Since legalizing marijuana in 2014, the State of Oregon has experienced an oversaturation of its legal marijuana market, driving down prices and creating a surplus. Observers have opined that the surplus is fundamentally caused by the initial explosion of the industry upon legalization, and Oregon’s relatively easy path in obtaining a license to produce and sell the drug. In short, Oregon made its own bed. Not surprisingly, in recent months cannabis products have been setting sales records. Still, industry experts believe that even more sales are possible if exportation of the drug to other states were legal. Oregon lawmakers are now hoping to tackle the problem with two bills signed into law last year: one designed to curb excess production, and the other aiming to establish new markets to funnel excess weed into.
Senate Bill 218
Hoping to eliminate the marijuana black market, Oregon issued licenses to sell or produce marijuana liberally. In order to fight excess production, Senate Bill 218 was enacted to give the Oregon Liquor Control Commission the ability to restrict the issuance of licenses based on current market conditions. In other words, the Commission will now look at the supply and demand of the drug along with other relevant economic factors to limit the number of licenses it issues.
Senate Bill 582
As marijuana flower has a limited shelf life, excess marijuana eventually will go stale and become unable to sell. Senate Bill 582 hopes to combat this problem by giving the governor of Oregon the ability to enter into agreements to export cannabis-related products to other states. Oregon has always been known for favorable growing conditions when compared to other areas of the country. States that have legalized or who plan to legalize with less than ideal growing conditions could look to Oregon to supplement its supply.
Additionally, if marijuana prices in Oregon dip lower, it may be economically wise for retailers in other states to buy from Oregon rather than a more expensive local supplier. Unfortunately, federal law prevents marijuana from being transported across state lines. However, SB 582 lays the groundwork for Oregon to ship out its excess supply to other states if and when transportation of cannabis across state lines becomes legal. With more states legalizing recreational and medical cannabis each year, some believe a change in federal law is just around the corner.
Will It Work?
Some industry insiders are skeptical about the new legislation. With California and Washington both experiencing surpluses, it is unlikely that Oregon’s neighboring states will look to import marijuana. Additionally, with many states still experiencing a robust black market, skeptics predict that consumers short on legal marijuana will simply look to unlicensed sellers for the drug. Still, there is optimism that a change in the White House in 2021 will alter the national marijuana landscape. This change could create a demand in newly legalized states, providing Oregon ready and willing trade partners. In any event, Oregon, and those who campaigned tirelessly for these laws (we’re looking at you ORCA) continue to be ahead of the pack in forward-thinking, solution-driven legislation.