Two cannabis industry groups in Oregon have decided to join forces in a merger that comes amid a downturn in the state’s market for legal marijuana. The two groups, the Oregon Cannabis Association and the Cannabis Industry Alliance of Oregon, announced the merger last week following unanimous votes by the boards of directors of each organization.
The newly merged group is named the Cannabis Industry Alliance of Oregon and represents more than 500 member businesses in the state’s licensed cannabis industry, which generates nearly $1 billion in regulated sales per year.
“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 combined trade 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 medical marijuana in 1998 through a ballot initiative that received more than 54% of the vote. That was followed by the legalization of adult-use cannabis in 2014, the same year the Oregon Cannabis Association was founded to serve as a lobbying and networking group for the state’s cannabis businesses. The Cannabis Industry Alliance was formed in 2022 through a separate merger of three groups representing regulated cannabis industry retailers and cultivators.
“It’s a community that we all really value and we want to see survive and thrive,” Mike Getlin, the board chair of the Cannabis Industry Alliance of Oregon, told local media. “We want something more than a bunch of minimum wage jobs owned by out-of-state and potentially even overseas financial interests. So that’s what this fight is really about for us.”
Oregon Has Too Much Weed
Neubauer noted that since the launch of adult-use cannabis nearly a decade ago, the regulated industry has experienced two boom and bust cycles. Currently, an oversupply of recreational marijuana has depressed prices, resulting in the first contraction of the market since legalization.
“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 Oregon Liquor and Cannabis Commission wrote in a report released in February of this year. “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 oversupply and drop in weed prices at the wholesale and retail levels came at a time of steep inflation throughout the economy as a whole, putting further pressure on operators in the troubled cannabis industry.
“It’s been … really tough because as you look at budgets in a really constrained market –less than 30% of businesses are profitable,” said Marianne Cursetjee, owner of Alabi Cannabis.
The challenging market has led to the failure of many businesses and the consolidation of others. The owners of the remaining firms hope that the merger of the two trade groups will help align the industry toward common goals. In addition to the troubled market, operators face other challenges including high taxes and regulatory fees as well as competition from a persistent unlicensed industry.
“If I look through my phone of all of my close friends and colleagues from 2017, very few are still in business,” said Mike Getlin, the board chair of the Cannabis Industry Alliance of Oregon and a leader at Nectar. “It is more important now than it’s ever been to speak with one unified voice and to work as one unified body with regulators and legislators to try and figure out a way to carve out a better future for our businesses.”
Oregon’s troubled cannabis industry has also had to weather the fallout of a scandal surrounding the cannabis brand La Mota earlier this year. According to data reported to the state, the company had failed to pay some taxes and was facing legal action from vendors. With attention on the company, it was revealed that then-Oregon Secretary of State Shemia Fagan had signed a pricey consulting contract with La Mota. Fagan resigned in May in the midst of the scandal, which Neubauer said has led to a rift in communication between the state legislature and the regulated cannabis industry.
“It’s been really tough since something’s surfaced surrounding one of the companies in Oregon and Shemia Fagan,” said Neubauer. “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.”