The falling price of marijuana will not significantly impact the amount of sales tax Oregon expects to collect in coming years, according to the annual economic forecast delivered Friday by the Oregon Office of Economic Analysis.
Prices are falling, but the percentage of the population using marijuana is rising, with a resulting increase in sales, according to data the office cited. The share of the Oregon population aged 18 years and older that reported using marijuana in the previous 30 days moved from about 13 percent in 2015 to slightly more than 16 percent a year later, according to the annual forecast.
“Sales are tracking the forecast reasonably well, although higher than forecast,” wrote Josh Lehner, a state senior economist, in an email Tuesday. “But for now, we’re not ready to change the outlook. We’ve only been doing it for nine months, and we’re happy with the process and forecast for now.”
Local cannabis retailers reported similar sales trends at their stores. The price of dried marijuana flower fell about 30 percent in the past six months, said Mark Capps, of Oregon Euphorics on SW Century Drive in Bend. That translates to a drop from $12-$18 per gram to $8-$15 per gram, depending on the strain. “There’s a race to the bottom right now as far as price,” he said.
Still, the shop is holding its own in terms of sales, which are “somewhat” increasing, he said.
“Even though prices are falling, our margins are about the same,” Capps said.
At Miracle Greens, on SE Third Street in Bend, store manager Anthony Accinelli agreed that retail prices have fallen about a third in recent months. He attributes market fluctuations to evolving commerce in legal marijuana in Oregon.
“When the industry started, nobody knew where prices were going to sit,” he said Friday. “We’re finally seeing the market settle where it needs to be.”
Oregon may see an increase of $600,000 in sales tax revenue in the next two years, followed by a drop of $200,000 in the two years following, according to the Oregon Economic and Revenue Forecast. The forecast projects sales growing from about $39 million annually to about $50 million by the end of 2019.
“Currently the outlook for recreational marijuana sales and tax collections remains highly uncertain,” the forecast reads.
Regulatory changes that affect supply, a continued decline in price and the implied threat of enforcement action by the federal government — for which marijuana is still a controlled substance — all could affect the profitability of the Oregon cannabis market, according to the forecast.
“While there is yet to be any real action taken, there is a non-zero chance the federal government could step in and eliminate, or severely restrict, recreational marijuana sales,” the forecast reads. “In this event, taxes collected would be considerably less than forecast.”
The marijuana tax forecast, for which the Legislature last year set a mandate, relied partly on comparisons to Colorado and Washington, states that also legalized recreational cannabis. Accounting for differences in population size, Oregon tracks closely to Colorado in terms of usage rates and sales figures. Oregon has a lower tax rate and higher usage rate than Washington and prices comparable to those elsewhere, according to the forecast.
Looking ahead, the state cannabis industry will grow in ways similar to the craft beer industry, the report states, particularly in its ability to create specific strains and value-added products such as oils, creams and cannabis-infused drinks and edibles.
Justin Clapick, co-founder of Deschutes Growery, an indoor cannabis farm in Bend, said branding and aspiration are key to surviving a business shake-out due to falling prices. Consumers will pay for quality and will always expect something new, he said.
“If you’re one of the few growers that have that genetics, it makes it easier to sell the elite stuff at a higher price,” Clapick said. “We grow weed in an efficient way, and we’re going to produce stuff that you can’t find elsewhere.”
— Reporter: 541-617-7815, email@example.com