Marijuana Business Factbook 2019

185 © 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. Financial & Operational Data: Wholesale Cultivators | Chapter 3 MJBIZDAILY.COM In the short term, declining license counts do not necessarily translate into improved business conditions for cultivators. In some cases, a struggling cultivator may sell fall harvest or existing stock at fire-sale prices ― below the already-depressed market rate ― to recoup as much money as possible before going out of business. Other cultivators must find a way to compete against rock- bottom prices without going under themselves. CHART 3.04: Inventory Of Supply Of THC In Oregon By Month Source: Oregon Liquor Control Commission Recreational Marijuana Supply & Demand Legislative Report © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Inventory Of Supply Of THC In Oregon By Month Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 Years Of THC Supply The rapid increase in Oregon’s THC inventory from fall 2016 through early 2019 illustrates the oversupply dynamics of recreational markets. The state reports the information in terms of milligrams of THC based on the assumption that THC is the primary driver of cannabis demand and to accommodate the diverse product mix available in the adult-use market. The sheer volume of growers, coupled with existing cultivators increasing their production to maximize canopy space, has resulted in legal product surplus and, thus, declining prices. However, recreational sales have continued to increase in product-saturated states. While Oregon’s legal supply currently outstrips legal demand, market forces as well as actions taken by the state may result in market equilibrium in the coming years. Regulators have responded to oversupply by increasing compliance checks and creating new requirements that harvest be monitored to prevent diversion of legal product to the illegal market. Law enforcement also has increased crackdowns on illegal grows. Policymakers have considered other options to constrain demand, including the current moratorium on processing new licenses, issuing license caps, increasing fees and adjusting canopy-size allotments or ratios.