Oregon Dispensaries See Huge Revenue Spike From Rec Sales, But Picture Not All Rosy

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By John Schroyer

Recreational cannabis sales began in Oregon last October, and things have been looking up for many of the state’s dispensaries since then – to the tune of tens of millions of dollars in additional revenues.

So far, more than 300 licensed medical marijuana dispensaries have received special permission from the state to sell adult-use cannabis, a temporary solution until Oregon issues licenses specifically for its recreational marijuana program. The first licensed rec stores are expected to open this fall.

The decision to start early sales in Oregon has been a boon for some dispensaries and a lifeline to others that were on the verge of collapse because of saturation in the medical marijuana market.

“We’re doing tenfold what we were selling in medical,” said Chris Matthews, owner of Stash Cannabis Company in Beaverton, to the west of Portland.”The average medical day was probably between $300-$400 a day, and the average rec day is $3,000-$4,000. So it’s definitely a difference.”

Shane McKee, who owns three dispensaries across the state, learned recently that roughly 90% of his sales since October are tied to recreational customers.

The figure “blew my mind,” McKee said, adding that one of his dispensaries has even seen a sales spike of 800-900%. “It’s just gone through the roof.”

The Oregon Retailers of Cannabis Association previously estimated that rec revenues hit $11 million in the first six days of sales last October.

A spokesman for the organization couldn’t be reached Tuesday for an updated estimate. But if those early sales have held up, then the rec industry has already generated more than $200 million.

And dispensaries aren’t even allowed to sell edibles to rec customers at this time, so the numbers are even more impressive.

Rec sales have proven to be a lifesaver for many dispensaries in the Portland area especially, in part because the metro area is saturated with MMJ businesses that were all previously competing for the same medical patients. Now, they can sell to anyone with a driver’s license, which has opened up the customer base by an immense margin.

“I don’t think we’d be able to survive if we only stayed with medical,” said Nyno Thol, the manager of Brothers Cannabis Club. “There’s just not enough for us to keep our business up and running.”

Still, Thol said rec hasn’t been exactly the boon he had hoped for, though it has definitely helped.

“We had to hire different departments and more staff. We went from maybe five employees to double or triple that. So everything else went up, with payroll and inventory and supply,” Thol said. “It’s kind of balanced out.”

There was also another bump in the road in January, when a 25% sales tax kicked in for the first time. That turned off a lot of customers, several dispensary owners said.

“There’s absolutely been backlash from that. Some people may politely complain, and others have literally just walked out in frustration,” McKee said.

Matt Walstatter, who owns Pure Green Dispensary in Portland, said last month’s sales actually dipped by 25% from December because of the taxes.

“We had as many as 10 people a day hear about the tax and just walk out,” Walstatter said.

To combat that and hold onto customers, McKee and Walstatter both lowered their prices to offset the tax.

The tax is still so new that it’s hard to tell whether or not such a move will prove sustainable, but there’s a bit of light at the end of the tunnel: Once the state’s new rec rules are fully implemented, the 25% tax will be downgraded to a 17% sales tax.

The other thing dispensaries have to look forward to is that once the rec system is operational, any licensed recreational vendor will be allowed to start selling edibles and concentrates to the adult use crowd, and not only medical patients.

“When the edibles and oils come into effect, it’s going to be just like opening day again,” Matthews said. ”

Thol agreed, estimating that about 70% of the rec customers who visit his shop ask if they can purchase edibles yet.

There’s a bill in the Oregon Legislature currently being considered by lawmakers that would let dispensaries have a sort of slow rollout with edibles and concentrates to the rec market. But it would only let the dispensaries sell single edible doses with low potency, or single CO2 cartridges of concentrates.

If it passes, dispensaries could begin selling edibles and concentrates this spring.

The Oregon Liquor Control Commission is also already accepting applications for full rec retail licenses, which any current dispensary would also need in order to continue selling adult use cannabis once the full regulatory system kicks in later this year. As of Feb. 12, the OLCC has received a total of 514 recreational applications, including 117 applications for retail licenses.

Correction: The original version of this article misquoted Chris Matthews, owner of Stash Cannabis Company, as saying the average medical day was between 300-400 customers and that’s increased to 3,000-4,000 customers per day. Matthews said the average medical day was between $300-400, and that has since increased to $3,000-$4,000 in sales per day.

John Schroyer can be reached at johns@mjbizdaily.com