Gordon Friedman

Statesman Journal

County bans on licensed recreational marijuana businesses may result in millions of dollars of lost economic activity, according to one analyst.

Marion County alone could lose $110 million in economic activity this year as business goes elsewhere because of its ban, said Beau Whitney, an economist and vice president of government and compliance at Toronto-based Golden Leaf Holdings.

Nineteen Oregon counties and 86 Oregon cities have banned marijuana producers, processors, wholesalers and retailers.

Recreational marijuana became legal in 2014 via Measure 91. State lawmakers allowed local governments to ban pot businesses if their voters opposed legalization. In counties with less than 55 percent rejecting legal sales, like Marion, the bans are temporary and must be put to the voters. In counties with more than 55 percent rejecting legalization, local governments can ban pot businesses outright.

Marion County's moratorium was enacted in September 2015, though Salem still allows marijuana businesses. County residents will have a chance to vote on the ban in November.

Counties with a moratorium don't reap the benefits of tax revenue from cannabis sales, which partially fund law enforcement. They also lose out on the ripple effect of economic investment and new jobs.

When asked about Whitney's estimate of economic losses, Marion County Commissioner Kevin Cameron said, "He may be right about that. I don't know." He added that enough cannabis is being grown already.

Whitney's analysis comes after Golden Leaf Holdings was unable to expand in Marion County because of the ban.

Part of its business model is achieving low-cost production at "scalable facilities," according to a company presentation for investors. Golden Leaf owns property in Aurora where it intended to build an "extraction and refinement center," according to a company press release. Plans of expansion are on hold until November, when the ban may be lifted by county voters.

The company is an embodiment of the modern gold rush — or green rush — that the legalization of marijuana has created in Oregon.

Golden Leaf manufactures cannabis oils and extracts in Oregon and is publicly traded in Canada. The company has multi-state branding partnerships, assets worth tens of millions and financial data disclosure requirements just like any other public company. It wants to capture a share of what it predicts will be a $10 billion market nationwide by 2019.

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Whitney said the company wanted to employ 80 to 100 people at the Aurora site — about $4.5 million in annual payroll. It also planned $4 million in facilities upgrades.

But each dollar invested ripples through the local economy four times, according to Whitney's estimate, meaning Golden Leaf's spending could have amounted to a $34 million shot in the arm for Marion County.

Whitney also estimates the statewide shift of medical marijuana producers toward the recreational market could have multiplied into another $80 million for the county economy. That calculation would put the county's potential total losses around $110 million.

Using a "multiplier" to estimate economic changes is standard industry-wide, Whitney said. Research shows that companies and governments have found multipliers useful for planning economic development, though multipliers vary in accuracy and emerging markets are especially difficult to predict.

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Whitney maintains that his estimates are conservative. He presented his findings to the Marion County Commissioners in February with the hopes of convincing them to repeal the moratorium. That seems to have had little effect.

"Beau can supply all the numbers he wants," said Cameron, the county commissioner. "I'm not going to sit here and talk about whether the moratorium is impacting Marion County because I don't have those numbers."

When pressed, Cameron said some investors are likely holding back because of the ban, possibly affecting county job growth.

"Yes, there may be some time lag for those jobs coming, but that’s okay with me," he said.

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