Applications for pot dispensaries in Oregon increasing as chance for retail sales approaches

Economic Indicators Associated Press

Applications for permits to open new medical pot dispensaries are increasing as the state prepares to allow the businesses to sell retail marijuana to anyone over 21.

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Figures obtained by The Associated Press from the Oregon Public Health Division show that since Measure 91 passed last November, there have been 411 new applications to open medical marijuana dispensaries and 51 since the start of July, when the Legislature voted to allow medical marijuana dispensaries to start selling recreational pot on Oct. 1. There were 203 in the six months before the election.

Donald Morse, a dispensary owner and director of the Oregon Cannabis Business Council, says the market is saturated, with three dispensaries recently going out of business.

"Everyone believes there will be millions of people lined up around the block to go to their dispensary," said Morse. "When they don't show up, these people will realize they made a mistake, there isn't that much money to be had, and close their doors."

At last count, there were 310 licensed dispensaries, about half in the Portland area.

"There is going to be a major shakeout soon, within the next six months," Morse predicted.

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He notes that's what happened in Colorado.

Marijuana shops proliferated there in 2009, after the Obama administration indicated it wouldn't pursue federal drug charges against businesses compliant with state law. There were more than 600 dispensaries statewide and Denver had more pot shops than Starbucks coffee shops.

Colorado responded with new state regulations, including tracking requirements for the marijuana plants. Combined with market forces, the regulations led to consolidation in the industry. Colorado today has about 300 recreational marijuana stores, and about 500 stores selling medical marijuana. Many shops are in both categories.

In Oregon, the Oregon Liquor Control Commission does not expect to have permits issued and regulations in place for recreational marijuana stores until late next year, though possessing and growing limited amounts for personal use became legal July 1.

Until then, existing medical marijuana stores will be able to sell to anyone over 21 a quarter ounce of buds. Candy bars and brownies won't be available until regulations on dosage are worked out. Once the retail shops open, medical marijuana cardholders can go to dispensaries and buy cannabis tax free. Everyone else will have to go to a retail store and pay a 17 percent state tax, and 3 percent local tax, if one is enacted.

Steve Wagner, who is overseeing the rules for early marijuana sales being drawn up by the Public Health Division, says it is tough to find a place to open a dispensary in Portland without violating the mandate to be 1,000 feet from a school or another dispensary.

The law authorizing the early retail sales does not allow charging what amounts to a sales tax until Jan. 4, 2016. The Department of Revenue is working on those rules.

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Gosia Wozniacka in Portland, Oregon and Kristen Wyatt in Denver contributed to this report.