US: Cannabis investors are zoning out about supply

It is wise to know where your cannabis comes from. Intoxicated by bullish demand forecasts, pot investors aren’t paying nearly enough attention to supply.

U.S. states currently decide whether to legalize cannabis within their own borders, even though the drug remains illegal at the federal level. It is a misnomer to speak of a single U.S. pot industry, considering the patchwork of self-contained cannabis economies across the country.

Pot can’t cross state lines today, even between two states where the drug is allowed. Should federal laws change, high-cost growers and areas with less favorable climates for cannabis growing will be undercut.

“There will be upheaval in the price structure and efficiencies are going to set in,” said Steve Schain, senior counsel at cannabis law firm Hoban Law Group.

Oregon is ready to roll. This week, lawmakers in the West-coast state signed into law a new bill that would allow local cannabis growers to export over its borders if and when federal law permits. This oversupplied state could quickly flood the market with cheap crop.


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