Business

Cannabis industry groups merge as Oregon businesses face oversupply

By Kyra Buckley (OPB)
PORTLAND, Ore. Oct. 19, 2023 7:59 p.m.

The groups unanimously decided to combine resources as the industry contends with low prices.

FILE - In this Feb. 7, 2019, file photo, a bud tender shows a top cannabis strain at a dispensary in Portland, Ore. Two major cannabis trade and lobbying groups in Oregon are merging.

FILE - In this Feb. 7, 2019, file photo, a bud tender shows a top cannabis strain at a dispensary in Portland, Ore. Two major cannabis trade and lobbying groups in Oregon are merging.

Richard Vogel / AP

Two major trade and lobbying groups for Oregon’s cannabis industry are merging as the state’s marijuana businesses face oversupply, limited demand and record low prices.

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The Oregon Cannabis Association and the Cannabis Industry Alliance of Oregon said Wednesday the boards of each group unanimously voted to merge the trade associations, effective immediately. The newly merged Cannabis Industry Alliance of Oregon represents more than 500 member businesses in the state’s nearly $1 billion industry.

“There’s a lot of knowledge, there’s a lot of passion, there’s a lot of really educated folks within the cannabis industry in Oregon,” said Hunter Neubauer, board member of the newly merged group. “Those folks need one place to go to, where they can take a little bit of money that they have, and hopefully become members, and show up with us in Salem and advocate for reasonable regulations and future opportunities for the industry.”

Oregon legalized recreational marijuana in 2014. That same year, the Oregon Cannabis Association formed as a networking and political lobbying group for the industry. The Cannabis Industry Alliance was formed last year out of another merger — when three groups including marijuana retailers and farmers joined.

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Neubauer said the nearly decade-old industry has already experienced a pair of boom and bust cycles. The current supply and demand imbalance comes as inflation was already putting pressure on Oregon companies, he said, leading to consolidation and shuttered businesses.

That’s in line with what state officials predicted for 2023. A February report on the state of the industry from the Oregon Liquor and Cannabis Commission foreshadowed a tumultuous year.

“The overabundance of supply throughout 2021 and 2022 resulted in historically low wholesale and retail prices for both usable marijuana and concentrate/extract products,” the OLCC wrote in the report. “The declining prices, in combination with a tempering in the growth of quantities purchased, resulted in the first-ever decrease in annual sales (from $1.2 billion in 2021 to $994 million in 2022).”

The commission forecast record low prices this year as businesses contend with a stockpile of cannabis products and waning demand.

The OLCC report predicts that low margins will continue unless the federal government “creates pathways to interstate commerce.” Cannabis industry advocates also point to federal legalization as a way for marijuana companies to gain access to the banking system and take advantage of federal tax benefits for businesses, but movement in Congress has been sluggish.

The merger of cannabis lobbying groups also comes as the industry in Oregon works to repair damage from a scandal earlier this year involving the marijuana chain La Mota. Reporting on the company showed it had neglected to pay certain taxes and was being sued by vendors. It was also revealed that then-Oregon Secretary of State Shemia Fagan had a lucrative consulting contract with the company. Fagan resigned over the scandal in May.

The sequence of events has muddied communication between the industry and the Legislature, according to Neubauer.

“It’s been really tough since something’s surfaced surrounding one of the companies in Oregon and Shemia Fagan,” he said. “Our goal with the merger is to take the industry’s leaders and advocates that are still here and combine our resources so that we can show that was one bad apple.”

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