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Fun Friday: Alcohol, Marijuana, and Tech

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Happy Friday everybody! A friend of the office recently noted that we haven’t been discussing beer nearly enough lately. And it turns out she was right. After our office’s first, real recreational marijuana forecast last year and the Oregon Vice research and presentation I did, our office has been mostly focused on the evolving macro environment this year (more next week). Given this, and the fact that our office recently reconvened our marijuana forecast advisory group, I thought I should rectify the oversight.

Let’s start first with an update to the comparison you never knew you wanted, but are now glad you have. Over the past decade, or since the start of the Great Recession, Oregon’s thriving alcohol, and marijuana sectors have added more jobs than one of the state’s economic pillars: the high-tech cluster. Of course these economic sectors are not directly related, but instead are being used to help frame the discussion for just how fast, and how many jobs are being added here in the state.

We use this chart regularly in our presentations to discuss a variety of legitimate economic topics, including the transition from hardware to software within the tech industry, in addition to the true economic impact from vice sectors lies not with the growing and retailing of the products, but in all the ancillary and support industries that grow along with consumer demand and evolving markets. At its roots, Oregon’s alcohol cluster is value-added manufacturing where firms take raw ingredients — many of which are locally-grown — and turn them into a much more valuable products sold across the state and increasingly around the world. Furthermore, a plurality of brew system manufacturers in the U.S. call Oregon home. So when a new brewery opens up elsewhere in the country, there is a good probability they are buying and using Oregon-made equipment.

Our office’s hope is this type of cluster similarly develops around the recreational marijuana industry as well. Prices continue to plunge as the market matures and marijuana commoditizes. But increasing market activity in extracting oils, creating creams, making edibles in addition to hopefully building up the broader cluster of lab testing equipment, and branding and design firms, means Oregon will see a bigger economic impact from legalization.

Note that the reason for the range of marijuana-related employment in the chart is due to data availability. Our friends over at Employment do a great job of matching employment records to OLCC licensed businesses. Their latest count totals 5,300 jobs in Oregon. Now, these are payroll jobs (technically jobs subject unemployment insurance). Given harvest seasonality, part-time work, independent contractors and the like in a still federally illegal industry, it is reasonable to expect these payroll jobs to be more of a lower bound. However, if we turn to OLCC marijuana worker permits, those currently number 36,000 which is too high. Triangulating a more reasonable estimate — either via a rough sales to employee ratio, or scaling by a similar factor as food handler cards to food service jobs — shows there are probably about 11,000 or 12,000 marijuana-related jobs in the state today.

Finally, I have also been updating my Oregon brewery production numbers to track start-ups, the state’s legacy breweries, and also closures or failures. Given the outright declines in the beer industry overall, and slowing growth in craft beer sales, there has been quite a lot of hand-wringing over what it means. No doubt, retail shelf space is limited and the competition is fierce. Some breweries are seeing substantial declines in their sales and production. However that does not mean the industry overall is unhealthy. In fact, brewpubs continue to thrive, and some of the bigger breweries are revamping their tasting rooms, and adding more locations for better direct-to-consumer sales given they maximize revenue per pint this way. Elon Glucklich at The Register-Guard has great article on this, with a focus on Eugene breweries.

However, as Warren Buffet said, “only when the tide goes out do you discover who has been swimming naked.” For breweries this means that business plans, practices and operations matter considerably more in a world of slowing growth then they do during the go-go days of double-digit gains every year. Slower growth can strain business finances, eventually leading to more closures or failures. So, are we seeing this here in Oregon? So far the answer is no. Yes, the absolute number of brewery closures has risen in recent years, but the closure rate has barely budged. The reason is Oregon has quadrupled the number of breweries in the state over the past 15 years. As such, we should see more closures given there are so many more potential places to run into issues — be they low sales, high costs, personal problems, or the like. To date, Oregon breweries are closing at a significantly lower rate than other types of businesses across the state.

UPDATE: It it also helpful to put the number of closures in perspective with the number of openings. Economists tend to refer to this as churn. There are always new businesses forming and others going out of business. Additionally around 1 in 8 workers in Oregon are gaining or losing a job every single quarter. While topline economic indicators tend to be pretty stable, or show solid gains, there is an incredible amount of churn below the surface. This occurs in good times and in bad. So far, even as brewery closures are rising some overall, the number of new breweries in the state continues to outpace closures by a margin of 4 to 1 in the last three years.

Next week I will have a few posts on the macro outlook, as we meet with our economic advisors to nail down the 2019-21 biennium outlook. Our forecast will be released Nov 14, at which time we will also have an updated recreational marijuana forecast that incorporates all of the latest data and input from our advisors.

Last but not least, a special thank you to Beth Dyer at Employment for helping me get all of the industry data to build the clusters!

Source:Oregon Economic News

Oregon Leaders Fight Coast Guard Closure

Coast GuardNEWPORT, Ore. — A new effort to avoid the closure of the Coast Guard Air Station in Newport, Tuesday.

Oregon’s congressional leaders teamed up with leaders from South Carolina to urge the Coast Guard to reconsider. The leaders wrote a joint letter, calling on the Coast Guard to keep facilities open in both states.

Oregon Senators Ron Wyden and Jeff Merkley as well as South Carolina Senators Tim Scott and Lindsey Graham say closing the stations would needlessly endanger mariners in both states.

Along with Newport, a Coast Guard Air Facility in Charleston South Carolina is slated to close December 15, due to budget concerns.

Oregon Electric Station to Close

3-18 Electric StationEUGENE, Ore. — A longtime downtown staple and favorite restaurant for many may soon be closing its doors.

