Oregon’s marijuana cultivators are facing a challenging environment that favors vertically integrated companies and craft cannabis.
Wholesale prices for trim and outdoor-grown marijuana flower sold to processors have dropped to as low as $50 a pound.
The situation isn’t likely to improve any time soon.
With hundreds of producer and retail licenses pending approval from the Oregon Liquor Control Commission, which regulates the state’s cannabis industry, the supply glut is expected to only increase, depressing prices further.
As of Jan. 26, there were 520 retailers in the state, with 141 licenses pending approval, according to the agency’s website.
Compare that to 906 licensed producers, with 858 pending approval.
To ride out even more contraction in the market, businesses – either nascent or long-standing – should be well-capitalized, industry insiders say.
“People would stop trying to get in the industry if they actually knew what was going on here,” said Aviv Hadar, co-owner of Oregrown, a vertically integrated cannabis company in Bend.
“If you think there’s money in growing cannabis, put on a seatbelt and sit back for a 5-10-year ride, because it is not easy.”
Cultivators selling outdoor-grown flower to processors are getting as little as $50 a pound, according to Hadar.
“(The market) is just decimated. Decimated,” he said. “There’s so much oversupply.”
“I believe it,” said William Simpson, founder and president of Chalice Farms, a vertically integrated marijuana company in Portland.
He said he’s seen wholesale marijuana selling for as low as $100 a pound, but $50 a pound is “absolutely” possible.
Donald Morse, executive director of the Oregon Cannabis Business Council, said he’s heard of some people paying only $50 a pound for outdoor-grown trim, but it’s more common to see $100-$150 a pound.
“Prices have come down dramatically,” he noted.
Pete Gendron, president of the Oregon Sungrown Growers Guild, said characterizing the situation as dire for growers “is not an overstatement.”