BREAKING NEWS Final Almeda Fire victim identified Full Story

Some Oregon Cannabis Stores Consolidating to Weather Weak Market

Marijuana stores have faced increasingly tight margins since overproduction after the drug was legalized in Oregon led to a sharp decline in prices.

Posted: Nov 13, 2018 4:20 PM

ASTORIA, Oregon (AP) — Signs for Mr. Nice Guy, an ode to the 1998 stoner comedy "Half Baked," recently began popping up in Astoria, Oregon.

The Daily Astorian reports that the marijuana retailer has merged with a sister company, Hi Cascade, absorbing its location at the foot of the South Slope. Mr. Nice Guy will open another store next month on Bond Street downtown.

The new addition to Astoria's growing number of marijuana stores is also part of a trend toward consolidation, as many shops try to weather a weak market, sometimes taking on outside investment capital.

Will Wiedenmann, an assistant director of operations with Mr. Nice Guy, said the two companies' ownership felt they needed to make a universal brand behind Mr. Nice Guy. The company now has 16 locations in Oregon, including former Hi Cascades.

"Strength in numbers is a big thing," Wiedenmann said.

Five Zero Trees, a Portland-based retailer that recently opened stores in Cannon Beach and Astoria, has six locations on the North Coast and around Portland. Sweet Relief has five locations on the North Coast and inland to Columbia County. Cannabis Nation, with a location in Seaside, has four stores around the state.

Marijuana stores have faced increasingly tight margins since overproduction after the drug was legalized in Oregon led to a sharp decline in prices. Having more places to sell allows retail chains to buy at a larger scale for a lower price, said Beau Whitney, a cannabis economist with New Frontier Data.

"That creates a pricing differential relative to the smaller mom and pops that don't have the purchasing power," he said. "To me, this is a natural evolution of the market. It's starting to increase now lately."

It seemed like Oregon was reaching saturation when it recorded nearly 600 dispensaries, Whitney said. But the state had focused on getting more licensees and offering lower entry fees to help take consumers away from the illicit market.

"In retrospect, when you think about it, having unlimited licenses in a closed environment . at some point there was naturally going to be a consolidation in the marketplace," Whitney said.

State regulators in June placed a moratorium on new licensees until they could work through the backlog of applicants seeking entry into the marijuana industry. That backlog is exacerbated by companies changing ownership as they take on investors, Whitney said. The process was made easier by the state Legislature in 2016 rolling back requirements that more than half of a marijuana store be owned by an Oregon resident.

Now out-of-state investors can contribute as much as they want to Oregon cannabis businesses, bankrolling new franchises.

"Investors are coming in," Whitney said. "They see an opportunity. They are seeing a certain level of distress in the market. That distress is allowing them to buy high-value properties at a discount. They see this as an arbitrage opportunity."

Another reason for the rush of outside capital is that marijuana business owners can't access traditional financing, such as loans, because of federal prohibition, Whitney said.

The clearest example of outside investment locally is Hashstoria, a marijuana store in Uniontown. The business is registered to Charles Delvalle from Eugene and Canty Ventures, an angel investment firm from Florida embracing nontraditional, emergent industries from cannabis to cryptocurrency. Hashstoria's ownership was not immediately available for comment. On his Instagram profile, Canty founder Jedd Canty announced the company would be establishing a second location in Springfield.

Whitney sees smaller shops and growers being squeezed out of the cannabis market as prices continue to stagnate. "Those mom and pop shops that don't have access to capital, they're the ones that are going to be priced out of the market first," he said.

April Smith and her family bought out the previous owners of The Farmacy, a standalone marijuana store in Astoria, earlier this year. Previously a behavioral health and addiction treatment therapist in Washington state, Smith said she had seen how well cannabidiol, a nonpsychoactive compound in cannabis with medical uses, had helped people escape addiction to hard drugs.

The Farmacy includes a retail shop and a grow operation under a separate company in the basement. The vertical integration from seed to sale allows more tax write-offs under the section of the IRS tax code limiting cannabis producers to business deductions attributable to production activities.

"To be able to be successful, you have to have a way to optimize everything," Smith said.

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 387485

Reported Deaths: 5116
CountyCasesDeaths
Multnomah59768836
Washington41571393
Marion39592504
Clackamas32426376
Lane29856354
Jackson24672350
Deschutes23182185
Umatilla15087180
Linn14488178
Douglas13236286
Josephine10057240
Yamhill9665142
Klamath8979145
Polk813698
Benton605137
Malheur591586
Coos5573106
Columbia423855
Jefferson416865
Lincoln357252
Union336854
Crook330156
Wasco314846
Clatsop258335
Baker217531
Tillamook214345
Hood River211337
Morrow197025
Curry190136
Harney119332
Grant108314
Lake104016
Wallowa74713
Sherman1903
Gilliam1844
Wheeler1141
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Cases: 5057759

Reported Deaths: 74098
CountyCasesDeaths
Los Angeles152224027074
San Diego4047084319
Riverside3849455306
San Bernardino3718825944
Orange3329505675
Sacramento1674002423
Kern1565171781
Fresno1558992246
Santa Clara1511691922
Alameda1246581499
San Joaquin1070001833
Ventura1036461188
Contra Costa1032921045
Stanislaus910641413
Tulare856141082
San Francisco56614669
San Mateo56058627
Monterey52340625
Solano47422356
Santa Barbara47035548
Merced44807664
Sonoma42912412
Placer41881468
Imperial38128769
Kings35038358
San Luis Obispo31294358
Madera26005311
Shasta25917440
Butte25295309
Santa Cruz22028222
Yolo21451257
Marin18342248
El Dorado18166161
Sutter14494181
Napa13372104
Yuba1070088
Tehama10230129
Humboldt10043117
Nevada9914103
Mendocino848894
Lassen792355
San Benito775977
Tuolumne767790
Lake6990110
Amador573766
Siskiyou470954
Glenn455136
Calaveras435685
Del Norte371242
Colusa323519
Inyo254345
Plumas19127
Mono18294
Mariposa156718
Trinity98817
Modoc7475
Unassigned2430
Sierra2170
Alpine1060
Out of CA00
Medford
Cloudy
50° wxIcon
Hi: 50° Lo: 34°
Feels Like: 50°
Brookings
Cloudy
54° wxIcon
Hi: 52° Lo: 37°
Feels Like: 54°
Crater Lake
Cloudy
50° wxIcon
Hi: 37° Lo: 26°
Feels Like: 50°
Grants Pass
Cloudy
50° wxIcon
Hi: 49° Lo: 31°
Feels Like: 50°
Klamath Falls
Cloudy
54° wxIcon
Hi: 50° Lo: 27°
Feels Like: 54°
Very small chance for showers Saturday, dry and mild for Sunday
KDRV Radar
KDRV Fire Danger
KDRV Weather Cam

Community Events

Latest Video

Image

Friday, November 26 weather

Image

Thursday, November 25th Evening Weather

Image

Pet of the Week: Bat, Hunk & Keith

Image

Thursday, November 25 afternoon weather

Image

Thursday, November 25 morning weather

Image

2021-2022 StormWatch 12 Winter Forecast

Image

Wednesday, November 24 Evening Weather

Image

Wednesday, November 24 afternoon weather

Image

Supply chain issues this holiday season

Image

Wednesday, November 24 morning weather