Employees at the Oregon Electric Station on 5th Avenue say the restaurant will close before the end of the month.

The restaurant has been open for more than 30 years and the building’s history goes back much further.

An employee says the restaurant is expected to close by March 30th. Sources tell KEZI 9 News it will reopen under new management, but have a different feel and look.

We reached out to the Oregon Electric Station. Managers did not want to comment or confirm any information saying they wanted us to respect their privacy.

SRC evacuated and reopened after broken sprinkler floods basketball court

The Student Recreation Center at the University of Oregon has been re-opened after a brief evacuation earlier this evening. Around 5:25 p.m. fire alarms went off in the building when a student on the basketball court hit a sprinkler head with a ball, flooding the court and tripping the alarm system.

According to SRC staff, basketball courts 2 and 3 will remain closed for the remainder of the night for the assessment of water damage to the wood floor.

Senior Patrick Dougherty was playing basketball on the easternmost court of the SRC when the alarm was tripped by patrons on the other half of the court.

“Somebody hit the sprinkler with the basketball,” Dougherty said. “There was black water…a lot of it.”

Following the alarm, patrons were evacuated from the building and instructed to wait across the street as the Eugene Fire Department and UOPD arrived to assess the scene. After fifteen minutes, students were allowed back in the building to access lockers and work out in the weight rooms, upstairs cardio and pool areas.

According to Eugene Fireman John Ticer, the dark, rancid smelling water that initially flowed out of the pipes can be attributed to the infrastructure of the building.

“The pipes that are in the building are iron, so they oxidize,” Ticer said. “It smells kind of bad, and it’s black, and that’s normal.”

Ticer reports that after the sprinkler was fixed, the scene posed no threat to SRC patrons.

“The biggest concern now is just going to be getting the water out of the wooden floor so that it doesn’t warp,” he said upon leaving the scene.

According to Facility Manager Pauline Tran, this was the second alarm to sound at the SRC in recent months. In her opinion, facility managers and staff reacted quickly and efficiently, handling the situation while avoiding student hazards.

“It’s just a matter of getting people to respond seriously and getting people out of the building,” Tran said. “As far as me and the rest of the staff. I’m proud of what we did and how we responded.”

Although it is standard practice to evacuate the SRC in case of alarm, administrative reaction to the sprinklers aggravated some patrons.

“There’s no reason to close the gym. That’s one spot of the gym,” UO Professor Emeritus Ken Liberman said. “To kick everybody out — that’s stupid.”

The Eager Beavers

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The Eager Beavers

Comedy/Country/Swing

Label:  Leave it to Beaver

Jamie Jamison – vocals, guitar, ukelele
Cindy Ingram – vocals, ukelele, washboard
Ali Heyer – vocals, bass, keys, ukelele, drums
Jonna Threlkeld – vocals, drums, banjo, kazoo, saxophone

The Eager Beavers

The all-girl  Eugene based band, The Eager Beavers, (not to be confused with the band of the same name out of the Netherlands) ventured out in front of audiences in February of 2011 with one mission: to put together a show that adult audiences could relate to; even if it made them uncomfortable. Their song such as “Can I Pay You to Leave” based on a Charlie Sheen quote referring to hookers, pokes fun and makes light of adult subject matter all in a ragtime tempo and style.
These four ladies have already decided it’s their goal to make good music, make people laugh and to ’cause at least a few jaws to drop’ with their crude and catchy lyrics and daring subject matter.”

The Eager Beavers

–Glass

March 8 – Evening Update

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Here is this evening’s headline update:

The Weather Forecast – Tim Chuey
Our rainy weather continues in waves through the weekend. (Updated 4:30PM). A Weather Warning is in effect till Wednesday Afternoon.
Pimps prowl Eugene for girls to lure into sex slavery
Sex traffickers find their victims right in the heart of downtown Eugene, according to an undercover police officer. They stake out public places like the bus station and the library looking for vulnerable girls.
Springfield’s School Board Votes to Close 6 Schools
After months of meetings, public forums and discussions, Springfield’s School Board will cast its vote on the closures of six schools on Tuesday evening.
Kitzhaber signs budget rebalance, 4 other bills
Oregon Gov. John Kitzhaber has signed the first bills of his term.
Broker of marijuana licenses faces tax charges
An Oregon man who describes himself as the nation’s largest broker of licenses for medical marijuana has been arrested and charged with failure to pay state income tax
Rogue Valley pear grower hits hard times
A late spring frost last year and tight money this year have led one of the Rogue Valley’s major pear industry players to lay off half its year-round staff.
Greyhound bus rear-ends Jeep on I-5
Three people in a Jeep Libery suffered minor injuries when a Greyhound bus rear-ended the SUV on Interstate 5 early Tuesday morning.
Airport artwork coming down for temporary landing
The artwork by the late David Joyce, called “Flight Patterns,” depicts a number of flying people in the A concourse at the Eugene Airport. The work will be refurbished while the wall is repaired later this year.
Major triathlon coming to Eugene area
Eugene is known for its track and field legacy, so much so that it’s been called Track Town USA for decades. The city is also known as a mecca for bicyclists.
Three arrested after indoor marijuana garden discovered in home
Eugene police said they seized more than 10 pounds of marijuana from 25 plants after serving a search warrant early this morning at a home north of Sheldon High School.
Eugene man admits Lee Corso mascot head theft
A Eugene man has pleaded guilty to stealing an oversized mascot head of ESPN broadcaster Lee Corso from the Oregon State University campus during last December’s Civil War football game, court records show.