Oregon’s Marijuana Industry and Employment TrendsDecember 8, 2022
Oregon recreational marijuana sales hit a record high of $110.8 million in April 2021, a 23.5% increase over April 2020 when sales reached $89.7 million. With sales trends going back to 2016, we saw a seasonal pattern where sales tended to be lowest in February and reached their yearly peak in August. That pattern changed in 2021 as sales declined from the April peak down to $93.8 million by October. Total recreational sales continued to decline in 2022, reaching $79.4 million in October 2022.
One factor in total sales decline is falling prices. The median price per gram of usable marijuana fell from $10.50 at the end of recreational prohibition in October 2016 to $5.00 per gram in October 2021. Through the summer of 2022, the median price per gram was just below $4.20 per gram. Harvest totals continued to rise through 2021 but declined slightly over the year through October. Oregon’s total wet weight harvest peaks steeply in October, and reached 5,540,000 pounds in October 2021, up from 2,950,000 pounds in October 2019. The October 2022 total monthly harvest of 4,100,000 pounds was down about 25% from the October 2021 total.
Having grown up in the heart of the so-called “Emerald Triangle” of the once entirely illicit marijuana industry, I’ve observed remarkable changes both from a legal and societal acceptance perspective in a relatively short time span. I would imagine that those who lived through the end of the alcohol prohibition era in 1933 witnessed a similar rapid change once the speakeasy gave way to legal bars, taverns, and legal retail liquor sales. Oregon’s bumpy path toward legalized recreational marijuana sales may have germinated back in 1973 when the state became the first to decriminalize possession of less than one ounce of marijuana. The legalization subject continues to be divisive, as results of the most recent 2022 mid-term election showed. Voters in Maryland and Missouri approved the legalization, while similar proposals were rejected in Arkansas, North Dakota, and South Dakota. The populous state of New York recently issued its first 36 cannabis dispensary licenses, another step in establishing a legal marketplace for recreational marijuana.
Some governments seem to want to atone for the damage to lives that the past war on the cannabis drug has caused. According to a PBS News Hour story from Nov. 21, 2022, “The licenses approved by the (New York) state’s Cannabis Control Board were the first of 175 the state plans to issue, with many in the first round reserved for applicants with past convictions for marijuana offenses.” New York has also planned a $200 million public-private fund to aid “social equity” applicants to help redress the ravages of the war on drugs, especially in communities of color. Here in Oregon, Governor Kate Brown’s office recently announced about 47,000 people previously convicted of possessing one ounce or less of marijuana in Oregon will be pardoned and $14 million in fines forgiven. Criminal convictions, even for possessing small amounts of marijuana that would be legal now, can be barriers to employment, housing, and education.
While not a “new” industry in the sense the seeds were sown by a new technology, product, or market, rather this is an industry that has been flowing through Oregon’s economy for decades. This industry has a long-standing presence and is even more concentrated in the outdoor marijuana cultivation-friendly climate of the southwestern corner of the state, essentially for generations. The economy has been rife with cannabis activity, economic output, and income gains, mostly beneath the scope of any real data to measure that activity. The only real published figures were when law enforcement interdiction produced poundage and street-dollar value estimates of the formerly illegal seized cannabis products. Even now, federal statistics preclude any tally of employment, revenue, and sales data for this budding industry sector. A few regional economies, including Oregon’s, are now pulling the curtains back on the scope of this older but now legal industry as data on sales, revenue, and employment become available.
Transitioning to the Retail Dispensary Model
One of the evolving changes in Oregon’s legal marijuana industry is the shift to retail dispensaries. As of January 1, 2017, sales are allowed at licensed recreational retailers. Previously, medical marijuana dispensaries were also allowed to sell to recreational customers – any adult over 21 years old. Currently, recreational dispensaries may sell cannabis to both recreational and medical customers, with only recreational customers subject to taxes. Now medical-only dispensaries are only allowed to sell cannabis to those with a medical marijuana card.
From a business perspective, these changes have ushered out the era of medical-only dispensaries. There were only 48 strictly medical dispensaries left in the state in April 2017. By October 2022, the Oregon Health Authority/Oregon Medical Marijuana Program database listed just one medical-only dispensary business remaining, located in Josephine County. That doesn’t mean the medical marijuana segment has disappeared. There are nearly 18,000 medical marijuana patients, 6,800 caregivers, 5,600 growers, and 4,800 grow sites in the Oregon Health Authority medical marijuana database. On the other hand, the Oregon Liquor Control Commission (OLCC), which oversees the recreational marijuana industry, listed 827 active licenses for retail dispensaries as of Nov. 29, 2022.
