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(Oregonian file photo)

Oregon this month passed the latest marijuana milestone: the end of recreational sales at medical marijuana dispensaries.

The big shift ends stopgap state permission for dispensaries to sell marijuana to anyone over 21 as regulators spent the past year and a half drafting rules for the new recreational market.

The transition comes with other significant changes: Recreational consumers can now buy more marijuana flower and will pay lower sales taxes on pot.

But they probably will find fewer places to buy marijuana - at least for a while -- as dispensaries make the switch.

Though the state is still home to 300 dispensaries, that number is expected to continue to drop as medical-only shops migrate to the larger recreational industry.

"Nobody is going to survive being medical only," said Brad Zusman, owner of Cannadaddy's, a recreational shop at 17020 S.E. Division Street in Portland.

Business at his store shot up 15 to 20 percent last week -- a spike he attributes to an influx of customers who previously shopped at nearby dispensaries that don't yet have their recreational licenses through the Oregon Liquor Control Commission.

The state received at least 70 new requests from dispensary owners who intend to quit the medical marijuana program, presumably to transfer into the recreational system.

In Portland, which has its own licensing system for marijuana businesses, 41 recreational cannabis shops are up and running, said Victor Salinas, marijuana program coordinator for Portland.

The city is awaiting payment on another 17 retail licenses; 32 more have been approved but the state hasn't yet signed off.

Ultimately, the state expects to license about 400 recreational marijuana shops across Oregon, with dozens in Portland, raising concerns among regulators about market saturation. If production exceeds demand, as liquor commission officials fear, marijuana is likely to filter into the illicit market.

Steve Marks, executive director of the liquor commission, said he's heard reports of legal marijuana leaking into the black market, but agency inspectors haven't found evidence of any manipulation of the system.

"We have followed up and done investigations but the investigations haven't panned out," he said.

Meanwhile, five state compliance officers headed into the field last week to ensure dispensaries are back to selling only to medical marijuana patients and their caregivers.

The Oregon Health Authority, which oversees the dispensaries, hopes to make impromptu visits to each one by month's end, said Chris Westfall, compliance unit manager for the medical marijuana program.

So far, the officers have inspected 46 dispensaries, officials said. Westfall said the agency is prepared for "high non-compliance," but had found only one dispensary in violation.

Health authority officials on Monday wouldn't identify the establishment or the details of the violation, saying only that they plan to propose a civil penalty. Rule-breakers could net fines and the loss of their registration.

Westfall said the agency plans to audit dispensaries at the end of the month to confirm their sales are limited to the medical market.

"This is a big no-no," he said.

Anthony Taylor, a longtime medical marijuana advocate, said the end of recreational sales at dispensaries is a grim but expected development for smaller medical marijuana producers who for the past year sold their products in the medical shops but can't afford to obtain a recreational producer license.

He and other advocates fear medical growers will scale down their operations to avoid the hassle of record-keeping required of larger medical producers. They'll end up taking on fewer patients, he said, further weakening the state's once robust medical marijuana program and leaving behind people who depend on the drug.

Though medical marijuana patients can shop tax-free at recreational stores, many had grown accustomed to informal arrangements with growers. Under the previous system, medical marijuana growers depended on amassing medical marijuana patients to legally justify high production since the state's system tied patient cards to plant limits. Those patients could count on free or cheap marijuana in return. But new medical marijuana rules mean growers don't need to take on as many patients, which Taylor says has left many in the cold.

"They have gone from being exploited to being marginalized," he said.

And as dispensaries continue to switch to the recreational market, he said medical growers have few legal outlets for their harvests.

"It's going to go into the illicit market," he said. "There is no doubt about it."

And while medical marijuana patients may feel pushed aside, recreational customers will see benefits of the latest changes to the market.

Jan. 1 brought recreational consumers the ability to buy more marijuana flower -- under last year's rules recreational shoppers were limited to a quarter-ounce, compared to the ounce they can get now.

They'll also pay lower sales taxes on marijuana: The state's 25 percent sales tax on marijuana was replaced this month with up to 20 percent in state and local taxes.

Another Jan 1. change limits individual edible products at 5 milligrams of THC per serving; recreational consumers can buy a package with no more than 50 milligrams. Last year, a package of edibles was capped at 15 milligrams.

Recreational retailers said while marijuana flower is plentiful, popular concentrates and edibles continue to be in short supply due a lag in licensing and tougher testing requirements, resulting in delays getting some products into the market.

Many retailers predict the market will eventually settle down once supply issues are worked out and more processors are online.

"These are really big challenges for the industry right now, particularly for small businesses," said Sam Heywood, an owner of Farma, a recreational shop on Southeast Hawthorne Boulevard. "But it's temporary and the story of Oregon cannabis is really, largely a positive one that I think we will get back to focusing on as we head into spring."

-- Noelle Crombie

503-276-7184; @noellecrombie