States like Oregon and Washington have too much cannabis and not enough demand

The unexpected cannabis problem

When states started legalizing cannabis, lawmakers worried about setting fees and rules for licensing and legislating where cannabis dispensaries could set up shop. The last thing they thought they needed to worry about was an oversupply of cannabis.

But that’s exactly what’s happening in Oregon and Washington. The two Pacific Northwest states hope to correct their cannabis markets by tweaking local laws, but it appears that the only panacea for their woes could be the full legalization of cannabis at the federal level.

To say that Oregon has something of an oversupply issue is a vast understatement. The state’s authorities estimate that demand in the adult use cannabis space is running at just 50% of the supply from legal producers between July 2017 and June 2018. It has left Oregon, which became the third state in the country to legalize adult use cannabis in 2014, sitting on approximately 1.3 million pounds of cannabis that it can’t shift, mainly because of both local and federal laws that prevent sales outside state lines.

That is a staggering amount of cannabis —  enough to last until mid-2025 without the state having to grow one more plant. That’s not a possibility, as few dispensaries sell cannabis that has sat for up to a year.

Oregon’s cannabis policies are partially to blame here. Post-legalization, Oregon aimed to bring its hordes of illegal growers, including medical growers who were suspected of cultivating for the black market, into the legal market. Salem’s lawmakers set about lowering the barriers to entry with rock-bottom license fees and taxes, and removed caps on the number of licenses.


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