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The Oregon Liquor & Cannabis Commission (OLCC) announced last week that it is formally implementing a moratorium on issuing new cannabis business licenses “to applicants who submitted an application after January 1, 2022.” The moratorium was enabled by legislation passed last year, which we covered at the time; it applies to all license types and will remain in effect for two years.
The OLCC statement says that the state’s market has “experienced exponential growth, which has led to a crowded marketplace.” By some measures, however, growth has been slowing in Oregon’s legal cannabis market as of late, with 2021’s sales of $1.18 billion up just 6% over 2020’s tally of $1.11 billion, the smallest year-on-year increase in legal sales since they began in 2016. On the other hand, production and supply increased at impressive rates in 2021, with the state’s outdoor harvest volume wet weight ballooning by 55% year-on-year and indoor harvest volume jumping by about 30%.
Oversupply and a saturated market have led to wholesale prices falling to extremely low levels in Oregon, with competition in the retail sector also leading to reports of rock-bottom prices and shrinking margins, where they still exist. Whether the new moratorium will work to ameliorate the state’s current cutthroat market conditions remains to be seen.
If history is any guide, it is unlikely that the moratorium will have a prompt and direct impact on the existing market landscape. Oregon officials previously limited the issuance of new producer licenses in 2018, with a formal moratorium on that license type put in place in June 2019 by the passage of legislation. However, since previously submitted applications could still be processed under the terms of the moratorium, as is the case with the new moratorium, the number of producer licenses continued to expand. Information from OLCC shows 1,136 active producer licenses as of the end of June 2019. The most recent information available from the Commission lists 1,395 active producer licenses as of mid-March 2022. As noted above, harvest volumes increased substantially in 2021 – and in 2020 as well – despite the previous moratorium remaining in effect.