The Oregon Senate recently voted in favor of a bill that will freeze marijuana production at its current level for the next two years. The bill would also suspend the issuance of any new cultivation licenses while allowing currently licensed growers to renew their licenses during the temporary freeze. Oregon’s House of Representatives will now take up the bill for consideration.
When Oregon legalized recreational marijuana in 2014, it liberally awarded cultivation licenses. That, in turn, resulted in an explosion in production. Oregon’s marijuana market became oversaturated as early as 2016, and regulators have struggled with how to handle the surplus product. In January 2018, the United States Attorney for the District of Oregon, Billy J. Williams, penned an op-ed wherein he suggested that the excess marijuana being grown legally by licensed cultivators was being diverted to the black market in an effort to salvage some return on investment. Williams was relying on statistics provided by the U.S. Postal Service that showed “Oregon seized 2,644 pounds of marijuana in outbound parcels and over $1.2 million in cash” in 2017 alone. Compare that to a total of 984 pounds of marijuana seized in Colorado between 2013-2017, and Williams’s suggestion appears to be accurate.
Oregon’s surplus, and the concerns that come with it, have only grown since 2017. According to State Sen. Michael Dembrow (D-Portland), Oregon has already produced enough marijuana to last it for the next 6-plus years. That massive surplus, besides creating black market problems, drives down wholesale prices. Oregon legislators are hopeful that by freezing production and not issuing new cultivation licenses now, they can bring equilibrium to the market.
Oregon’s efforts to curb the excesses associated with liberal cultivation licenses and oversupply will be watched closely by other states contemplating and implementing recreational marijuana programs. We will continue to follow this bill as it works its way through Oregon’s legislature, and we will be sure to publish an additional post if the Oregon House approves it.