Dec. 6, 2016—When Oregon implemented more stringent testing and packaging regulations for its nascent cannabis market on October 1, many in the industry speculated that the new rules would have a negative impact on the market. Now, with the availability of BDS Analytics’ detailed data for the month of October, we can objectively review the effect. Unfortunately, the numbers show that those pessimistic predictions were accurate. Oregon dispensaries’ cannabis sales dropped 8.5 percent from September to October, to $29.5 million, the first time the market fell below $30 million since May. (Sales spiked to $31.5 million in June when adult-use dispensaries began selling concentrates and edibles, and averaged $32.6 million per month July through September.)
As disappointing as this news is, it’s not the worst of it. A more detailed look at weekly sales in October reveals a disturbing pattern: sales trended downward as October progressed. In October’s first week, cannabis sales totaled $7.6 million. By the final week of the month, that figure had fallen to $6.0 million, a 21-percent decline. Weekly sales in the three months preceding October averaged $7.4 million. Sales in the first week of October increased over the preceding three-month weekly average, likely because savvy consumers anticipated the coming supply challenges. But as the month wore on, the data show a clear decline as dispensary supply diminished through October.
The declines continued and worsened in November according to a subset of dispensaries that report sales data to BDS. Same-store declines from September to November averaged 21 percent, with some stores declining more than 60 percent in retail dollars. The greatest October declines occurred in the edibles category, which cratered 32 percent from $3 million in September to $2 million in October, the lowest level since adult-use stores began selling the category in June.
September’s number was an all-time high for edibles, which was the category that endured the greatest challenges after October 1 due to more frequent and more expensive testing being required throughout the supply chain. As with the overall market, edibles sales declined steadily as October progressed, with dollars sold dropping 22 percent from the first week to the final week. As supply diminished throughout the month, prices rose 5 percent, so units declined even more than dollars did, dropping 25 percent. Concentrates saw a similar price effect from October’s first to final week: Average selling price rose 6 percent and the decline in units, at 23 percent, exceeded the 18-percent decline in dollars sold. It is clear from these data that Oregon’s new rules have had a major impact on retail cannabis sales and on the viability of businesses across the industry. New temporary rules designed to ameliorate testing challenges will help, but they may have come too late for some businesses.