Suzanne Roig
The Bulletin

The cannabis tracking system used by the Oregon Liquor Control Commission has logged 1.3 million pounds of usable marijuana, 200,000 pounds in edibles and tincture products and 100,000 pounds in concentrate extracts as of December.

For the second year in a row, Oregon harvested millions of pounds of fresh marijuana, which has affected prices in the highly regulated recreational market.

That’s good news for consumers, who can get cheap marijuana, but not for growers. Growers harvested more than 2.5 million pounds of cannabis in October. Of that so-called wet harvest, 1.3 million in usable marijuana was logged into the Oregon Liquor Control Commission’s cannabis tracking system as of December.

In 2017, the fall harvest reaped nearly 2.6 million pounds of wet product.

The bountiful harvest in 2018 spotlights an issue brought about by a cannabis market that is limited to sales within the state’s borders but has 1,107 licensed active producers and another 900 producers seeking licenses from the OLCC.

Cannabis farmers statewide cut back the amount they planted, while others didn’t plant at all, and some surrendered their licenses, said Don Morse, a Portland cannabis consultant. As of Wednesday, 70 grower licenses were expired, and 57 grower licenses were surrendered, according to OLCC data.

“Everyone is concerned about this,” said Adam Smith, Craft Cannabis Alliance executive director. “You’ll see people going out of business in the spring when it’s planting time. There are far too many in the industry in distress. No one is making money here.”

Consumers are buying so much cannabis, however, that state marijuana tax collections have exceeded the forecast by 7 percent in the 2017-19 biennium, according to the Oregon Office of Economic Analysis. State economists noted that ongoing growth in sales volumes has been more than enough to make up for falling prices.

Beau Whitney, senior economist and vice president of New Frontier Data, a cannabis market research firm, said this year the legal cannabis industry had more growers, which produced more cannabis. The increase didn’t come from higher yields, he said, and that is driving out some small growers.

“Because of the federal illegality, there is not a balance between suppliers and demand,” Whitney said. “If it was an open market and it was legal throughout the United States, there would be demand and prices would stabilize.”

Last year saw prices plunge up to 50 percent, Whitney said. This year could see prices drop by 35-50 percent more, he said.

“There is no short-term fix for this,” Whitney said. “You have a lot of supply in the system, and it will take a while for it to flow through the system.”

Proposed solutions range from limiting the number of licensed growers to opening new markets outside the state. It would take an act of Congress to remove cannabis from the federal controlled substance list enforced by the Drug Enforcement Agency.

“Craft cannabis won’t be profitable for people until we can ship it nationwide, like craft beer,” Morse said. “You have to have a big enough market to consume the product and pay a premium to appreciate what craft cannabis is all about. The market is too small here in Oregon.”

When Oregon lawmakers return to Salem later this month, among the measures introduced will be a bill that would make it legal for Oregon to export cannabis, Smith said.

“Essentially what we have here is prohibition, and that’s what is destroying the industry,” Smith said. “What we have is not an excess, it’s a bounty.”

One silver lining is the fact that the concentrate and extract industry consumed 54.5 percent more cannabis in December than the same month a year ago. The concentrate and tincture market consumed about 17,000 pounds last month, compared to about 11,000 pounds in December 2017.

That tracks with the results of a user study that showed consumers are opting more often for oils and concentrates than smokable flower, Whitney said. The market share of concentrates has nearly reached parity with flower, growing 138 percent since 2015, from 16 percent of retail sales to 38 percent in October 2018, according to the study of consumer habits by New Frontier Data and MJ Freeway, a cannabis technology firm.

“The cannabis industry is becoming more sophisticated it the product offerings,” Whitney said.

— Reporter: 541-633-2117,