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The Oversupply Headache

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Oregon produces more cannabis than we consume, causing endless consternation for regulatory and law enforcement agencies. This oversupply has resulted in threats from the state's attorney general that authorities needed to step up their enforcement and efforts to deal with it before he does. It's also sent prices plunging, dropping 50 percent last year, with predictions that wholesale prices will drop again this year.

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A new cannabis audit by the Oregon Secretary Of State's office assesses just how overcome we are with what I once would have never thought would be the "problem" of too much weed.

The audit resulted in four key findings:

• The OLCC needs help—lots of it: The number of people licensed to grow cannabis for the recreational market, and those who wish to become licensed to do the same is overwhelming the Oregon Liquor Control Commission. Although a temporary moratorium was placed on new license applications June 15, OLCC doesn't have the staffing to keep up with processing renewal and new license applications, and performing inspections. As the report notes, "As a result, only 3 percent of retailers and 32 percent of growers have had a compliance inspection."

• But the OHA isn't doing so hot either: The Oregon Health Authority oversees the Oregon Medical Marijuana Program, and it has bigger challenges than the OLCC. The Oregon Medical Marijuana Program has far less oversight than the OLCC's recreational program, such as not requiring cameras at OMMP grow sites, and having a laughable total of four—four—inspectors to handle the 14,000 OMMP grow sites statewide. That's 3,500 grow sites per inspector. The report mentions that the OHA has "struggled with decreasing revenues, turnover, and performance management."

• Heavy metal and weed are a bad combination: Recreational cannabis is required to be stringently tested, yet most OMMP cannabis is not. The OHA does not require heavy metal and microbiological testing, which is required by some states for their medical marijuana programs.

• Testing, testing, 1,2,3: OHA faces serious challenges regarding cannabis labs. Per the report, "Limited authority, inadequate staffing, and inefficient processes reduce OHA's ability to ensure Oregon marijuana labs consistently operate under accreditation standards and industry pressures may affect lab practices and the accuracy of results."

The Oregonian writes that 45 percent of cannabis consumed comes from "legal home grows, medical marijuana growers and...the illegal market." They also note that sales of extracts and concentrates grew 40 percent between 2017 to 2018. Still, at the rate Oregonians are consuming cannabis in its many forms, we presently have over a six-and-a-half year supply of harvested and cured cannabis.

The OLCC's concerns isn't how six-and-a-half-year-old cannabis tastes (horrible, btw) but rather, the dreaded D word: Diversion. When cannabis can be procured for as low as $300 per pound, there are people who are tempted to take a road trip to canna-thirsty states such as Idaho, and find others who will gladly pay many times that amount. That isn't a paranoid scenario on the part of law enforcement, as demonstrated last month by Portland resident and local poster child for "Boy, have you lost your damn mind?" Tim Marsano.

Idaho State Police stopped Marsano and a driver in a semi truck Jan. 24, during a random and routine commercial vehicle safety check. The two had paperwork stating they were hauling 31 bags of hemp. Police believe the bags were actually packed full of cannabis, which could represent the largest bust in ISP history: 6,701 pounds of it. Testing is ongoing to determine if the cops are correct, but odds aren't great this ends well for Marsano.

Potential "solutions" to oversupply include raising license fees, which are lower than some states. But raising fees tenfold wouldn't fix the revenue problem. Canopy sizes could be limited, but as OPB notes, "farmers could simply buy more licenses and grow more cannabis." OLCC could limit the number of licenses issued or make permanent the licensing moratorium. The report also offers the idea that the OLCC could allow the market to correct itself via failures and consolidations.

That's now happening. Brands going under, or being bought out by corporate cannabis entities. Market corrections are brutal, and cannabis is no exception. Support craft cannabis, now more than ever.

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