Oregon Investing Profile: Current state of the marijuana and hemp markets

There’s no question that Oregon has become a hotspot for cannabis investment. The recreationally and medically legal cannabis state is on-track to pull in a projected $1.04 billion by 2025, based on estimates from Statista. It’s no question that investors see green.

In fact, the Brightfield group rated it number two on a list of the best places for cannabis investment in the United States. In this study, states were rated from 1-10 - the lowest number being the least attractive investment at the time. Colorado was voted number one with a score of 7.0. Oregon finds itself in a strong second place with a score of 6.71. Particularly, Oregon was ranked highly because of the supreme quality flower that’s budding in cultivation facilities statewide. Additionally, sales revenue was projected to top $800 million by 2019; it’s no wonder why Oregon's cannabis market is in such high demand.

Changes to Oregon's Cannabis Laws Stifle Recreational Investors

Industry investors started focusing their attention on the “Beaver State” back in October of 2015 when an emergency bill was signed by state Governor Kate Brown to allow dispensary cannabis sales for recreational consumers. That “early period” acted as somewhat of a springboard for the industry, which experienced further success when (in March of the following year) Governor Brown signed additional legislation that would permit medical and recreational cannabis dispensary sales.

Despite the amendments made to Oregon's cannabis testing standards, the state’s marijuana dispensaries managed to harvest revenue to the tune of $393 million in 2016. It was smooth sailing for industry investors until changes to Oregon's cannabis laws meant that recreational cannabis dispensary producers and suppliers became obligated to obtain a “recreational license” in January of 2017.

This licensing has changed the groundwork for producers, processors, and retailers, what with 747 applications still waiting to be reviewed as of September 24, 2018. Numerous companies have already obtained their licenses, which means savvy investors are targeting those businesses as the green light investments. Stem Holdings and their strategic partners have been able to reach both into the cannabis sectors and into the hemp sector. Adam Berk, CEO of Stem Holdings, understands that the value for investors lies in both realms, and those who are able to capitalize early will continue to see long-term growth.

Beyond the long wait for cannabis licenses, wise cannabis investors are spotting alternative money-making opportunities, particularly in the hemp market.

Recreational Cannabis Applicants Face 14-Month Wait

Cannabis industry regulators are overwhelmed by the surge of interest in Oregon's legal cannabis market. Throughout the entire month of January last year, 2,030 recreational cannabis applications had been submitted and a mere 831 licenses approved. The following month saw 917 recreational cannabis companies operating in Oregon with the necessary licensing.

Investors Turn to Hemp-Derived Products to Cash in on the CBD Boom

More cannabis is being cultivated in the State of Oregon than the market can handle. Pending recreational cannabis applications are piling up, which is encouraging cultivators to dabble in hemp farming. Rich in a non-psychoactive cannabinoid called cannabidiol (better known as “CBD”,) the hemp plant is unlike the cannabis plant in the sense that it contains little to no traces of a psychoactive cannabinoid called tetrahydrocannabinol, or “THC”.

Currently, a 2018 Farm Bill to legalize hemp cultivation at the federal level is being reviewed by Congress. By cultivating hemp, growers can extract potent CBD-rich oils and transform them into a broad spectrum of therapeutic products, such as topicals, dissolvable powders, edibles, drinkables and capsules, to name a few.

A business strategy that contains both cannabis AND hemp boasts the following benefits for industry investors:

● Growers can diversify operations and still cultivate cannabis - Hemp is not limited to the 40,000 square-foot growing restriction that is tied to marijuana farmers in possession of Tier 2 licenses in Oregon. Some growers are yielding crops over three acres of farm space (or more) with most farmers planting 2,000 plants per acre.

● Hemp-grown flower is selling for an attractive price - Growers can yield approximately one pound of flower per hemp plant. Since the flower derived from hemp plants carries a price tag of around $50-$60 per pound (or $5-$6 for every percent of CBD), investors can reap the financial rewards of hemp cultivation.

● Hemp production costs are lower than cannabis production costs - Popular on a national level, hemp plants cost significantly less to produce than cannabis. On average, growers may yield anywhere from 6,000-8,000 hemp plants per three acres. Based on statistics gathered by the Marijuana Business Facebook 2018, cannabis production costs $305 per pound, whereas the costs of hemp cultivation rest at around $5 per pound.

Oregon's Cannabis Tax Revenue Hits Record High

Between July 2016 and June 2017, an impressive $70.2 million was accrued in state cannabis taxes. By the close of the fiscal year on June 30, 2017, collections swelled to $82.2 million. Previously, analysts predicted that Oregon's cannabis market would accumulate $162.2 million in tax revenue for the 2017-19 biennium. The revenue has already soared to $157 million by May of 2017, thus exceeding analyst expectations.

With continued investment in Oregon's cannabis industry, the economy can thrive. When you consider the fact that the legal weed markets in Colorado and Washington launched two years ahead of Oregon's, the future looks promising. Both states have pulled in millions of dollars in cannabis tax revenue since their recreational market activity began.

If industry investors set their sights on Oregon's hemp market, tax revenue can be funnelled into schools (40%) the Mental Health Alcoholism and Drug Services account (20%) as well as the State Police (15%) and law enforcement in statewide cities/counties (10%). Last but not least, the remaining five percent will be used to fund the Oregon Health Authority's efforts for alcohol and drug abuse prevention.

To learn more about Stem Holdings’ Oregon business operations, go here.

References

(1) https://www.statista.com/statistics/798091/oregon-cannabis-sales-value-forecast/
(2) https://www.brightfieldgroup.com/post/ranking-of-best-places-for-cannabis-investment-2-oregon
(3) https://cannabusinessplans.com/oregon-cannabis-market/
(4) https://cannabusinessplans.com/oregon-cannabis-market
(5) https://www.google.co.id/amp/www.bendbulletin.com/business/6549683-151/newcomers-to-marijuana-industry-face-year-long-wait-for%3famp=1
(6) https://mjbizdaily.com/factbook/
(7) https://www.google.com/amp/s/www.bizjournals.com/portland/news/2018/08/28/oregon-cannabis-tax-revenue-hits-record-high.amp.html?espv=1
(8) https://www.google.com/amp/s/www.bizjournals.com/portland/news/2018/08/28/oregon-cannabis-tax-revenue-hits-record-high.amp.html?espv=1
(9) https://oregoneconomicanalysis.com/2017/06/07/oregon-recreational-marijuana-forecast/
(10) https://www.google.com/amp/s/www.bizjournals.com/portland/news/2018/08/28/oregon-cannabis-tax-revenue-hits-record-high.amp.html?espv=1

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