Assessing Marijuana Employment: An UpdateMay 23, 2017 Since our last attempt to assess employment in the marijuana industry about a year ago, recreational marijuana has developed commercially. As of January 1, 2017 sales are allowed at licensed recreational retailers. Firm license applications from the Oregon Liquor Control Commission (OLCC) have increased to more than 2,500 with close to 1,200 approved. According to estimates from the Oregon Health Authority, during 2016 established dispensaries had $79.4 million in sales to medical marijuana card holders and $215.3 million in recreational sales through the early retail sales program.
As the industry has grown, the Oregon Employment Department has also improved its efforts to track employment.
Tracking Employment and Wages at Marijuana-Related Businesses
The most basic way that the Oregon Employment Department tracks employment and wages is through the Unemployment Insurance (UI) program, which collects data from employers subject to UI law to produce our Quarterly Census of Employment and Wages (QCEW). Each firm is assigned to an industry based on their primary activity. Industry definitions are set by the U.S. Department of Labor, which has made recommendations for the industries that marijuana-related firms are categorized in.
There are currently 25 industries that include some portion of activities related to marijuana cultivation, production, processing, wholesaling, and retailing. The industries include many types of establishments, not just those growing, selling, or otherwise working with marijuana. In the future, there may be separate industry codes for marijuana-related firms as there are for other commodities. But, for the time being, marijuana employment and wage breakouts based on current industry classifications alone are not possible.
In an effort to track payroll employment at marijuana-related businesses, the Oregon Employment Department has created a database of known marijuana-related businesses. To do this, the Oregon QCEW unit designates an employer as being marijuana-related if the primary nature of the business is deemed to be marijuana-focused. This includes businesses involved in the growing, processing, and distribution of marijuana and marijuana products, and businesses that support those activities. They use a variety of methods to make this determination including reviewing information provided by the employer, referencing industry registries like the OLCC license registry, and reading information publicly available online.
The most recent results are for the fourth quarter of 2016. There were 440 reporting firms with 3,506 employees that paid $22,209,086 in wages. By multiplying the quarterly annual average wage of $6,335 by four the estimated annual average wage is $25,340. The largest number of firms (250) and employment (2,290) was in other services. This is where medical dispensaries are coded. Through 2016, firms that were both medical dispensaries and recreational retailers were coded here as recreational retail was only allowed through established medical dispensaries. As of the first quarter of 2017, firms are no longer able to be both a medical dispensary and a recreational retailer. Because of this, in the future we expect more firms to be coded under trade, transportation, and warehousing, and fewer to be coded under other services.
The next largest industry sector is agriculture, where producers are coded. The highest average annual wage ($35,128) is in manufacturing, where edibles and extracts are made, and includes some workers with education and experience in chemistry.
These are businesses that are up and running and have employees on a payroll. During this transitory period, we know that the QCEW data currently under counts employment since it does not include sole proprietors and businesses that have opened during the first half of 2017.
Licenses and Permits as Indicators of Employment
In other industries where some of the employment is not subject to UI laws, such as commercial fishing and real estate, we can use licensing or other records as an indicator of the level of employment.
As of January 1, 2016, the OLCC began accepting applications for firm licenses for labs, processors, producers, retailers, and wholesalers. A separate license is needed for each activity and a nonrefundable application fee applies.
The definition of activities that may not be self-explanatory follows:
- A lab license is for a laboratory to test marijuana for things like adulteration (pesticides, mold, etc.) and potency.
- A processor is a business that will transform the raw marijuana into another product or extract. Processors are also responsible for packaging and labeling.
- A producer is a grower.
OLCC also separates license applications by county. The top counties at the writing of this article were Multnomah (462), Jackson (350), Lane (350), Clackamas (265), and Washington (171).
Of the 2,545 firm applications, 1,167 were approved. Getting local government approval can sometimes cause delays. Many of the recently approved firms will be included in the OEDs QCEW database in the coming months.
Starting July 5, 2016 OLCC began accepting applications for worker permits. These are required of all workers in any marijuana-related firm including temporary and seasonal workers. There is a $100 fee payable upon approval. The permit is valid for five years. As of 8:00 AM May 15, 2017, 19,027 applications had been submitted. Applications continue to flow in, averaging 75 a day in the first five months of 2017.
Of those submitted 12,008 were active, meaning they were approved and paid for. A significant number of applicants (5,242) had been approved and not paid for. It’s unknown why they are not paid for. Undoubtedly, many simply could not afford it. Since it doesn’t cost anything, some may have applied out of curiosity. A quick survey of marijuana job openings listed on the internet shows that many openings have an OLCC worker permit as a requirement for employment. Therefore, some may be waiting until they actually have a job to pay for an approved permit. Only 40 applications have been denied. Since the permits are valid for five years the number of active permits can only go up until they start needing to be renewed.
It can be assumed that all applicants have some interest in employment at a marijuana-related business. After the deadline for compliance on April 28, 2017, however, if we assume that all workers are in compliance, the number of active licenses should be considered an upper bound of employment in recreational marijuana. Since permits include temporary and seasonal workers it is not likely that all permitted workers will be employed on any particular day. In addition, since the permits are valid for five years, they do not capture turnover. People who are fired, quit, laid off or otherwise not employed at a marijuana-related business can still have a valid permit.
In April 2017, there were 26,067 caregivers and 33,764 growers in the Oregon Medical Marijuana Program (OMMP). Caregivers can be a medical professional or anyone else authorized to handle marijuana in the care of the patient. Growers can have up to six mature plants and 12 plants overall. Many workers who were involved in the OMMP are now in the recreational industry since dispensaries have transitioned to both medical and recreational sales; therefore, they are now counted as recreational retail workers.
There were only 48 strictly medical dispensaries left in the state in April 2017. Since recreational sales were made legal, applications for new medical dispensaries have declined from several dozen a month to single digits. The number of new applications for medical marijuana processing sites has dropped to essentially zero.
It is difficult to put a number on employment during this expansionary period for marijuana businesses. We are seeing rapid growth in the recreational marijuana industry and at the same time transition from medical to recreational sales. We know that the 3,506 workers at 440 firms listed with OED’s QCEW program are a minimum that doesn’t include sole proprietors or new firms started since January 2017.
Looking at licenses from OLCC, we can assume that there will likely be at least 2,500 firms in the near future. In addition, as of May 15, 2017 roughly 12,000 workers have an approved worker’s permit. The number of active permits should be considered an upper bound on employment since permit holders include temporary and seasonal workers. In addition, since the permit is valid for five years, those who are laid off, fired or quit are included until they choose not to renew. Using these parameters, the boundaries for recreational marijuana employment on May 15, 2017 would be more than 3,506 but less than 12,008 with both ends of the range trending up. As time goes by, the range should narrow as more firms are included in the QCEW database and workers who are no longer in the industry do not renew their permits.