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Oregon’s Solution for Cannabis Over-Supply: Quit Growing It

Oregon’s Solution for Cannabis Over-Supply: Quit Growing It
Photo by Dan Curtis for Cannabis Now


Oregon’s Solution for Cannabis Over-Supply: Quit Growing It

State’s six-year cannabis supply and resulting price crash is triggering government intervention into the market.

Let’s hear it for Oregon, where recreational cannabis is providing an ongoing lesson in elementary economics and the role of government in the marketplace.

Also, let’s hear it for Oregon, where the state’s cannabis producers have grown and processed so much product — a six or a seven-year supply, depending on who you ask, and that’s if every single plant currently under the lights or the sun were ripped out root-and-stem and never seen again. In Oregon, consumers are enjoying record-low prices.

The state’s Biblical cannabis oversupply is lusted after greedily by consumers and patients in places like Canada and in Louisiana, where production hasn’t quite yet scaled up to meet demand for recreational users or patients, respectively.

But in the meantime, the state’s cannabis market crash is less a moral lesson and more a commercial emergency that’s prompting some government intervention.

With the state drowning in so much unsold cannabis and demand for the plant at a nadir, there would not seem to be much incentive for more entrepreneurs and more companies to acquire more grow licenses to add to the problem.

Just in case there were any such lunatics, the Oregon state Senate in late April approved a plan to freeze cannabis production at current levels for two years.

Growers with existing licenses — the growers who caused this problem — will be able to continue causing the problem should they wish; they’ll be able to renew their licenses and continue growing more cannabis than the market needs. Anyone else wishing to enter the crowded market will have to wait at least two years to apply for a license to grow a product that will be sold at bargain-basement rates.

Even this limited step did not come easy. Oregon lawmakers, mostly Republicans from the state’s rural eastern areas (where commercial cannabis is far less welcome than in urban areas like Portland) rejected an earlier version of government-imposed market limits on Oregon cannabis production in favor of letting “the free market” decide, as the Associated Press reported.

(A brief note on that: Anyone with the idea that cannabis enjoys a free market anywhere at the moment, or at any time in its brief history, might want to consider the artificial limits on licenses issued by states, the strict local requirements would-be cannabis producers have to abide by in order to even apply for a license, the exorbitant application fees, and the unique and byzantine tax structure applied to cannabis sales.)

Will it work? Something had to be done, and something is better than nothing, but whether it will help producers staring at bulging warehouses, overdue bills, and dispensary clients offering them slim percentages of the asking prices their business plans relied upon is another question.

The best hope for producers in Oregon is the legalization of interstate trade, which would allow patients and consumers in medical and recreational states access to a place with an overabundance. That, in effect, would be the “free market” and if Republican lawmakers in Oregon or elsewhere were truly serious about their conservative principles, that’s what they’d be pushing for rather than the much larger government interventions of prohibited interstate trade.

In the meantime, Oregon will remain a lesson for the cannabis industry: Too much cannabis is a very good thing for the consumer only.

TELL US, have you ever been in a situation where you had too much cannabis?

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