In addition to licensed retail dispensaries, the OLCC also publishes license-holders, by county and firm name, for marijuana processors, wholesalers, and producers. The largest number in Oregon was for producers, with 1,400 active business licenses. There were also licensed processers (330); wholesalers (280); and testing laboratories (20), according to the OLCC business license database. Business names in this database are disclosed, but not any other data including sales or employment. The Rogue Valley in the southwestern part of the state, also part of the “Emerald Triangle” – a prime area for marijuana cultivation – is home to about 40% of the licensed marijuana producers in Oregon.
Using Unemployment Insurance Payroll Employment to Count Marijuana Jobs
From an employment perspective, the Oregon Employment Department (OED) has to play a bit of catch-up with these rapid changes. OED tracks employment and wages 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).
In an effort to track payroll employment at marijuana-related businesses, OED has created a database of known marijuana-related recreational and medical dispensaries. 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. We 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. But it’s not yet a perfect science. Marijuana remains illegal in the eyes of the federal government, and some establishments are not forthcoming in proclaiming that they are selling marijuana. Dispensaries might have workers who are not counted in that industry. For example, if a dispensary uses a staffing agency to fill their job openings, those workers would be included in the professional and business services industry – where temporary help or employment placement businesses are counted. A sole proprietor with no employees covered by unemployment insurance would also be excluded from the OED figures. And the sheer number of new dispensaries creates additional challenges.
As of the second quarter of 2022, OED tallied about 350 dispensaries that had jobs covered by unemployment insurance. These are establishments that are in the marijuana industry, but due to imperfect data, and factors such as sole proprietors not required to have unemployment insurance coverage, are missing from our count of cannabis industry jobs. The database of OLCC retail dispensaries with a business license includes about twice as many businesses (830). Of course every OLCC-licensed business may not be in operation yet, or someone may have a license with plans to open a dispensary in the future. So it’s not an exact comparison when comparing businesses who are licensed with the OLCC and those that we are tracking in our payroll statistics information. Despite the differences, it’s safe to say there are many more people working at Oregon dispensaries than our payroll employment data captures.
To keep up with the changes in the medical/recreational distribution of firms in the marijuana industry, we’ve been recoding where recreational dispensaries are counted. Beginning in the first quarter of 2017, we shifted some establishments that were previously counted in the medical dispensary category “business, professional, labor, political, and similar organizations”, a subset of “other services”, to “all other miscellaneous store retailers”, and most recently “tobacco, electronic cigarette, and other smoking supplies retailers”, which is in the retail trade sector.
According to our most recent information, about 390 recreational dispensary establishments in Oregon had payroll employment totaling 4,300 jobs. The broader category that also includes wholesale trade had about 4,400 jobs and average pay of $32,852 in the second quarter of 2022. The following graph shows the marijuana-related business employment totals by broad industry group.
Licenses and Permits as Indicators of Employment
In other industries where some of the employment is not subject to unemployment insurance 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 late November 2022, almost 137,500 applications had been submitted. Of those, about 64,600 were counted as 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. Another 6,800 were approved but not paid for, 6,200 were under review, and 80 were new applications.
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.
According to the Oregon Office of Economic Analysis, over the extended forecast horizon, marijuana sales are expected to rise slightly slower than their previous forecast. The recreational marijuana tax revenue forecast is lowered due to the pending recession, downgraded economic outlook, and ongoing price declines which impact tax collections even if the underlying volume of sales and consumption remain more steady. According to their recent forecast, “The underlying reason for the low prices is an oversaturated market where production (harvest) outpaces consumer demand, and there are more retailers per capita than in most other states, leading to increased competition. Even so, the outlook calls for increases in marijuana sales and tax collections in the years ahead, primarily due to the state’s growing population and incomes.” Oregon Economic and Revenue Forecast, December 2022.
One of the goals of recreational marijuana legalization was to move marijuana sales from the illicit and black market category into the regulated, tested, tracked, and measured market. The state has had success in capturing a majority share of sales through the medical and recreational programs now in place. And the steady stream of income into state and local coffers has been generally welcomed through taxation of cannabis sales at the retail level.
Oregon will continue to refine laws and rules regulating marijuana sales and production. In this fast-growing industry, constant change seems to be the order of the day for the near-term, with a gradual shift to more areas of the U.S. allowing recreational marijuana. It behooves other states to study Oregon’s example and experience in the path to a regulated recreational cannabis market, and begin their own efforts to track employment and impacts of this emerging and increasingly legal sector of the economy.
One of the large issues coming to the forefront is the demand for water that is sometimes illegally taken from wells and streams for supplying marijuana crops during the growing season. And with the dry conditions we are already facing in many parts of the state for a number of years, those issues may continue to hamper the industry.
For more information: Oregon’s recreational marijuana industry, http://www.oregon.gov/olcc/marijuana/pages/default.aspx.
Oregon’s medical marijuana program: http://www.oregon.gov/oha/PH/DISEASESCONDITIONS/CHRONICDISEASE/MEDICALMARIJUANAPROGRAM/Pages/index.aspx