The state of Oregon recently announced a plan to limit the amount of recreational cannabis produced within its borders. The temporary freeze is intended to address the surplus of marijuana that the state is currently facing.
In April of this year, the Oregon State Senate convened to discuss Senate Bill 218 before voting 18-10 in favor of capping marijuana production for the next two years. No new cannabis production licenses will be issued during this time, however, those already involved in the growing business will be permitted to renew theirs.
The wording of Senate Bill 218 reads, “The Oregon Liquor Control Commission may, based on the supply and demand of marijuana, as defined in ORS 475B.015, refuse to issue production licenses under ORS 475B.070 for an amount of time that the commission determines necessary…[This] does not apply to the renewal of a production license under ORS 475B.070 or to the issuance or reissuance of a production license under ORS 475B.070 necessitated by a change in the location or ownership of a production facility or premises.”
Last week, the Oregon State House of Representatives passed the bill, 39-18.
Oregon's Surplus Problem
Democratic Senator Michael Dembrow says that the state’s surplus has forced down prices significantly, hurting small businesses. In fact, Oregon already has enough legal weed to last at least the next 6.5 years, that is, according to a study by the Oregon Liquor Control Commission (OLCC).
The bill would give the OLCC the authority to deny new applications for production licenses submitted.
According to Democratic Gov. Brown, the problem really comes down to an oversupply, saying “The harsh reality is we have too much product on the market.”
In the last three years alone, over 1,100 production licenses have been issued in Oregon. The price of 1 gram of recreational cannabis has dropped to $5, down from $10 per gram back in 2016.
Such low prices on marijuana could force producers back onto the black market. A recent report by the Secretary of State’s Office called for the marijuana regulation system to be strengthened.
Said Oregon Secretary of State Dennis Richardson, “Preventing diversion is imperative to ensure federal authorities maintain confidence in Oregon’s ability to adequately regulate the use and sale of marijuana. As the market is sstill developing, agency tracking of Oregon’s marijuana supply and inspections is lacking.”
A similar piece of legislation was voted down last month. Oregon State Republicans have been strongly opposed to any efforts to limit cannabis production, preferring instead to allow the free market to determine supply and demand. Republican Senate Minority Leader Herman Baertshiger Jr. has likened the plan to “socialism,” calling it “a stab at capitalism in pure form.”
Small business owners across Oregon have been hit the hardest by price drops due to the state’s cannabis surplus. Margo Lucas, a cannabis producer from Willamette Valley, relayed her concerns in an interview with AP News, saying, “We’re a very young industry. So when we go out of business, we’re going to go down hard. Many of us will lose our homes…You’re going to have a lot of entrepreneurs in this state that are pretty unhappy with the way that this ends if we don’t get some support with this bill.”
Now, the bill will proceed to the Governor’s desk for a final signature of approval.