a sequence like La Mota, whose authorized points metastasized right into a statewide controversy, and resulted in unwelcome tax compliance rules for OLCC retailers. The reply is easy: La Mota most likely reached a deal on cost plan with the Division of Income. Elsewhere, we haven’t seen something to persuade us, in some way, that OLCC is making an effort to deal with small companies the identical because the bigger operators— an issue space we highlighted in 2023. That stated, let’s see what occurs with the labs.

OLCC chasing testing labs on THC inflation

On September 25^th, OLCC despatched enforcement notices to seven testing laboratories. I defined on the time that OLCC had:

Propos[ed] license cancellation in some circumstances and suspension or fines in others. The notices middle on alleged THC inflation, and prolong again to cases recognized in 2023. We solely have eleven labs in Oregon accredited to do that obligatory work, so OLCC chasing seven of them is a giant deal.

This saga continues to be ongoing, and none of those circumstances are resolved to my data. For thought-about and lawyerly causes, I’ll reserve additional touch upon this one, past all that I’ve already said.

New OLCC guidelines and legislative adjustments

Numerous guidelines took impact in 2024, attributable to legislative adjustments this spring and an initiative vote within the fall. Listed below are the 4 largest developments for me, in chronological order:

Licensing Moratorium

Oregon lastly made its licensing moratorium everlasting, when Governor Kotek signed House Bill 4121 on March 20, 2024. This implies the one approach to purchase a hashish license in Oregon is to search out somebody keen to promote. That can possible be the case endlessly, based mostly on unreachable “new license triggers” in HB 4121, and the truth that the legislature received’t reverse this new regulation.

Hemp Vendor License Requirement

This one took impact July 1. At the moment, I wrote that the rule was “very broad and prone to catch folks off guard.” That proved to be the case in my expertise, together with with respect to OLCC— I ended up writing them on September 30 after stumbling throughout incorrect FAQs on the subject. My guess is that a lot of Oregon companies are nonetheless unaware of the license requirement, and due to this fact not compliant, and that it doesn’t actually matter as a result of enforcement is sparse or nonexistent.

Labor Peace Agreements

This one has been a scramble, with many licensees having to discover a approach to comply on brief discover. The brief story is that attributable to Poll Measure 119, which handed in November, all OLCC licensed retailers, processors and labs should present a signed labor peace settlement (LPA) with a bona fide labor group, to resume or apply for an OLCC license. I nonetheless consider BM 119 is legally problematic, however somebody must problem it to obviate the LPA requirement.

Presumptive Hemp Testing Rules

The Oregon Division of Agriculture (ODA) issued a short lived administrative order following on HB 4121, which defines presumptive marijuana beneath its testing guidelines, outlines procedures for marijuana disposal, and descriptions violations of ODA hemp licensure extra typically.

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We will anticipate to see extra adjustments, as at all times, in 2025. OLCC is presently in rulemaking to implement HB 4121, to begin. The 2025 legislative session subsequent yr can also be a protracted one, lasting from January to June. I’ll write my standard session preview someday in January, lest this put up turn out to be extraordinarily lengthy. For now, the Hashish Trade Alliance of Oregon (CIAO) has listed out is legislative priorities here.

Odds and ends

• 2024 will need to have been a welcome reprieve for OLCC, which remained largely out of the highlight after a trying year in 2023.
• Not a lot is happening with ODA and the hemp business, past what I discussed above.
• Shout-out to CIAO, which was organized and efficient in its first full yr as Oregon’s consolidated, hashish commerce group.
• Native hashish banking is getting simpler on a regular basis. Most just lately, we constructed out a cannabis banking program for Central Willamette Credit Union, the latest Oregon service supplier.
• I’m nonetheless pessimistic a couple of federal hashish banking invoice, however I’m looking forward to federal rescheduling. A transfer for marijuana to Schedule III would get rid of punitive tax code provision IRC § 280E – hopefully in calendar yr 2024. That growth would instantly improve margins for Oregon hashish companies, throughout the board.
• Additionally on the federal degree, this was our final yr with Earl Blumenauer, Congress’s greatest ever cannabis advocate.

Oregon hashish: that’s a wrap

Let me know within the feedback in the event you assume I missed something value mentioning, or shoot me an email. There may be at all times one thing. Within the meantime, right here’s hoping for easy crusing for Oregon hashish in 2025.

For earlier posts on this sequence, try the next: