Portland, OR – Cannabis industry economist Beau Whitney of Whitney Economics and the Oregon Cannabis Business Council today jointly released the results of a survey conducted this November that predicts a $10 million drop in fourth-quarter state tax revenue, a $187.5 million uptick in black-market sales, with layoffs and dispensary closures statewide due to Oregon Health Authority (OHA)’s new testing rules.
“October was a defining, if not catastrophic, month for Oregon’s cannabis industry, which, until then, was growing at a very fast rate,” Whitney said. “OHA’s new testing rules, which very few existing operations can presently comply with, virtually crippled the supply chain of adult-use and medical cannabis, from grower to retailer.”
The survey results can be download at https://whitneyeconomics.com/download-paper
Deployed on October 1, a change in Oregon Health Authority (OHA)’s testing certification, test limits and enhancement of a banned substances list for Oregon cannabis products resulted in longer test throughput times, a lack of available supply of cannabis products in both the medical and adult use markets, job losses and economic hardship.
The Whitney Economics/OCBC survey, conducted from November 14 to November 30 among 683 Oregon cannabis businesses, indicates:
- Supply constraints due to the changes in testing protocol in Oregon have significantly impacted the Oregon Cannabis industry
- On an annualized basis, black market activities have increased a projected $187.5 million due to a combination of higher prices and lower supply
- Oregon tax revenues are projected to decrease by a minimum of $10.0M in Q4. This is conservative and is likely closer to $15 million – $20 million, as OLCC-licensed outlets are allowed to sell more product to an individual than is currently allowed in medical dispensaries. This was poised to increase sales by 2x to 4x current levels. The OHA rules constrain the industry at a time where there should be exponential growth
- 22 percent of survey respondents indicated they are going out of business, and a large majority of survey participants plan to lay off employees for one to three months starting in fourth quarter 2016
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