1 year ago
Tokelahoma’s days are numbered.
The world’s wildest weed market — which at its peak had nearly 14,000 licensed medical marijuana businesses — has been steadily shrinking since Oklahoma voters overwhelmingly rejected a recreational legalization referendum in March.
Heightened enforcement by state regulators and law enforcement is pushing some businesses to shut down. Others are simply realizing that Oklahoma is producing so much weed — a staggering 64 times the volume needed to serve the state’s medical patients, according to a recent study — that it’s impossible to make any money.
At the same time, the potential customer base is shrinking: There are just under 350,000 people enrolled in the medical program, down from a peak of more than 385,000.
“It’s just too big. It’s just causing too many problems,” said Chip Baker, a veteran weed entrepreneur who moved from Colorado to Oklahoma in 2019 to take advantage of the launch of the medical market. “Everybody’s struggling.”
Oklahoma has become a cautionary tale over the past five years for the country’s experiment with marijuana legalization. Many of the problems that have plagued fledgling markets across the country are magnified in the staunchly conservative state.
The unlikely boom market has been sullied by dozens of raids on illegal cultivation sites, rampant diversion of products into the illicit market, allegations of human trafficking and grisly crimes, including a quadruple murder of Chinese nationals at a weed farm last November.
Republican state Rep. Scott Fetgatter, who has worked extensively on cannabis policy, said the blowback is so severe among his fellow lawmakers and constituents that he doesn’t see any point in introducing legislation seeking to boost the medical market and help struggling business owners.
“Because it has become such a toxic issue, and people get angry with me at the Capitol over legislation, you probably won't see my name on much marijuana industry legislation,” Fetgatter said in an interview.
Most close market watchers believe that hundreds more businesses — and perhaps thousands — will raise the surrender flag in the coming months. Baker predicts that two-thirds of Oklahoma’s medical marijuana businesses will ultimately disappear.
Chris Moe, a medical marijuana patient and advocate widely known as “Uncle Grumpy,” thinks the bloodletting will be even more severe: 80 percent of businesses, he predicts, will be gone by the one-year anniversary of the failed referendum.
“The priority is crackdown. The priority is shrink the industry,” Moe said. “Who wants this? Everybody. The only people who don’t want the industry shrunk are those who know they’re going to lose everything.”
The next big shakeup of the weed industry is poised to land on Oct. 31. That’s when all businesses — there were 10,278 as of Oct. 2 — must renew their licenses with the Oklahoma Bureau of Narcotics and Dangerous Drugs. For the first time since the medical market launched five years ago, OBN is requiring that businesses provide proof that they have a valid Certificate of Occupancy for their facilities.
OBN officials say they were spurred to toughen enforcement due to at least 10 fires at marijuana manufacturing facilities since 2021. In one incident, 10,000 acres of land was set ablaze, prompting the mobilization of the National Guard to combat the fire. On two different occasions, OBN agents were present when fires ignited at marijuana grow facilities.
Even though the requirement to have a Certificate of Occupancy isn’t new, there’s widespread agreement that many weed businesses aren’t compliant and won’t be able to renew their licenses.
“Many people in the marijuana industry didn't do their due diligence and they should have known better,” Fetgatter said. “If you start a business, you should know all the guidelines.”
The Oklahoma Medical Marijuana Authority has also been ramping up its enforcement capabilities over the past two years and is punishing more businesses for breaking the rules. Last month, it issued violation petitions to 161 dispensaries for allegedly exceeding state limits on how much cannabis can be purchased in a single transaction. OMMA is seeking to revoke the licenses of 39 of those weed shops, while 122 others face fines.
“We really narrowed it down to the ones that were more egregious, that would indicate likely diversion,” said OMMA Executive Director Adria Berry in an interview. “We don’t have the time or resources to spend on going after people who just gave away one extra pre-roll.”
Weed businesses are feeling the blowback, too. Travis Smith, co-founder of Oklahoma City cultivator Smokey Okies, said the company’s garbage contractor recently announced that it will no longer work with weed businesses. The reason provided: frustration with cannabis companies routinely over-stuffing dumpsters in order to save money and not paying their bills.
“Cannabis operators are not desirable customers,” Smith said. “Landlords don't want dispensaries and the industrial folks don't want cannabis. The reason is that so many grows are going through evictions right now.”
Smith and other struggling business owners say the crackdown is long overdue. They’ve grown increasingly frustrated at trying to compete with operators who don’t follow the rules and had hoped that recreational legalization would significantly expand the market, particularly with Texans crossing the border to shop.
But with the defeat of the ballot measure — every single county in the state voted against it — they’re now hoping that enough firms will fail that it will be more feasible to run a financially successful business.
“A lot of people just can't pay their bills,” said Jeff Henderson, co-founder of PYRE, which operates a 4,800-square-foot grow facility in Muskogee. “Some people have no margin whatsoever. There's not a lot of money to go around.”
Henderson said Pyre has been able to survive in the two-plus years since it launched by focusing on cultivating high quality flower that consumers are willing to pay a premium for, with more than 30 dispensaries statewide currently carrying their products.
“There’s not a lot of people who are trying to be the Louis Vuitton of the weed industry,” Henderson said. “Most people want to be Walmart. … Most people are going for quantity over quality.”
Many industry officials express optimism that the worst financial struggles are now in the past, with prices starting to inch up in recent months. The expectation is that promising trend will continue as scores of additional businesses collapse in the coming months.
Smokey Okies, PYRE and thousands of other struggling weed businesses are hoping that they’ll be among the survivors when the smoke clears in Tokelahoma.
“If we can stick out the rest of this year,” Smith said, “we think things will be better next summer and a lot better in 2025.”
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