New Oregon cannabis licensing freeze could last ‘decades’

Oregon issued an indefinite pause on new cannabis licenses after permanently tying new issuances to population growth, and officials say it could take a long time before conditions for more are met.

Since June 2018, the state issued a series of moratoriums and administrative halts on new licenses as it wrestled with how to control market expansion. The state currently has 2,781 active licenses for the farming, processing, and sale of cannabis, according to data from the Oregon Liquor & Cannabis Commission.

“It was really quite altruistic to have an unlimited licensing program in the early days in Oregon,” Joy Hudson, co-founder and CEO of Oregon-based Nimble Distribution, recently told Green Market Report. “The intent was to encourage everyone to apply and give opportunity to anyone that was interested.”

But things are different now, compounded by concerns such as lulled federal legalization and the inability to export surplus product.

“In a market that’s open, where it’s way too saturated, you just end up having some new money come in that cycles out, old money that is depleted and beaten down. And the people who win that game are the ones with the most money to lose,” Hudson said.

The new law, which follows extensive lobbying efforts from the cannabis industry, says that Oregon cannot issue new production or retail licenses until there are 7,500 smoking-age residents for every license. For processing and wholesale licenses, the ratio will need to be 12,500-to-1.

As of February, CannaLawBlog estimated that the cap on retail licenses under the new ratio would be 324; the state at that time had 863 active retail licenses.

Mark Pettinger, a spokesperson for the Oregon Liquor and Cannabis Commission, told local Oregon public radio station KLCC that it could take “decades” for the population criteria to justify additional licenses. He also noted the possibility of a reduction in the number of businesses through the surrender of licenses to the state, which will not be reissued.

“There are just far too many companies that are vying for a very limited market,” Mike Getlin, board chair of the Cannabis Industry Alliance of Oregon and an employee of the statewide chain Nectar, told the outlet.

Getlin said that the new rules won’t immediately fix the state’s current overcrowding issues, but will prevent the situation from worsening. “It allows us to do some long-term planning in a way that frankly we’ve never been able to do in Oregon in the past,” he said, “because we never knew if we were going to suffer another 50% decrease in revenue.”