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About The nugget. (Sisters, Or.) 1994-current | View Entire Issue (Nov. 21, 2018)
Wednesday, November 21, 2018 The Nugget Newspaper, Sisters, Oregon 29 Some Oregon pot stores consolidating to weather weak market ASTORIA (AP) — Signs for Mr. Nice Guy, an ode to the 1998 stoner com- edy “Half Baked,” recently began popping up in Astoria, Oregon. The Daily Astorian reports that the marijuana retailer has merged with a sister com- pany, Hi Cascade, absorb- ing 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 con- solidation, as many shops try to weather a weak market, sometimes taking on outside investment capital. Will Wiedenmann, an assistant director of opera- tions with Mr. Nice Guy, said the two companies’ owner- ship felt they needed to make a universal brand behind Mr. Nice Guy. The com- pany now has 16 locations in Oregon, including former Hi Cascades. “Strength in numbers is a big thing,” Wiedenmann said. F i v e Z e r o Tr e e s , 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 loca- tions on the North Coast and inland to Columbia County. Cannabis Nation, with a location in Seaside, has four stores around the state. Year-round FIREWOOD SALES — Kindling — — — SISTERS FOREST PRODUCTS 541-410-4509 SistersForestProducts.com Community newspaper advertising gets seen! Display ads in The Nugget start at $27.20/week Call your community marketing partner, Vicki or Patti Jo, to discuss promoting your business to every household in the Sisters area. 541-549-9941 Marijuana stores have faced increasingly tight mar- gins 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 dispen- saries, 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 unlim- ited licenses in a closed envi- ronment ... at some point there was naturally going to be a consolidation in the mar- ketplace,” 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 CHECK OUT this week’s Nugget inserts! backlog is exacerbated by companies changing owner- ship as they take on inves- tors, Whitney said. The pro- cess was made easier by the state Legislature in 2016 roll- ing back requirements that more than half of a marijuana store be owned by an Oregon resident. Now out-of-state inves- tors can contribute as much as they want to Oregon can- nabis 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 dis- count. They see this as an arbitrage opportunity.” Another reason for the rush of outside capital is that marijuana business owners can’t access tradi- tional 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 busi- ness 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 com- pany would be establish- ing 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 fam- ily bought out the previous owners of The Farmacy, a standalone marijuana store in Astoria, earlier this year. Previously a behavioral health and addiction treat- ment therapist in Washington state, Smith said she had seen how well cannabidiol, a non- psychoactive compound in cannabis with medical uses, had helped people escape addiction to hard drugs. The Farmacy includes a retail shop and a grow opera- tion under a separate com- pany 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 busi- ness deductions attributable to production activities. “To be able to be suc- cessful, you have to have a way to optimize everything,” Smith said. YOU CAN SEND A GIFT... Bi-Mart Black Friday 2-Day Sale Friday and Saturday $8.97 Blue Jeans $16.87 Avia Shoes $1.88 Fleece Throws & more! 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