Oregon lawmaker to propose interstate cannabis commerce rules
With marijuana still on the federal government’s list of prohibited substances, all of the 30-plus U.S. states which have legalized marijuana currently forbid the export of cannabis products to other states. Oregon might be the first U.S. state to change this policy. Legislators and industry advocates are reportedly working to develop legislation which could allow interstate cannabis commerce. However, critics of the proposal aren’t convinced that the effort is time well spent, since every state which allows retail sales of cannabis also allows in-state cultivation.
According to a report in The Statesman Journal, Adam Smith executive director with industry advocacy group Craft Cannabis Alliance is working with Sen. Floyd Prozanski to craft export rules. Prozanski introduced a similar bill in 2017 which died before coming to a vote.
According to the Journal, under the proposal, Oregon’s governor would be empowered to negotiate deals with other states where the drug is legal allowing wholesalers to sell marijuana and other cannabis-derived products to retailers in those states.
Benefits To Oregon
Oregon currently exports a number of regulated agricultural products including wine and craft beer which bring money into the state. The move is an attempt to derive similar benefits for the state’s cannabis industry.
Oregon pot prices have plummeted over the past year as a sharp rise in supply continues to outpace the rise in demand. Although the measure would not immediately remedy the issue, the move is an attempt to gain a head start on potential interstate sales should the federal government ease restrictions on marijuana as it has with hemp.
"I don't want us to be flat-footed and (have) everyone running out at the same time trying to create something," Prozanski said.
According to the Journal, Beau Whitney with Washington, D.C.-based cannabis think tank New Frontier Data claimed that allowing cannabis exports "would either slow or stop the price declines because there wouldn't be any more excess. It would create more of a market in which quality and branding and other things would come into play more so than just pure price.”
In early 2017, cannabis prices were at about $1,400 per pound. By June of 2018, Oregon growers were reportedly sitting on a 1 million pound surplus, and prices plummeted to around $900 per pound. Although some big farms and grow ops were able to integrate vertically and form partnerships with wholesalers and dispensaries, a large percentage of growers are still reeling from the impact of the dramatic fluctuation.
As a result of the drop in prices and the federal government’s new stance on the cultivation and interstate commerce of hemp products, many of Oregon’s cannabis farmers are reportedly considering getting out of the marijuana business and switching to the cultivation of hemp and the production of CBD oil.
The measure is also seen as an attempt to keep the state’s cannabis operations under local control. According to the Journal, “Out-of-state business officials have snatched up Oregon enterprises in the past, from beverage giant Anheuser-Busch's purchase of 10 Barrel Brewing Co. in Bend to California-based Pacific Coast Producers' acquisition of Oregon Cherry Growers' processing arm in Salem.”
Smith told the Journal, "When we do get to export, is there any ownership here, are we building wealth here, or are we just shipping money out-of-state? If you got to export tomorrow, and folks suddenly could get a fair price for their product, you'd still have a bunch of outside companies here, but you would have a relatively healthy ecosystem."
Doubts About the Proposal
Kevin Sabet, president of the anti-pot group Smart Approaches to Marijuana is skeptical that the bill would provide any benefits to the state. Sabet said that the effort “looks like a desperate attempt to tackle the out of control black market production that has happened in Oregon since legalization. The state should be focusing on how to reduce overall demand and supply."
Furthermore, a non-trivial tax of 17 percent on exports would cut into competitive pricing.
All products would still be required to meet not only Oregon testing, packaging and labeling rules, but also any rules imposed by states with which Oregon cannabis wholesalers might do business.
Unless and until there are changes to Federal cannabis policies cannabis products would be prohibited from being shipped by air or through states which prohibit interstate transport of the increasingly popular drug.
Smith is confident that the state and its cannabis growers would see benefits from the measure, telling the Journal in an interview, "There are plenty of markets that would be thrilled to have world-class cannabis, but prohibition keeps us from sending it into those markets."
The bill is expected to be introduced in the state’s 2019 legislative session.