Oregon

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

The Wildfire Season Has Really Fired Up.

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My last report on the Oregon wildfire situation was a very positive one with only one active large wildfire burning. As you can see on the map below that fire didn’t seem to be terribly important. There was also one fire in progress in Washington. The thing to remember is that all wildfires have serious consequences.

6.30.18 Wildfire Map
NWCC Wildfire map 6.30.18 | Image by NWCC

Here we are less than one month later and there are 10 wildfires raging in Oregon and 4 in Washington.

Oregon/Washington Wildfires 7.20.18 | Image by NWCC

Here is the current list as of Sunday July 22nd.

Cemetery Wildfire
Cemetery Wildfire | Photo by Bend Bulletin

The Cemetery fire: Located 32 miles east southeast of Prineville, Oregon. The number of acres involved is 1,414. The fuel/terrain is tall grass, brush, and timber.  It started on 7/1/18 and the cause is listed as lightning/natural. Residences threatened: 0 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 149 people, 4 crews, 1 helicopters, and 7 engines*. The fire is 95% contained*.

The Garner Complex fire: Located 17 miles northeast of Grants Pass and 10 miles south of Grants Pass*, Oregon. The number of acres involved is 7,949*. The fuel/terrain is grass, litter, and understory.  It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 393 single residences*, Other structures threatened: 0 nonresidential commercial property. Resources being used: 1,834 people, 59 crews, 26 helicopters, and 74 engines. The fire is 10% contained.

The Granite fire: (Now included in The Hendrix fire listed below) Located 9 miles northwest of Selma, Oregon. The number of acres involved is 233. The fuel/terrain is grass, hardwood litter and brush.  It started on 7/16/18 and the cause is listed as lightning/natural. Residences threatened: 12 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 2 people, 0 crews, 0 helicopters, and 0 engines. The fire is 0% contained.

The Hendrix fire: Located 3 miles southwest of Ashland, Oregon. The number of acres involved is 830. The fuel/terrain is timber.  It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 10 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 520 people, 14 crews, 5 helicopters, and 21 engines*. The fire is 15% contained*.

The Klondike fire (Now includes the Granite fire): Located 9 miles northwest of Selma, Oregon. The number of acres involved is 2,169*. The fuel/terrain is hardwood litter and brush.  It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 12 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 42 people, 0 crews, 0 helicopters, and 0 engines. The fire is 0% contained.

The Natchez fire: Located 15 miles southeast of Cave Junction, Oregon. The number of acres involved is 1,372*. The fuel/terrain is timber, chaparral, and hardwood litter.  It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 0 single residences, Other structures threatened: 1 nonresidential commercial property*. Resources being used: 283 people, 7 crews, 5 helicopters, and 10 engines*. The fire is 0% contained.

The South Umpqua Complex fire: Located 45 miles southeast of Roseburg, Oregon (Tiller Ranger District. The number of acres involved is 2,229. The fuel/terrain is timber. It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 6 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 964 people, 30 crews, 5 helicopters, and 31 engines. The fire is 10% contained.

SubstationFire
SubstationFire | Photo by Wildfire Today

The Substation fire: Located 5 miles south of The Dalles, Oregon. The number of acres involved is 79,121. The fuel/terrain is grass, brush. It started on 7/15/18 and the cause is listed as Under investigation. Residences threatened: 1,188 single residences, Other structures threatened: 45 nonresidential commercial property and 130 other minor structures. Resources being used: 286 people, 40 crews, 5 helicopters, and 22 engines. The fire is 82% contained.

The Sugar Pine fire: Located 12 miles northwest of Prospect, Oregon. The number of acres involved is 160. The fuel/terrain is timber. It started on 7/15/18 and the cause is listed as under investigation. Residences threatened: 0 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 328 people, 10 crews, 0 helicopters, and 21 engines. The fire is 0% contained.

The Timber Crater 6 fire: Located 8 miles southeast of Diamond Lake, Oregon. The number of acres involved is 1,190*. The fuel/terrain is timber. It started on 7/15/18 and the cause is listed as lightning. Residences threatened: 0 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 340 people, 14 crews, 2 helicopters, and 1 engines. The fire is 0% contained.

Wildfire Map
Updated Oregon/Washington Wildfire Map 7.22.18 | Image by NWCC

Now here is the final update as of Sunday 7/22/18. I have updated the fires listed above (Updated items have an * after them.). Below are the 3 new fires that have developed.

The Round Top fire: Located 8 miles north of Prospect, OR, Oregon. The number of acres involved is 104. The fuel/terrain is timber. It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 0 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 142 people, 5 crews, 0 helicopters, and 9 engines. The fire is 0% contained.

The Union fire: Located 10 miles northeast of Prospect, Oregon. The number of acres involved is 104. The fuel/terrain is timber. It started on 7/16/18 and the cause is listed as lightning/natural. Residences threatened: 0 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 142 people, 5 crews, 0 helicopters, and 10 engines. The fire is 0% contained.

Wagner Wildfire
Wagner (Creek) Complex Wildfire | Photo by Statesman Journal

The Wagner Complex fire: Located in Jackson County, Oregon. The number of acres involved is 250. The fuel/terrain is timber, brush, and grass. It started on 7/15/18 and the cause is listed as lightning/natural. Residences threatened: 30 single residences, Other structures threatened: 0 nonresidential commercial property. Resources being used: 336 people, 14 crews, 9 helicopters, and 27 engines. The fire is 61% contained.

That gives us 13 wildfires currently ravaging various parts of Oregon. We still have a lot of Summer early Fall left for these fires to continue and possibly even more to start up due to lightning strikes or careless people. We can only hope for an early return of our rain season. Let me know what you would like me to talk about or explain.

You can comment below or email me at: [email protected].

Net neutrality bill passes Oregon Legislature

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SALEM — The Oregon Legislature sent a net neutrality bill to Gov. Kate Brown, a response to moves by federal regulators aimed at forcing internet service providers in the state to treat all types of content equally.

Oregon effort to declare health care a right falters

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SALEM — An effort to insert an amendment in Oregon’s Constitution making health care a right died amid concerns by lawmakers that it would expose the state to lawsuits.

The Suttle Lodge Dining Experience + Dinner Series

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breakfast at The Suttle LodgeThe Suttle Lodge dining experience is a mix of cabin comfort and upscale cooking, with culinary moxie that proves the chefs here offer more than just grown-up camping fare. A stay at The Suttle Lodge in central Oregon is all about immersing yourself in nature – without actually having to sleep and eat in the…

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Unpacking Coffee with Kandace and Ray: Junior’s Roasted Coffee

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Gun control bill OK’d by Oregon; 1st since Florida shooting

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SALEM, Ore. (AP) — Fueled by anguished voices in the aftermath of the Florida high school shooting, Oregon’s Legislature on Thursday banned people convicted of stalking and domestic violence or under restraining orders from buying or owning firearms and ammunition.

The Suttle Lodge: A Serene, Modern Rustic Retreat in Central Oregon

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Suttle Lodge in Sisters, OregonThe Suttle Lodge in Sisters, Oregon offers a hip, rustic retreat for those seeking to relax, unwind, and soak up the great outdoors. One of the best things about living in Portland, Oregon is the diversity of life adventures we have at our fingertips. My family lives on the edge of the city, right next…

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