Week in Review: Oregon’s cannabis oversupply, marijuana job growth & hemp lawsuit

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Oregon’s top prosecutor says the state’s marijuana industry has an oversupply problem, cannabis job postings are soaring, and a lawsuit targets a Vermont hemp producer.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Oregon’s ‘bloody’ market

Oregon U.S. Attorney Billy Williams called a meeting of key officials to talk about concerns the state’s overproduction of cannabis is leading to diversion to the black market.

The “unprecedented summit” included representatives from 14 other U.S. attorneys offices, the FBI, U.S. Postal Inspection Service, U.S. Forest Service and U.S. Customs and Border Protection.

But marijuana oversupply isn’t the most pressing issue for Oregon’s cannabis business owners.

They’re more worried about paying their bills, said one industry analyst.

“It’s a super-tough market right now, and it’s really bloody,” said Beau Whitney, a Portland-based economist at New Frontier Data.

“People are just worried about staying in business.”

The state has more than 900 operating growers and hundreds more pending the approval of the Oregon Liquor Control Commission.

Meanwhile, growers in southern Oregon just produced a “huge” outdoor harvest, flooding the market with outdoor cannabis and causing wholesale prices to dive, Whitney said.

Oregon’s marijuana businesses are struggling right now because not only are they competing in the regulated market during the commoditization of cannabis, they’re also vying with illicit-market growers who don’t have the expenses of compliance, including paying taxes.

Some of the proposed solutions to level Oregon’s cannabis industry, including allowing the state to limit the number of licenses, don’t seem feasible to Whitney.

“I don’t think the state wants to be put in the position to pick winners and losers and cap licenses,” he said. “Especially after people have invested hundreds of millions of dollars.”

Reducing canopy size is also on the table, but Whitney believes all that would do is reduce growers’ revenue potential during a period of commoditization of prices.

“That’s not very palatable, either,” he added. “That’s just going to wipe people out who are on the edge right now.”

Marijuana employment booming

Marijuana job postings are exploding, according to a recently released report by online employment marketplace ZipRecruiter.

The total number of job postings in the U.S. cannabis industry increased by 445% in 2017, stunningly higher than the sector’s 18% increase in 2016, according to the report.

The spike was especially dramatic in the fourth quarter of 2017, with cannabis industry job posts increasing 693% year-over-year and 79% quarter-over-quarter.

The most in-demand jobs are sales, budtenders and retail associates, delivery drivers, marketers and processing personnel such as trimmers, said ZipRecruiter’s chief economist, Cathy Barrera.

ZipRecruiter did not have data on how many of those positions were being filled or at what rate.

So what’s the upshot when there’s massive job growth like the cannabis industry is experiencing?

Such growth can lead to wage increases, Barrera said, though it depends on what’s happening on the job-seeking side of the market and in related industries in which those job seekers might work.

Because the cannabis industry is relatively new, particularly in some geographic areas, it could be that there are more job seekers trying to enter the field than there’s been job creation.

“In that case, wage growth would be dampened. To get an idea of the extent to which that may be true,” Barrera said, “we can look at potentially related industries that may be competing for the same job seekers.”

She pointed out that retail jobs in many sectors are on the decline.

“Therefore, there may be more slack in the labor market for these types of job openings, reducing the upward pressure on wages,” Barrera added.

“Other jobs in this industry require skills that are currently in high demand, such as pharmacy technicians and software engineers.

“The wages for these jobs in areas where the industry is growing could increase as a result.”

According to ZipRecruiter, these metropolitan marijuana markets had the most cannabis job openings in 2017:

  • 1. Los Angeles
  • 2. San Francisco
  • 3. Denver
  • 4. Seattle
  • 5. Miami
  • 6. Portland, Oregon
  • 7. Las Vegas
  • 8. San Jose, California
  • 9. Santa Barbara, California
  • 10. Tallahassee, Florida

Hemp controversy

Was it rain? Or robbery?

News this week that a Vermont hemp processor is being sued by a landowner who planted 6 acres of hemp for him underscored that although hemp may be legal, entrepreneurs in the market should tread as carefully as their marijuana-growing colleagues when entering business agreements.

The Vermont Hemp Co. is being sued by a Burlington landowner who says she grew a variety of hemp for seed production, only to see the company take her plants and abscond with the profits.

The company’s CEO insists the crop was damaged by heavy rains and that the landowner signed a contract guaranteeing no payment in case of crop failure.

Attorneys say the Vermont case highlights hemp’s legal uncertainty.

Though the plant is legal to grow in many states, farmers have no access to government-backed crop insurance.

In other words, hemp growers have more legal protections than marijuana cultivators but not as much legal cover as farmers who grow wheat or corn, where crop insurance is the rule and farmers have protection from drought or flood.

“Even if it’s hemp, I’m recommending that every single transaction should be well contracted and well documented,” said Tim Fair, a Burlington attorney who advises cannabis clients but isn’t involved in the landowner’s lawsuit.

Bart Schaneman can be reached at barts@mjbizdaily.com

Omar Sacirbey can be reached at omars@mjbizdaily.com

Kristen Nichols can be reached at kristenn@mjbizdaily.com