Oregon Economist Beau Whitney Releases Cannabis Jobs Report

12,500 Cannabis Jobs in Oregon Generating $315 Million in Wages

OREGON: Cannabis industry economist Beau Whitney of Whitney Economics today released the results of “Cannabis Employment Estimates,” a report compiled at the request of the Oregon State House of Representatives Committee on Economic Development and Trade on the number of jobs associated with the Oregon cannabis industry and a projection of the economic impact the industry is having on the state.

“On a national basis, the $50 billion cannabis market is essentially the equivalent to the U.S. wine market ($55 billion),” Whitney said. “And there are more than 1,000 businesses in Oregon that touch cannabis. I suspect that this is a very conservative estimate based on limited data from the Department of Employment and the OLCC.

In summary, Whitney’s report found:

  • As of February 21, 2017, there are 917 OLCC licensed cannabis businesses and an additional 1,225 applications for a cannabis business. 2,142 in total. The Oregon Employment Department lists 776 cannabis businesses inOregon
  • There are approximately 12,500 jobs associated with the cannabis industry in Oregon. These are jobs that directly touch cannabis and are not jobs associated with auxiliary businesses such as security, regulatory, accounting, consulting, real estate, etc. This is a very conservative estimate and these numbers are expected to increase once the more detailed analysis is completed
  • At an average wage of $12.13/hour, the total annual wages associated with these jobs are $315 million. With a multiplier of 4, this implies that there is $1.2 billion in economic activity related to these wages

The report does not extend into the supply chain for “shovels or picks,” meaning lights, greenhouses, insurance, real estate, accounting, security, etc.

“At present, I feel there are roughly 300,000 – 400,000 cannabis-touching jobs in the USA,” Whitney said. “That number will grow to more than a million as more states come online as legal markets. Cannabis is a job-creation machine.”

Whitney said a more comprehensive jobs report will be researched and published later in 2017, but this initial update should demonstrate the cannabis industry is a powerful force in the Oregon economic engine.

Herbonomics: Looking at Portland, OR Cannabis Licensing Trends

By Beau Whitney

OREGON: In advance of my talk this week at the CCC Show in Portland, I want to share an analysis I put together on the City of Portland, Office of Neighborhood Involvement Marijuana Licensing.

I initially reported on this in a press release of a white paper published on 12/12/16. Although there has been some movement on the retail side, not much movement has been made in the other categories.

I tracked the number of additional licenses issued for non-medical licenses since 10/10/16. I also listed the percentage of licenses issued versus applications submitted.

Over the past four months, there have been 3 new producer licenses issued, 4 processing and 5 wholesaler licenses. The change in the ordinance helped retailers with an increase of 47 new licenses since the ordinance change.

Percentage of Total Licenses Issued versus Applications Issued.

  • Retailers:             34.4%
  • Producer:            6.4%
  • Processors:         4.9%
  • Wholesalers       14.0%

Given that only 12 new non retail licenses have been issued in four months, this is an indicator that some additional reform is needed. Although it is in Portland, this can impact the entire Oregon industry.

The data speaks volumes. How is it that only 16 non retail marijuana licenses have been issued in four months. This is creating extreme economic hardship for many businesses.

portland licensing report

The Clinch On Cannabis: Immature Industries Eventually Grow-Up

By Beau Whitney, Whitney Economics

The cannabis industry is still taking shape. Legislative and regulatory policies can have a profound impact on the direction the movement takes. There are many academic sources available, but what differentiates this report from others is that this author is able to combine economic rigor with direct industry experience.  The author has a background in economics, experience in high tech business operations as well as a background in the cannabis industry as a chief operating officer, a governmental affairs officer and a compliance officer. These practical experiences in the cannabis industry has further enabled the author to take the next step and assess the impact policies have on the industry and to make policy recommendations to address them.

Front Runner, an agglomerated cannabis data website, commissioned Whitney Economics to conduct an analysis of the Washington cannabis market. The initial genesis of the project was to ascertain whether or not the 222 additional retail outlets proposed by the Washington Liquor and Cannabis Board were an appropriate number based on the BOTEC analysis.

