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Oregon stuck with massive cannabis surplus

Zej Moczydlowski
Apr 10, 2019 11:30:00 AM
Reports this week signal that Oregon, one of the states which led the nation in legalizing cannabis for both medicinal and recreational usage, is now facing a crisis. The state currently has over a million pounds of unsold cannabis and, due to laws prohibiting transportation across state lines, has no way to export it. This surplus is causing radical price drops. As noted in the Business Insider article linked below, a quantity of cannabis which sells for $20,000 in New York sells for only $7,000 in Oregon.

Federal laws preventing interstate cannabis commerce resulted in the surplus but local laws contributed as well. The article notes that "When Oregon legalized recreational marijuana in 2016, it came with an open invitation to growers from the century-old illegal industry to register for recreational licenses. This low barrier to entry encouraged an increase in production." Oregon has attempted to remedy this over-saturation of growers by halting new cannabis licenses last year but the issue remains.

Until federal legislation allows the transportation of cannabis across state lines, this issue is likely to remain. One alternative will be for states where cannabis is legal to set up agreements where they allow for inter-state cannabis commerce; although this option could bring about a crackdown by federal authorities. The other option is for states to slow down the expansion of their cannabis industries. Until a solution is found, however, it is likely that such surpluses will continue.

Link to the Business Insider article on this issue:
https://www.businessinsider.com/why-oregon-has-1-million-pounds-of-unsold-cannabis-2019-4

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