An Oregon state economist believes that Oregon’s cannabis sales could rival those of Colorado’s in a couple of years.
A new report prepared by Oregon state economist Josh Lehner projects that the Oregon cannabis market will pull in $156 million in taxes over the next two years. Lehner penned the Oregon Office of Economic Analysis report, which shows that the state’s first full year of legal marijuana sales exceeded those of Washington and closely tracked Colorado’s when figures are adjusted for population size.
“In terms of the outlook, Oregon is poised for strong growth in the coming years,” the report reads.
Lehner’s report lists four reasons why Oregon’s marijuana market is performing so well. The first is that Oregonians appear to be more regular cannabis consumers. The report cites surveys showing that “a larger share of Oregonians have used marijuana in the past month than what is reported in Washington.”
The second reason, the report claims, is that Oregon’s market has determined an ideal balance of price and tax rate. Compared to Washington, Oregon’s marijuana retail prices are competitive, and its tax rate is significantly lower (37 percent to 17 percent). The lower over retail price brings in more consumers by recruiting those that had previously obtained cannabis from the black market.
The third reason for Oregon’s early success, according to Lehner, is Oregon’s built-in customer base and the “cross-border effect” that impacted sales. Data shows that Oregonians crossed the border to purchase legal marijuana in Washington prior to the launch of Oregon’s legal sales. Once Oregon’s early sales began, counties in southwest Washington saw their marijuana retail sales drop by nearly 40 percent.
Lastly, Oregon immediately opened multiple marijuana retail stores in its major population centers, improving market access and product availability in places where most of its residents live. In Colorado, there were no retailers in Boulder initially. In Washington, Seattle only had a few retailers when sales first started.
The report reads: “Not that Oregon is overstored, or that there cannot be more room for growth – Colorado, for example, has considerably more retailers even after adjusting for their larger population – however lack of consumer access does not appear to be a major issue in Oregon today for much of the population.”
Oregon voters approved Measure 91 to legalize adult use marijuana in 2014 and the law took effect July 1, 2015. Under the law, adults ages 21 years and older can legally possess up to 1 ounce of marijuana away from home, or up to 8 ounces of homegrown marijuana at home. Adults can also possess up to 4 plants, 16 ounces of solid infused concentrates, or 72 ounces of liquid infused concentrates.
Oregon pulled in an estimated $241 million in adult use marijuana sales last year, generating over $60 million in tax revenue. A recent report estimated that Oregon’s cannabis industry has made a $1.2 billion economic impact, and generated approximately 12,500 new jobs for the state.
The economic report from Lehner cites price drops and supply constraints caused by regulatory bottlenecks as potential risks to the growth of Oregon’s cannabis market. Another is the potential federal crackdown, although the economist believes the chance of interference from the federal government to be unlikely.
The full report and forecasted data from economist Josh Lehner are available via the Oregon Office of Economic Analysis.
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