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
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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
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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.
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