State halts permits for new cannabis growers
Oregon has too much cannabis. One-million pounds too much of it to be exact. Or to put that hard-to-picture figure into perspective, enough of it has been produced just in the last two years that, if stopped immediately, the supply can last the state for another six years at current consumption rates.
Anyone living in, or visiting, the state can see this issue firsthand. There are innumerable dispensaries—often with at least a couple on a single street—throughout its metropolitan areas such as Portland, Salem, and even Eugene-Springfield.
In fact, in April 2019, Business Insider published an article written by Abby Tang, Jennifer Lee and Nisha Stickles that put the smoking-hot problem into perspective. It’s gotten so bad that “one tub of marijuana costs $20,000 in New York but costs only $7,000 in Oregon,” they explained.
What can be done to solve this surplus? Some, such as The Craft Cannabis Alliance, believe that the answer is to open up Oregon’s borders and allow for interstate, or international, cannabis trade. Unfortunately, while exporting to another country may sound like a viable solution, the plant’s current federal classification as a Schedule 1 drug make this unlikely to happen.
So, while exporting to Canada—which is having major shortages—sounds like a good idea, it is not an option.
Instead, the Oregon Senate voted 18-10 on April 29 in favor of what they believe to be the solution to this growing problem: a temporary freeze on cannabis production.
The bill is two-fold: one, it will keep the production levels static over the next two years; and two, new license applications will not be offered while currently licensed producers will be able to renew theirs.
According to High Times, the monthly cannabis magazine, Oregon’s problem has to do with its ideal climate for producing these large quantities of high-quality cannabis.
This is because, as Emma Chasen, writing for the Green Entrepreneur in April 2019 explained that the 2017 collapse of Oregon’s cannabis market was “due to the low barrier to entry for licensure,” meaning that as so many businesses entered the market, the surplus got greater and greater to its current point. The state’s population simply cannot consume all that is produced.
As a result, prices have suffered. In Eugene, Oregon, an ounce of cannabis flower costs as little as $30, but the average for high-quality flower is just over $210. This is drastically lower than other states, though, according to aggregate website, Price of Weed. There, the state of New York’s ounces cost an average of about $340. Even California, long recognized as a major cannabis producer, has higher prices, while not by much. There, the average cost for an ounce of high-quality flower costs a consumer around $250.
If this problem isn’t solved, it may affect the state negatively. Arguably the most damaging way the oversupply can do so is crashing prices. They, at some point, may get so low that producers could export their product to other states illegally, as the High Times article suggested. This will not only severely damage the legal cannabis market in Oregon, but it will fuel an already present black market. The federal government has warned that if this were to become a problem, they would have no choice but to crackdown on the industry.