Once the research commenced, the project extended beyond the initial scope and examined such topics as; the total demand forecast for the market, the total supply available to support the market, the elasticity of demand, taxation and how to maximize the conversion from the black market to the retail market. The data used in this report cites multiple sources, includes original analysis and forecasts, as well as data taken directly from the Washington Liquor Control Board (WLCB) and BioTrackTHC. The empirical data was analyzed and the findings contained herein are an interpretation the impact of policy decisions have on the Washington cannabis market.

The data assesses the empirical results from January 2015 through March 2016 and extrapolates into the 2016 fiscal year and beyond.The methodology was to examine specific aspects of the market to ascertain if the Washington market was able to be sustained at the proposed retail levels, whether the current policies support the development of the market, what policies need to be changed and what indicators to examine moving forward.

The conclusions derived from the data were meant to answer questions about the market that are fundamental to the foundation of economics. For if the data cannot support the most basic fundamentals of economic theory, then the data or policies must be viewed with skepticism.

The findings of this report are simple. The consumer is extremely price sensitive. The black market plays a large role in the marketplace and without a reduction in tax, the market will not realize its true potential. The level of demand is able to support the retail expansion, but without converting the demand over from the black market, the retail system will face challenges in growth. The allocation of the retail outlets can support the demand, but the allocation by county needs adjustment. The supply of product in the market is appropriate for now, however the amount of supply capacity is well in excess of what the market will bear. This, in turn will lead to further commoditization of prices, compression of retail margins and maintain a vibrant black market.

The insights contained in this report are much more applicable to an investor, a policy maker or a regulator than many previous works and that is what differentiates this report from others currently available.The report also provides a list of indicators to track on a regular basis that will allow the investor or regulator to ascertain the health of the industry and the success of the public policies as they currently exist.

DOWNLOAD full white paper

Oregon Cannabis Jobs Report

OREGON: The goal of the Oregon Cannabis Jobs Report is simple: To establish a foundation for future research on how many jobs are being created within the cannabis industry to date.

As new Cannabis economies come online across the United States and around the world, it is imperative that we track the growth of this industry as it creates jobs and economic opportunities for individuals, communities, and businesses alike.

As we march into the 2016 election, everyone is talking about jobs. We believe it is important that the cannabis industry start to inform the general public and those running for elected office on exactly how many jobs are being created within the Oregon retail cannabis sector today. This data is the first of its kind in the nation. Our researchers took painstaking care to ensure that our methodology will not only withstand scientific rigor, but will also establish a legitimate baseline for further research into other sectors of the cannabis market.

Download the Oregon Jobs Report here

LCB Says Licensed Marijuana Canopy Enough To Meet WA Recreational And Medical Marijuana Market Demand

WASHINGTON: The amount of marijuana allowed to be grown by state-licensed producers in Washington is enough to satisfy both the medical and recreational marijuana markets, a University of Washington study finds.

The state Liquor and Cannabis Board (LCB) tasked the UW-based Cannabis Law and Policy Project (CLPP) with calculating the “grow canopy,” or square footage, required to supply the state’s medical marijuana market as it becomes folded into the state’s retail system, as required by the 2015 Cannabis Patient Protection Act. The group’s report estimates that between 1.7 and 2 million square feet — or the equivalent of 30 to 34 football fields — of plants is needed to satisfy the medical marijuana market, and concludes that the 12.3 million square feet of canopy currently approved by the LCB is enough to supply the state’s total marijuana market.

Beau Whitney, a leading economist in the cannabis space, has looked into the proposed expansion of the retail stores thinks that is misleading, “Sure on the surface, there is enough supply to support the expansion, but the system is unsustainable at the current tax level of 37% + 9% local tax. With such high levels of taxation, we are looking at sustaining over $320M in black market demand-based activities. The only way to ensure a viable retail system is by lowering prices, through reduced taxes, and driving more people into the regulated systems.”

Mr. Whitney recently published a white paper on the Oregon retail market, and will publish a Washington retail white paper in early June. He is also the VP of Regulatory (Compliance) and Governmental Affairs for Golden Leaf Holdings. 

