Marijuana Business Factbook 2019

184 Marijuana Business Factbook 2019 Chapter 3 | Financial & Operational Data: Wholesale Cultivators © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. WHY ARE MANY WHOLESALE CULTIVATORS STRUGGLING? CHART 3.03: Number Of Licensed Recreational Marijuana Cultivators In Colorado, Oregon and Washington State Note: Washington state figures include dual-licensed producers and processors. Source: Colorado Department of Revenue, Washington State Liquor and Cannabis Board, Oregon Department of Revenue © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Number of Licensed Recrea�onal Marijuana Cul�vators In Colorado, Oregon & Washington State Colorado Oregon Washington State Sep-17 Sep-18 Sep-19 Sep-17 Sep-18 Sep-19 Sep-17 Sep-18 Sep-19 0 200 400 600 800 1,000 1,200 Number Of Cul�va�on Licenses 700 740 687 1,107 1,146 803 1,035 1,196 993 Market saturation is the primary economic driver behind the financial struggle of cultivators in recreational markets. The chart above shows the massive number of cultivator licenses issued in three states that have borne the brunt of cannabis overproduction and subsequent price declines: Colorado, Oregon and Washington. In these states, wholesale prices dropped 27%, 65% and 53%, respectively, between the 2017 and 2018 fall harvests. The number of cultivation licenses has begun to contract in both Colorado and Washington state, declining from 2018 to 2019 by 7% in Colorado and 17% in Washington state. The number of licenses in Oregon ― whose recreational market came online two years after Colorado and Washington state ― continued to increase during this period, but growth has slowed considerably in response to the moratorium on processing new applications that went into effect in June 2018. At the time, regulators estimated it would take more than a year to process the 2,000 applications in the queue when the moratorium was enacted. In June 2019, Oregon Gov. Kate Brown signed into law a bill that would allow regulators to deny new cultivation licenses and another allowing the state to export cannabis across state lines as it continues to grapple with its marijuana glut. The export bill will require some level of federal buy- in to be enacted. Oregon has a long history of illegal marijuana production. To entice illicit cultivators to join the legal market, state regulators kept barriers to entry low, issuing an unlimited number of cultivation licenses and keeping application and licensing fees modest. Those low barriers to entry have resulted in more enthusiasm for adult-use cultivation licenses than expected. As of September 2019, Oregon regulators had licensed 1,146 adult-use cultivators ― more than three times the number the state had initially estimated.