Oregon’s Initial Pot Sales Point to a Booming Market
Ryan Allway
October 12th, 2015
Policy, Top Story
Oregonian dispensaries sold $10.8 million worth of recreational marijuana during the first six days that it has been legalized, according to the Oregon Retailers of Cannabis Association. Based on these estimates, the retail group projects that sales will “wildly surpass” that state’s projections – for $9 million in tax revenue during the first full year of recreational marijuana sales in 2017 – by as much as 300% to 400% on a top-line basis.
After passing the law in November of 2014, Oregon began recreational marijuana sales on October 1st, permitting adults to purchase up to a quarter ounce of marijuana from any of the roughly 200 legal medical marijuana dispensaries located throughout the state. Adults over 21 years of age are also allowed to possess up to one ounce of marijuana outside their homes, eight ounces inside their homes, and grow up to four marijuana plants.
The state differentiates itself from others that have legalized recreational marijuana in a few different ways. First, it has some of the lowest per ounce prices in the country, according to PriceOfWeed.com, which pegs the high quality stuff at just $200 per ounce compared to $300 per ounce or higher elsewhere. And secondly, the licensing process is considerably easier in Oregon with a low application fee and no limits for in-state licensees.
Beating the Competition
The state’s initial recreational marijuana revenues outpaced Colorado’s debut in January 2014, when it generated just $5 million in revenue during the first week. Similarly, Washington State’s debut in July 2014 led to just $2 million in revenue during its first week.
These days, Colorado is collecting more tax revenue from marijuana than it does from alcohol, although the higher tax rate explains much of the gains. The state has collected nearly $70 million in taxes during the fiscal year ended June 30th, which is nearly double the $42 million collected from alcohol taxes over the same period. Similarly, Washington State collected some $83 million in revenue since the program began in July of 2014.
Oregon could surpass these figures given the state’s impressive first-week revenue, as well as its low-priced product, simplified licensing, and high number of users. If successful in substantially beating Colorado and Washington State’s figures, Oregon could set a new precedent for other states looking to legalize recreational marijuana in a way that maximizes revenue, and potentially, maximizes the other benefits.
Some Challenges Remain
The recreational marijuana industry is still very new and there are some key hurdles that must be overcome, including by Oregon.
Earlier this week, state public health officials and child welfare experts told regulators that the state should ban marijuana delivery services, limit cannabis-infused edibles, and impose strict limits on how these products are packaged and labeled. These comments came during an Oregon Liquor Control Commission hearing that attracted some 130 people pressing for some limits to the new recreational marijuana laws going into effect.
The commission is expected to draft rules on October 22nd that will quickly go into effect as the state transitions from selling recreational marijuana from medical dispensaries to specific recreational dispensaries. In addition to the public health concerns, officials may seek to limit majority ownership of cannabis businesses to Oregon residents and restrict out-of-state investors from controlling the management of marijuana companies.
Looking Ahead
Oregon’s new recreational marijuana laws should provide an interesting case study for the industry moving forward. With its early success, the industry appears well-positioned to become a leader nationwide given its underlying demographic trends and lenient laws and licensing procedures. These dynamics could be a big positive for the industry as a whole.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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