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article imageOver-production of marijuana in Oregon hurting growers

By Karen Graham     Apr 19, 2018 in Business
There has never been a better time to buy weed in Oregon than right now, it is the worst of times to be a grower or dispensary owner. In 2017, Oregon pot growers produced three times what was consumed.
Three years into Oregon's "Green Rush," and the dust is beginning to settle, giving everyone concerned a better look at the nascent marijuana industry in the state, and there are a few problems that stand out.
Oregonians voted in 2014 to approve the sale of recreational marijuana, and pot became legal in 2015. Medical marijuana has been legal in Oregon since 1998, and the Oregon Health Authority oversees a separate program regulating that industry. But the recreational marijuana industry is going full tilt ahead and state regulators are getting worried.
Cannabis Culture (CC BY 2.0)
Over-production problem
The Oregon Liquor Control Commission (OLCC) is responsible for handing out licenses in the state, and after a poor year in 2016 due to bad weather, in the spring of 2017, dozens of licenses were issued and some growers even planted a second crop as the weather remained perfect for growing clear up into the fall.
"That storm naturally constrained the supply even though there were a lot of cultivators," says Beau Whitney, senior economist for New Frontier Data, which studies the cannabis industry., talking about the 2016 storm, according to Willamette Week.
The thing is, in 2017, the supply was still sort of low, due to the 2016 storm, so this kept prices high. But all the while, the state continued to hand out growers licenses like they were candy. As of April 1, 2018, there are 963 licensed recreational cannabis growers, while another 910 are awaiting OLCC approval.
The bad part is the OLCC says it has no authority to limit the number of licenses it grants to growers, wholesalers and dispensaries - although, by contrast, the number of liquor stores in Oregon is strictly limited.
The price of marijuana has hit the bottom of the barrel
According to a state audit report last month, the state's recreational marijuana market has had more than $480 million in sales through November 2017. The state collects a sales tax on recreational po. Since January 2016, Oregon has brought in more than $115.5 million in taxes from cannabis sales.
Because of the bumper crop and the nearly 1,000 people already growing recreational marijuana, the price of sun-grown marijuana fell from $1,500 a pound last summer to as low as $700 by mid-October. That comes to about $4 or $5 a gram.
Without a doubt, the overabundance of pot has thrown the industry into a panic, with once confident new growers going out of business, losing everything. Many small pot farmers are unable to declare bankruptcy because marijuana is still listed as a federally scheduled narcotic.
Discount Medical Marijuana cannabis shop at 970 Lincoln Street  Denver  Colorado.
Discount Medical Marijuana cannabis shop at 970 Lincoln Street, Denver, Colorado.
O'Dea (CC BY-SA 3.0)
Everyone says that something needs to be done and quickly. Some are suggesting the OLCC regulate the number of growers and licenses issued, while others are suggesting that legalizing the sale of marijuana across state lines would solve the problem. However, U.S. Attorney Billy Williams is going to do something, and he says it will be this year.
Going back to the state audit report, it was found that concerns had emerged over state-approved legal marijuana growing operations selling their excess crop across state lines where pot is not legal. Williams described the growing black market sales problem as "formidable."
“Here’s what I know in terms of the landscape here in Oregon, and that is, we have an identifiable and formidable marijuana overproduction and diversion problem,” he said. “And make no mistake about it, we’re going to do something about it.”
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