In an era where most US states are legalizing cannabis for medical and/or recreational use, another state has taken a bold step to do so for a third time in less than a year.

The state of Oregon has been a leader in the cannabis industry for some time now, with the recreational market booming and the medical market booming even more, and the state government being open to a greater number of businesses to enter the cannabis market.

word-image-9030 Oregon’s cannabis market is a good example of the industry’s challenges, but also its ability to innovate and mature. Investors and entrepreneurs may fear a hyper-competitive market. If recent trends continue, Oregon could be in for a good time.

Highlights

Oregon Liquor Control Commission (OLCC) data for April 2021 shows that more than $105 million worth of cannabis products were sold in the state. The state sold about $109 million and $110 million in March and April, respectively. These figures represent a significant increase for Oregon, where sales at the beginning of the pandemic were over $70 million per month. The state is known for employing mostly small vendors and not covering the market. Cannabis brands Nectar Markets LLC, Golden Leaf Hldgs Ltd (OTC: GLDFF) and Halo Collective Inc (OTC: HCANF) lead the state in jobs, according to Portland Business Journal 2021. Jeff Yapp, CEO of Golden Leaf, called Oregon a game-changing state for cannabis. It has been and continues to be a leader in product innovation, and the quality of our growing regions makes it a key growth market in the country, Japp said. Japp paid tribute to the state’s pro-cannabis Congressional team for fighting for cannabis reform at the federal level.

Innovation and healthy consumption

Kevin Hogan, president and co-founder of the craft brand Oregrown, sees the state’s permanent operators as a model for the industry. Hogan said operators in mature markets like Oregon have a proven track record and have the experience and innovation to compete in any market. In 2019, Oregon State University opened the Global Hemp Innovation Center to advance cannabis research. Hogan said the innovative nature of the state stems from the hyper-competitive market. We are at the forefront of product innovation and quality, which gives us a competitive advantage over limited-license operators as we enter new states and legalize at the federal level. Judson Hill, vice president of Bespoke Financial, a licensed cannabis lender, believes the state’s maturity has led to the emergence of strong operators and market leaders. These companies have a proven track record and have therefore proven to be sound investments, Hill said. Hill added that investors should choose established companies because they have the luxury of time and know profitable operators who want to expand, rather than a start-up.

Competitive market with surpluses

Despite innovation and healthy consumption among the population, competition and oversupply remain a problem, according to some operators. The state has long suffered from an oversupply of cannabis. Others stressed the seriousness of the situation. Jess Horton, CEO of Portland-based producer brand LOWD, said most of the news was sensational. He pointed out that the figures are based on wet weight, which makes the surplus clearer. According to him, the difference in weight can be between 5 and 10 percent when comparing dry and wet cannabis. Horton, co-founder of the Minority Cannabis Entrepreneurs Association, said the reports sometimes limit his company’s ability to secure deals and funding. Hill added that the combination of a large number of licensed operators and a small population also limits the market. According to the 2017 Census, Oregon has the 27th largest population with 4.2 million people. Damon Bates, senior strategic business advisor at cannabis consulting firm GPS, compared the state’s market to flash paper that burns hot and quickly disappears. However, the pandemic has led to an increase and stabilization of the market. Despite this increase, he believes investment opportunities this year lie in discounted equipment purchases and drying, extracting, harvesting and pruning. Or, in other words, look elsewhere, Bates said.

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