Rampant overproduction in Oregon’s market for legal, recreational marijuana has produced a 50% drop in prices, according to recent estimates by state economists.
“The real economic impact from recreational marijuana will come not from the growing and retailing, which are low-wage and low value-added market segments,” according to a recent revenue forecast by the Oregon Office of Economist Analysis.
“It will come from higher value-added products like oils, creams and edibles, in addition to niche, specialty strains.”
The new state analysis finds the price collapse sparked a big uptick in marijuana purchases and a corresponding increase in associated tax revenue, The Oregonian reported.
Recreational marijuana sales in Oregon will be nearly $543 million this year, forecasts show, up 29% from 2017 and well above economists’ expectations.
When Oregon legalized marijuana four years ago, the business potential looked to be enormous for the new legal market.
The state created incentives for producers to leave the black market, leading to overproduction and the ensuing price decrease.
A state study found the retail cost of a gram of marijuana plunged from $14 in 2015 to $7 last year.
While Oregon has no general sales tax, it does levy a 17% sales tax on marijuana.
State marijuana taxes generated nearly $70 million in revenue last year and are forecast to generate nearly $90 million in 2018.
– Associated Press