OR: Marijuana Abundance Driving Price Downward

Photo Credit: Heath Korvola

A gram of marijuana costs $5 at one shop in Brookings.

At another, it’s $3.

And at a third, it’s $2.50.

“Our store, $5 a gram was the bottom-line inexpensive,” said Em Dollar of West Coast Organics on Railroad Street. “But with the relationships our boss has built, he gets good, good products. We went to $3, and now we’re $1.50 a gram. A-buck-80 and you’re out the door. It’s good. We’re running the market here, I think.”

Crashing prices haven’t gone unnoticed by the Oregon Liquor Control Commission, which is in charge of monitoring everything marijuana, from grow farms to retail sales. So as of Friday, it halted all processing of any new licenses to grow.

Currently, there are just over 1,000 licenses to grow pot in Oregon — but another 950 are in the queue. Officials want the state legislature to deal with the issue next year after U.S. Attorney Billy Williams said the oversupply problem needs to be addressed.

Shrugs all around

Locally, pot store owners indicated they’re not surprised the market has perhaps reached its apex.

“I’d have to say we’ve reached that point,” said Brenda Vice, an employee at High Tide Wellness Center in Harbor. “The state’s decision to stop issuing (grow licenses) is not a surprise to me.”

According to the state website monitoring licenses, Curry County is home to 10 marijuana dispensaries, including eight in the Brookings-Harbor area alone.

“I don’t see how we could have any more anyway; I don’t see how anyone would profit if they did,” Dollar said. “The way I see it, the people who got their feet in the door first are the ones who will succeed. The others are too late.”

When they all first opened, the Pilot asked each if they were worried about over-saturating the market, and all said supply and demand would weed out the weaker companies. Most now say any that tried to open today probably wouldn’t make it.

“It kind of makes the market better for the ones who are here,” Dollar said of the stiffer competition. “I still think some will be weeded out in the next couple of years.”

Some in the local industry said they began to wonder if the market was getting saturated as they started seeing lower prices from their growers. When they did, prices at the counter started to fall, as well — some as much as 50 percent in one year, according to the OLCC.

“The market took awhile to ramp up,” Vice said of the lag time that occurred when recreational pot became legal and store owners started to submit new applications to sell it either alongside or instead of medical marijuana. “There were times when things were very dry. We didn’t see a lot of variation and offerings like we do now.”

Now, she said, farms are in full swing, and growers are knocking at retail doors.

“Last year’s grow was the big one,” she continued. “We had three times as much in the (state) system than Oregon can even consume in a year. But consumers will be the ones that determine who lives and who doesn’t.”

The Associated Press last week reported Oregon has 1 million pounds of marijuana in the system — enough to provide every resident with a quarter-pound.

Shops — and then their customers — are the real winners today.

The OLCC said the average gram cost $14 two years ago, compared to $7 last year. This year, that’s even less.

“It’s here,” said Josh Hart, an employee at Bud Bros. in Brookings, of the saturation point. “(Lowering the prices) is really the only option anyone’s got, with it being so saturated — especially here in Brookings, where we’ve got, what, eight shops? Eight shops is kind of out-of-this-world, at this point.”

The Brookings-Harbor area has a marijuana shop for every 1,625 residents. Eugene has 56 stores, one for every 2,974 of its 166,550 residents. Grants Pass, he noted, has five shops, one for every 7,556 of its 37,780 residents.

Vice said shops can command better prices when the growers are producing too much product.

“There are too many people with (grow) licenses, so we get the better end of the deal,” Vice said. “We had a man come in (last week) asking, ‘Do you buy from rec grows? How much are you paying?’ It’s strange to have people coming in not knowing the protocol. It’s obvious they’re new and just trying to make their million. The ones that are in the game are already in it.”

“There’s capitalism for you, right there,” said State Rep. David Brock Smith, R-Port Orford. “Supply and demand.”

Smith noted he does not serve on the Joint Committee on Marijuana Regulation and therefore isn’t as attuned to the issue as others, but said the cessation of grow-license processing might be unfortunate for those who have invested money in equipment and aren’t yet in operation.

Then again, he said, he’s aware of conditions in neighboring Josephine County, where numerous growers and their employees have usurped almost all the available housing. Many, too, are growing illegally — and bringing with it associated crime and environmental degradation, he said.

“It’s put a huge strain on them because they have inadequate public safety,” Smith said. “There are a lot of issues in regards to code enforcement because the county doesn’t have the resources.”

Little guidance 

Another issue is that, when the state was crafting its regulations, there was little data to guide them, state officials have said. Only a few states had legalized pot at that point, and the long-term business effects had yet to shake out.

So Oregon officials decided, too, to let the market determine survival, first by not capping the number of dispensary and grow licenses, allowing businesses to apply for multiple licenses and setting registration fees relatively low.

One of the unintended consequences, they are now learning, is that chain stores are buying up dispensaries that go out of business, nudging smaller producers — usually mom-and-pop growers and retailers — out of the market.

That hasn’t happened here — yet — although a Portland-area shop owner approached the Gold Beach City Council earlier this year asking to expand there. Gold Beach has had two applications since marijuana became legal, but has no stores in town. The only two dispensaries outside South County are in Wedderburn and Port Orford.

Oregon Craft Cannabis Alliance founder Adam Smith said consumers and others need to speak up to prevent chain stores from becoming monopolies due to their buying power.

“The Oregon brand is really all about authenticity,” he told the Associated Press. “It’s about people with their hands in the dirt, making something they love as well as they can. How do we save that?”