The Legal Cannabis Diversion Problem

Oregon is no Colorado — not yet. And this is at the state’s peril.

In 2016, the year recreational marijuana consumers bought up more than $1.3 billion worth of legal cannabis in the Rocky Mountain State, Oregon dispensaries recorded less than a quarter of that action, closer to $250 million (we say “closer,” because that figure is based on $60 million worth of tax receipts, at nine months of 25 percent taxes and three months at slightly less) worth of sales.

But still! That is good news. Those were banner figures, sales so strong they exceeded official expectations by more than sixfold. And things continue to pick up. Now, economists believe sales will be closer to $280 million a year. There’s just one minor problem: It’s not enough.

Oregon marijuana users are not buying anywhere close to all the pot that Oregon marijuana growers produce. And that delta may be enough for the Trump Administration to send in the feds.

We know how much marijuana is sold in Oregon, and we have an educated guess as to how much cannabis is grown there. And we know there’s gap. A big one. Oregon’s marijuana growers produce an excess of between 132 tons and 900 tons, according to a law enforcement estimate. That excess weed isn’t thrown away or fed to the dogs. Much of it — nobody knows how much — flows out of state. And this is a problem.

“Diversion” is the term used by policy wonks and law enforcement for cannabis grown under the auspices of legal recreational or medical marijuana programs that ends up somewhere else. Oregon-grown appearing in Detroit, or Humboldt County cannabis in Seattle. Diversion is the inevitable result of market forces where marijuana is prohibited. As long as legal marijuana is stupendously more valuable in an illegal market, diversion will happen. And, conveniently, diversion is a problem federal drug cops have identified as in need of fixing.

“None is supposed to leave, so it’s an issue,” said Chris Gibson, executive director of the federal Oregon-Idaho High Intensity Drug Trafficking Area program, in an interview with The Associated Press. As the AP noted, federal and state police believe diversion “should be a primary concern to state leadership.”

And it absolutely is. In July, Attorney General Jeff Sessions sent a letter to Oregon Gov. Kate Brown, warning her that the diversion issue could violate the Cole Memo, the nonbinding, Obama-era policy that, thus far, has provided the legal cover for legal marijuana states to avoid prosecution from the feds. The letter echoed nearly identical warnings sent to the governors of Colorado, Washington and Alaska.

Quoting from the same report that guessed at Oregon’s marijuana gap, Sessions told the governors that he’s been following the obvious flow of weed out of state borders. Sessions wants to know that “all marijuana activity is compliant with state marijuana laws,” and said the diversion flow raises “serious questions about the efficacy of marijuana ‘regulatory structures’ in your state.”

“Congress has determined that marijuana is a dangerous drug and that the illegal distribution and sale of marijuana is a crime,” Sessions wrote, as the LA Times reported. “The [Justice] Department remains committed to enforcing the Controlled Substances Act in a manner that efficiently applies our resources to address the most significant threats to public health and safety.”

As the Huffington Post reported Tuesday, Gov. Brown wrote back to Sessions, informing him that the state is tracking cannabis the best it can. The problem here is obvious. Marijuana is lucrative, so growers will grow more than the market will bear, since some will be of lesser quality. And some will be grown to fulfill another market — the illegal market in other states. As long as prohibition creates a great incentive for out-of-state sales, diversion will continue.

TELL US, are you concerned about recreational cannabis crossing over into non-legal states?