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Oregon has a seven-year pot supply, but Canada can’t have any

Oregon’s legal cannabis growers have amassed so much marijuana that the state would take seven years to smoke it all, state legislators were told this week.

The oversupply has led to a price crash, hard times for growers, and a proposed solution that would sound familiar to Canadian dairy farmers: supply management.

The state’s vast cannabis surplus is in contrast to Canada. where shortages have caused temporary store closures in several provinces and led Ontario to limit the number of stores that are allowed to open.

One thing that’s completely off the table: legally exporting any of the state’s unsold million pounds of cannabis (453,000 kg) to Canada.

“I don’t think that’s going to happen any time soon,” says Deepak Anand, CEO of Materia Ventures, a cannabis supply and distribution company.

Anand points to legal obstacles on both sides of the border: there’s no legal framework in the U.S. to export either medical or recreational cannabis, and the federal Cannabis Act doesn’t allow Canada to import recreational cannabis.

“Health Canada isn’t going to allow product that was grown in an unregulated fashion in Oregon to be brought into Canada,” Anand says. “We’ve got a very highly complex and well-established regulatory framework in place which has strict testing mechanisms for pesticides and heavy metals, all those different things.”

“To be able to bring product in from a jurisdiction where you haven’t got any of that is not going to fly for Health Canada.”

On Wednesday, the Oregon state senate shot down a plan to cut marijuana production.

The measure would have allowed the state to limit the number of marijuana production licences it issues based on supply and demand for the product.

Democrat Sen. Michael Dembrow said oversupply has left the state with enough marijuana to last nearly seven years. He said managing the amount of marijuana produced could prevent the product from slipping into the black market.

Senate Minority Leader Herman Baertschiger, Jr., said the state should instead let the free market dictate prices. He said the plan amounted to “socialism,” and was “a stab at capitalism in pure form.”

Lawmakers voted down the proposal 17-13, but it was moved back to a committee for further consideration.

Oregon has over 1,000 licenced producers. (Canada has 148 for the entire country.)

“They issued a number of licences to cultivators,” Anand says. “I don’t think they were looking at the demand and supply situation, in terms of how much product the market could actually use.”

Among the problems the state’s producers face: cannabis is still federally illegal in the U.S., so none of the vast surplus can be sold outside the state, even to neighbouring states where it’s also legal.

Hoping that that may someday change, Oregon state senators moved forward a bill this week empowering the governor to enter into agreements with other states for such transactions.

It specifies that it would not be operative until U.S. federal law is amended to allow for the interstate transfer of marijuana, or the U.S. Department of Justice issues an opinion or memorandum allowing or tolerating it.

Sen. Shemia Fagan of Portland, who was among four Democrats and one Republican who voted in favour Wednesday, said it would give Oregon marijuana businesses an advantage if and when the federal government opens the path.

“Oregon’s industry is basically first in line for when the feds do act,” Fagan said.

“If we wait until the feds act, then all the other states will be working with their legislatures to then pass, and Oregon will kind of be at the tip of the spear and take advantage of what could be a lucrative opportunity for Oregon industry.”

“I think they’re handcuffed by the fact that they have a number of state and federal challenges,” Anand says. “It’s illegal to transport cannabis across state lines.”

“You have states in the U.S. that don’t currently have as much cannabis as they would like to have, but that’s not able to happen, on the legal side. I know there’s a lot of product moving across illegally.”

There are several bills in Congress that would take marijuana off the federal controlled substances list. Their future remains uncertain, but even a decision by the federal Justice Department to de-prioritize prosecuting interstate marijuana commerce would be enough for Oregon’s governor to start seeking co-operation with other states, according to the bill and its co-sponsor, Sen. Floyd Prozanski, D-Eugene.

In the meantime, Oregon cannabis producers struggle.

“Licensees expressed concerns about overproduction,” a survey by the state’s liquor and cannabis board reported in March. “It was common for licensees to state a belief that there was too much cannabis on the market.”

[source: / published: April 12. 2019]


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