Assessing Marijuana Employment: Refining our EstimatesAugust 2, 2018 Since we last looked at employment in the marijuana industry about a year ago, recreational marijuana has continued to develop commercially in Oregon. As of October 1, 2016, sales were allowed at some licensed recreational retailers. Since then, firm license approvals from the Oregon Liquor Control Commission (OLCC) increased to over 4,414 with 1,973 approved and active. According to estimates from the Oregon Office of Economic Analysis based on tax collections, recreational sales rose to about $40 million per month by late 2017.
As the industry has grown, the Oregon Employment Department has also improved its efforts to track employment.
Oregon Employment Department Efforts to Track 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 made recommendations for the industries that marijuana-related firms are categorized in.
There are currently 33 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. However, 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 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 first quarter of 2018. There were 669 reporting firms with 5,038 employees that paid $37,377,815 in wages. By multiplying the quarterly average wage of $7,406 by four, the estimated annual average wage is $29,624.
The largest number of reporting units (310) and employment (2,998) was in trade, transportation and warehousing. This is where recreational dispensaries are coded. Since both recreational sales and medical sales are now allowed at recreational dispensaries, there has been a shift of units from other services, where medical only dispensaries are coded to retail trade where recreational dispensaries are coded.
Over the past year, the number of reporting units grew from 544 to 669 while covered employment added 983 jobs. As the graph shows, agriculture firms cause the overall industry to be seasonal. Employment at agriculture firms grew through the year, peaking with the outdoor harvest and processing in the fourth quarter at 1,656 jobs before dropping to 1,197 in the first quarter of 2018. It also shows that employment growth at retail establishments slowed after three quarters of rapid growth.
These are businesses that are up and running and have employees on a payroll. We know that the QCEW data under counts employment since it does not include sole proprietors and some agricultural employment.
Licenses and Permits as Indicators of Employment
In other industries where some of the employment is not subject to UI laws such as real estate brokers, we can use licensing or other records as an indicator of the level of employment.
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 July 24, 2018, 51,285 applications had been submitted.
Of those submitted 31,539 were active, meaning they were approved and paid for. 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 28th 2017 however, if we assume that all workers are in compliance, the number of active licenses will overstate 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 quit, are laid off or otherwise not employed at a marijuana-related business can still have a valid permit.
In Colorado, worker marijuana worker permits need to be renewed every 2 years. According to the Colorado Revenue Department, the renewal rate was 32 percent in 2017. If we apply the Colorado renewal rate to Oregon’s active permit number we get 10,092. The renewal rate is likely to be lower in Oregon since worker permits are valid for five years and workers are more likely to leave the industry during the longer period. Like many low wage industries, marijuana has a high turnover rate.
Using Colorado’s renewal rate likely gets us close to the number of people who are directly employed in marijuana-related businesses in Oregon. This would indicate that the number employed at any given time is a few thousand above QCEW employment but not tens of thousands above.
Recreational dispensaries may sell cannabis to both recreational and medical customers, and medical-only dispensaries are only allowed to sell cannabis to those with a medical marijuana card, there has been a transition away from medical only legal marijuana to recreational retailers. Since July 2015, the number of medical caregivers has dropped from 35,864 to 15,593 (-38%) and the number of medical growers has dropped from 46,292 to 19,358 (-42%).
There were only eight strictly medical dispensaries left in the state as of July 2018. Since recreational sales were made legal, applications for new medical only dispensaries have declined from several dozen a month to essentially zero.
We are able to refine our estimates of employment in marijuana businesses as the industry matures. We know that the 5,038 workers at 669 firms listed with OED’s QCEW program are a lower bound that does not include sole proprietors and some agriculture workers. That said, using related worker permit renewal rates from Colorado’s recreational marijuana program to estimate Oregon’s employment, the portion of total employment over QCEW program employment is likely only a few thousand.