Marijuana overproduction in Oregon is hardly breaking news. We’ve covered it ourselves a number of times in the Pinnacle blog. Oregon is producing so much excess marijuana, that it is about three times more that it can consume. This overproduction has resulted in rotting marijuana and low-ball prices in the state. At this stage, there aren’t that many cost-effective options that don’t either result in lost money or lost product.

That’s why some people have begun thinking outside the box – or rather, outside the state. They do see a solution – if only it weren’t federally illegal. Oregon growers want to be permitted to sell excess cannabis across state lines. And it seems this desire couldn’t come at a better time: The Oregon Liquor Control Commission (OLCC) tracks all cannabis plant all the way from seed-to-sale. The OLCC is all too aware that local farmers have already produced three times the amount of last year. That means that new crops are likely to double existing inventory.

Federal Crackdown on Excess Marijuana

Oregon isn’t really helping itself when some cultivators have taken it upon themselves to sell their excess weed directly to the black market, in hopes of getting at least some return on their investment. This is only perpetuating the illicit market cycle. It doesn’t help the legitimate market; and it just continues to lower the prices in the black market. And the federal government has taken notice too. The U.S. Attorney, Billy Williams, has threatened intervention if Oregon doesn’t make some headway in curbing the cannabis leaving the state.

Oregon’s Attempt at Lowering Production

Back in May of this year, the OLCC decided to quit accepting any new cannabusiness applications. They also capped daily medical marijuana purchase amounts. By doing so, officials hoped to reduce illegal sales to outsiders. But Oregon is finding, these steps are not nearly enough.

One major impact of low prices and excess product is that it is weeding out businesses. When flower prices drop from the thousands of dollars per pound to mere hundreds of dollars, it becomes impossible for owners to support staff members, operating costs, and more. Closing up shop may not obviously be ideal; but there is no doubt that it does indeed reduce some of the overproduction.

A Bold New Idea

Adam Smith is the director of the Craft Cannabis Alliance (CCA) based in Oregon. Smith has proposed a solution to Oregon’s marijuana problem: allow cultivators to sell the excess marijuana to those states that have also legalized the substance. He also suggests adding the ability to transfer licenses between legal states.

“There is no faster way to incentivize growers to transition from the black market to the legal, regulated market than legalizing export.”

Adam Smith, CCA

East Coast Ready

Smith believes all of Oregon’s excess marijuana could be sent to the East Coast. Why? Massachusetts is on the cusp of getting its recreational market going after its delay in licensing testing labs. New Jersey and New York are thought be on their way to legalization. Another selling angle is that these markets could build a strong foundation with region-specific cannabis (i.e. sun-grown, soil-grown flower, unlike conditions found in the East).

One Fix Cannabis

CCA also joined forces with One Fix Cannabis to encourage cross-state marijuana transfer and sale. Smith sees exporting as the next big step. So many products start small and local, move up and out, and eventually transition to an exported good. But the federal elephant in the room always reminds everyone of the reality. Transporting marijuana across state lines is illegal. A number of lawmakers have proposed removing cannabis from the Controlled Substances Act. So, until it gets removed, Oregon’s cannabis surplus will have to remain in state. Pausing production might be Oregon’s only solution to playing cannabis catch-up.

Let Pinnacle be Your Guide

In a crowded market, you need a guide. Pinnacle Consultation has the expertise you need.  Cannabis is an industry of nuances. Forecasting the highs and lows within the various markets takes experience. At Pinnacle, this is all we do, meaning that we spend the time figuring out exactly where to invest, build, and grow – so you don’t have to. Whether you want to enter the market on the medical or recreational side, just invest, or go all in, Pinnacle is your one-stop cannabusiness consulting firm. Schedule a sit down today and get your business going.