Medical marijuana dispensaries must either obtain a state license or close by July 1, 2016. Of the 343 retail stores licensed by the LCB, approximately 81 percent have sought endorsements to their license to sell marijuana to authorized medical patients.

“It was important to design this study the right way and engage in careful empirical research reaching out directly to medical dispensaries and growers across the state,” said Sean O’Connor, principal investigator for the report, CLPP faculty director and Boeing International Professor at UW Law.

CLPP Executive Director Sam Mendez described the survey process: “There’s no master list of these dispensaries, so we used a variety of resources to identify as many as possible. Once the survey was complete, we applied the findings to other published research regarding averages of marijuana output per square foot, outdoor and indoor growing market share and amounts used for edibles and concentrates to reach our estimates.”

The report found that:

  • There were an estimated 273 medical marijuana dispensaries in Washington in January 2016
  • Dispensaries sell an average of 9.55 pounds of marijuana flower monthly
  • The average price of marijuana per gram sold by these dispensaries is less than $10
  • Marijuana flower comprises 60 percent of sales at dispensaries, followed by concentrates (22 percent) and edibles (18 percent)
  • The potential market value based on 10 million square feet of canopy is more than $8 billion

Study Methodology

Determining the size of Washington’s medical marijuana market was no easy task for the UW team, since dispensaries and collective gardens have gone mostly unregulated until recently. The UW researchers, which included five law students, started by compiling a list of possible Washington dispensaries using the databases of three websites — leafly.com, weedmaps.com and headshopfinder.com — among other sources. They came up with 467 possible contacts and called them for phone surveys in January and February 2016.

Interviewees were asked whether the dispensary grows its own marijuana, how much marijuana it sells, the average price of various products and what proportion of sales are flower, edibles, tinctures and concentrates, among other questions. Some refused to participate. Others did not appear to be affiliated with a dispensary or seemed to be out of business. The researchers also posted an online survey, sending it to all applicants for recreational marijuana retail licenses and promoting it widely through social media. All told, they found 273 likely dispensaries.

A report released in December 2015 by BOTEC Analysis Corp. estimated that the state’s marijuana market is divided roughly into thirds for medical, recreational and illicit use. Since February 2014, as an interim policy, the LCB has restricted marijuana producers to a single license. That decision will later be put into rule.

The Cannabis Law and Policy Project was launched in 2014 to provide thoughtful leadership on the responsible development of recreational and medical marijuana industries in Washington State and across the country. The group, which is based in the UW School of Law, but draws on experts in various other departments, focuses on advising the state on regulatory issues related to marijuana.

 

The report’s lead authors are O’Connor and Mendez, with contributing law student authors Ada Danelo, Harry Fukano, Kyle Johnson, Chad Law and Daniel Shortt. Dr. Nephi Stella, a professor in the UW School of Medicine, was a consultant on the report.

Investors Should Be Encouraged by 3 New Marijuana Statistics From The “Greenest” State

OREGON: We can assume there were quite a few cheers when California passed Proposition 215 in 1996, becoming the first state to legalize marijuana’s medical use, but 2016 could go down as the most remarkable year for the marijuana industry to date.

Since this first approval 20 years ago, the marijuana industry has witnessed 24 states in total legalize medical marijuana, of which Pennsylvania became the latest just this past week. Additionally, four states – Colorado, Washington, Oregon, and Alaska – have legalized the use of marijuana for recreational purposes. The 2016 elections could result in a sizable boost to both figures as favorability to marijuana among the American public continues to rise. Gallup’s national poll from Oct. 2015 showed that 58% of its respondents favor the idea of nationwide legalization, whereas a CBS News poll conducted a year ago this month demonstrated that roughly five in six people want to see medical marijuana legalized.

But just as exciting for the industry is the opportunity that may be at hand for investors. Marijuana is among the fastest-growing industries in the U.S., with ArcView Market Research expecting the industry to grow at a brisk compounded annual rate of 30% between 2016 and 2020, ultimately reaching an approximate market value of $22 billion by 2020. Investment opportunities where industries can sustain a 30% growth rate for a half-decade or longer simply don’t come around very often, making marijuana a seemingly attractive investment opportunity.