Why does Oregon have such a massive cannabis glut?

The State of Oregon has so much cannabis it doesn’t know what to do with itself, according to a new report [PDF] from that state’s liquor control commission. In 2018, Oregonian farmers grew 2,000 pounds of ‘wet’ marijuana, the kind that is turned into edibles, vapes, and other THC or CBD-infused products. After growing twice as much legal marijuana this year as the state consumed, there’s a total oversupply of more than six year’s worth of mary jane, measured by levels of THC.

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According to Quartz, the study’s researchers say that this glut is a win for the regulated market, however, proving that oversupply isn’t being diverted to the unregulated illegal market, as would be a concern. “For Oregon, producing a lot of marijuana is not new news; producing a lot of marijuana that is tracked in the legal system is,” Steve Marks, the liquor control commission’s executive director said.

The fear that the glut in the legal market could be diverted to the illegal one is still a concern. The situation creates a “concern that [legally grown cannabis] may be diverted to the black market and/or out of state given current market conditions (high supply, falling prices, and a huge pipeline of applications for new entrants into the market),” writes an economist working for the state government.

The report notes that the glut, however, is likely not just an oversupply being produced for the local market, but could exist because Oregon is a convenient home base to become established in the market if and when the hoped-for national legalization comes into effect. Marijuana producers are attempting to lay the groundwork to be prepared for changes in national law.

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“Businesses in Oregon’s recreational marijuana market are in some ways analogous to technology start-ups… willing to take the risk of losses today for potential large gains tomorrow,” says the report. “However, this calculus depends on ‘tomorrow’ not being excessively far in the future and the license remaining in good standing.”

 

Header Photo by Matteo Paganelli on Unsplash

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