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The green rush: An industry on the brink



April 20 is the de facto national holiday for weed connoisseurs, but in the year and a half since recreational marijuana was legalized, it has become just another day of the “green rush.”

The Oregon Liquor Control Commission oversees 426 active marijuana retailers statewide, as of April 19. With the success of Oregon’s new multi-million-dollar revenue stream, regulations are undergoing constant renovation. Changes to testing parameters, according to many, could be working against the “clean cannabis” reputation that Oregon was initially known for. Regardless, business is booming.

According to the Department of Revenue, Oregonians spent $241 million on recreational marijuana in 2016. From that spending, Oregon netted $60.2 million in tax revenue — $46.4 million more than the state projected. If a pre-rolled joint costs $10, Oregon residents bought the equivalent of 24.1 million joints last year.

Marijuana-related industry in Lane County is on the rise, and the number of local businesses has grown steadily. There are 60 different businesses in Lane County, with many more set to open, pending license payments. The OLCC has received 613 recreational retailer license applications statewide since January 2016.

Angelica Kontra, an employee at Cannabliss, identified a “green rush” at the heart of Oregon’s budding marijuana industry. “It’s a brand new industry, and people are making millions of dollars,” she said.

Despite Oregon’s success, the state’s current revenue projections pale in comparison to those of Washington, where sales since legalization currently total over $1 billion and the total tax revenue tops $404 million. Colorado, the other state to legalize recreational use in 2012, has made $1.3 billion in sales, according to the Colorado Department of Revenue.

(Dana Alston/Emerald)

University of Oregon economics professor Keaton Miller has conducted research on recreational marijuana industries in the U.S. He says Washington’s industry, active for almost five years, is the most useful to study due to the length of time it has been functional.

“In Washington, [pot] has been legal for much longer,” Miller said. “It’s where we’d want to study because the data has had more time to mature, relative to Oregon.”

Miller’s analysis shows a marijuana industry that continues to outperform even liberal estimates. In October 2015 alone, Washington generated $17 million from marijuana tax revenue. Economic success has been large and relatively immediate.

It’s a little too early to tell how Oregon’s industry will compare. States such as Washington and Colorado have had a fully functioning marijuana industry for over four years. Measure 91, which decriminalized recreational use in Oregon, passed in 2014 and has been in effect for less than two years. But a look at trends from other states has allowed analysts such as Miller to make predictions about Oregon’s future.

When asked to predict how successful Oregon’s pot industry might be, Miller was optimistic.

“Relative to the state’s [projections], I think Oregon is already overperforming,” he said. “In terms of getting people to use the ‘white market’ instead of the ‘black market’ for pot, I think the state is achieving its goals.”

Initially, the state’s requirements for marijuana testing indicated a high priority placed on public health and safety. All pot-related items intended to be sold for retail were required to be tested for pesticides, moisture content and THC levels, according to the Oregon Health Authority. Both Washington and Colorado require similar testing.

Testing continues to generate debate among industry professionals and authorities. Last year, three Oregon dispensaries, including one in Eugene, sold strains of marijuana that violated OHA pesticide restrictions.

Months later, OHA relaxed requirements, citing product shortages and processor lay-offs resulting from backlogs at testing labs. The new rules reduced the amount of retail marijuana required to be tested by producers from 100 percent of market cannabis to 33 percent. According to some,  OHA is considering reducing  that percentage further.

Rowshan Reordan, a managing partner at Green Leaf Labs, a testing lab based in Portland, says the initial testing rules created by the state, especially those regarding pesticides, helped brand Oregon as a “clean cannabis” state. But she expressed dismay at OHA’s new set of requirements, which she says makes it more difficult to protect the longevity of the marijuana industry.

“I think Oregon had taken the great position of ensuring that there were these pesticide standards,” Reordan said during a phone interview. “And now the state is looking at rolling that back. And it’s disappointing.”

The new rules have been met with derision from some local businesses. For example, mold testing is no longer required, allowing for potentially hazardous sales to unaware customers. Tim Khadafi, a part-time grower and current employee at Casper’s Cannabis Club, called the new requirements “worrisome and potentially dangerous.”

Adam Jacques of Oregon Microgrowers Guild says his marijuana plants are normally four times as large at this stage in the growing season. (Aaron Nelson/Emerald)

“Some growers don’t want to have to pay for anything more than a potency test,” he said. “They feel as though it’s become an unnecessary expense. But as a grower and a consumer and someone who’s passionate about medical [use], I think testing is absolutely necessary.”

According to Reordan, testing for all possible contaminants can cost up to 7 cents per gram. Khadafi claims that some commercial growers use these expenses to value profit over the health of their consumers.

“Big-time growers, by-and-large, are anti-testing,” he said. “I see it as a real health risk for a huge portion of the population that now puchases marijuana from recreational shops. [Pot] is a product that is medically valid and has a ton of value in people’s lives, being poisoned by industrialization. It breaks my heart a little bit.”

Anna Kaplan, co-founder and business and operations manager of Sugartop Buddery, a Eugene-based grower and retail supplier, echoed these concerns. Kaplan cited Oregon’s health-conscientious culture among small marijuana-based businesses as a defining trait of the state’s industry and worried that larger growers may treat the plant as “a cash crop.”

“In Oregon, we want pot to be a homegrown plant and experience,” she said. “Testing for pesticides is an important part of that culture.”

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Dana Alston

Dana Alston