Malheur County continues to top the state’s list in retail marijuana sales as Oregon’s cannabis industry struggles with declining sales and stagnant prices.
In its February report, the Oregon Office of Economic Analysis wrote that a saturated market, declining sales, and stable consumer demand have made it difficult for businesses to be profitable.
For three consecutive years, from 2020 to 2022, Malheur County had the highest per capita rate of retail sales of cannabis products. According to data from the state, in December of 2022, the last year the state collected such information, Malheur County’s per capita rate was $20.25 per adult, the next largest was Curry at $2.46 per adult.
The county’s proximity to Idaho, one of a handful of states where recreational and medical cannabis consumption remains illegal, has been a lifeline for the area’s retail cannabis stores.
Despite Malheur County posting $100 million in retail sales, the county saw a nearly 4% decline in sales in 2023.
Prices continue to limp along at $4 a gram, down from a peak of $10.50 in 2016. Harvests are up, leading supply to outstrip demand, the report noted.
TJ Sheehy, director of analytics and research with the Oregon Liquor and Cannabis Commission said in late 2023, the wholesale price of weed rose to above $700 per pound, up from $600 per pound in 2022. Since then, he said, the price has remained mostly flat and is currently at $750.
He added that the current price per pound remains considerably lower than in 2020 and 2021.
Meanwhile, as counties around the state have watched dispensaries fold, Ontario is poised to get two more retail shops soon, according to Dan Cummings, the city manager of Ontario. Currently, he said, there are 13 recreational marijuana stores in Ontario.
So far, Cummings said, Ontario has yet to see a recreational weed shop shutter due to the difficult weed market.
Cummings said marijuana sales tax revenue flowing to the city is still holding despite decreasing prices. So far, Cummings said, people continue to spend the same amount of money.
In 2023, Cummings said Ontario received $2.9 million in marijuana revenue.
Cummings said the city has used the most of such money to pay down the city’s Public Employee Retirement System debt, now standing at about $10 million.
Cummings said he plans to report to the Ontario City Council on how the city has been spending the tax revenue and give an update on the city’s PERS debt.
Following a record year in 2020, where recreational pot sales surged to $1.1 billion, the state’s pot growers increased their plants in 2021, optimistic about the booming bud market, the state report noted.
However, demand for marijuana dipped the following year, and the record outdoor harvest in the fall of 2021 set off a price drop that put the entire supply chain under pressure in 2022.
In Ontario, the hyper-competitive local market has left area pot purveyors vying for Idaho customers.
Ty Erlebach, chief executive of Weedology in Ontario, said the competition is good for the consumer. Still, he said, the competitive market strains the profit margins of retailers and producers.
Erlebach said he has seen some vendors selling their products for less than what it took to grow to get close to breaking even. He expects a rebound in the market.
Steven Meland, chief executive and owner of Hotbox Farms, an Ontario cannabis retailer, said cannabis suppliers are relinquishing their licenses or not renewing them as the industry continues to struggle. That in turn creates supply chain issues for pot retailers.
This year legislators passed House Bill 4121, which allows the state cannabis commission to continue the moratorium on limiting the number of licenses based on population and state law.
Sheehy said while marijuana grows abundantly in Oregon, it remains prohibited under federal law and can’t be sold legally across state lines. The lack of interstate commerce means retail or producer businesses have nowhere else to legally go with historically high supply levels.
According to Sheehy, Oregon has ideal marijuana cultivation compared to other states but the consumer population is relatively low.
Until federal law changes, Sheehy said, Oregon’s recreational pot market will continue to be competitive with low prices for consumers but low margins for cannabis retailers and producers.
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