Stephen Hamway
The Bulletin

In mid-March, an explosion rocked a northeast Bend duplex, lifting the roof off the building, moving the foundation by four inches and seriously burning two people.

Police said the blast likely came from an illegal lab for manufacturing marijuana hash oil using butane and believe the 134 pounds of marijuana in the illicit operation was grown legally. But that marijuana had been diverted to the black market, after state officials ordered it destroyed because it contained unhealthy pesticides.

The case remains under investigation, but it revealed a separate issue, one broached often by Oregon residents uncomfortable with recreational marijuana: In a state with more than 1 million pounds of legal, recreational marijuana, how often does it end up on the black market and how does it get there?

Far more cannabis is being grown than consumed in Oregon. According to data from the Oregon Liquor Control Commission, which regulates the pot industry, only 108,330 pounds of usable recreational marijuana were sold in 2017 at the retail level, leaving 891,670 pounds in the pipeline to be stored for later sales or used in the manufacture of concentrates and edibles.

While no one can say for sure how much legal recreational or medical marijuana gets sold out of state, which is illegal, Oregon law enforcement agents say it’s harder than ever to tell the difference between legal and illegal weed, even as the system for tracking it improves.

“Now that marijuana has become legal, we’re seeing more of these situations,” said Bend Police Lt. Nick Parker, who also belongs to the inter-agency Central Oregon Drug Enforcement team. “We’ve moved into new territory on this.”

Recreational marijuana was legalized in Oregon in 2015, following the passage of Measure 91 the prior November. The Oregon Liquor Control Commission began accepting applications for recreational dispensaries in 2016, and 4,435 applications for recreational marijuana licenses have been submitted to OLCC, according to the agency’s website.

State-licensed growers are required to keep a record of the marijuana they grow, buy and sell using the state’s cannabis tracking system. Andrew Anderson, owner of the Central Oregon recreational marijuana company Plantae Health, said the state’s software — known as Marijuana Enforcement Tracking Regulatory Compliance, or METRC — was rigorous, requiring four to five of his employees to log and sort their product in the system.

“It’s a lot of work, but I think that’s the only reason it works,” Anderson said.

Still, as long as there are rules in place, there are people willing to break them, particularly in an industry that’s operated in the shadows for most of its history, he said.

The marijuana found at the illegal Bend lab was grown by a licensed grower — High Cascade Farms — but was listed as having been destroyed by an employee after it tested positive for pesticides, according to a search warrant affidavit. The affidavit alleges that an employee removed the marijuana and modified its entry in the state’s cannabis tracking system.

“This was our first experience with that,” Parker said.

Oregon requires that all marijuana grown and sold in the state must be tested for pesticide, potency and other factors.

Because cannabis is not legal at the federal level, the Oregon Department of Agriculture developed its own rules for what pesticides may be used on the crops, according to Sunny Jones, cannabis policy coordinator for the state agriculture agency. Ultimately, the state developed a list of chemicals that cannot be safely smoked or ingested, according to Jones.

Mark Pettinger, spokesman for the OLCC, said the agency has limited ability to seize or destroy cannabis that is rejected. During most investigations, Pettinger said the marijuana is held at the growing site. He added that if growers are ordered to destroy some of their supply, it must be done where it can be seen on camera. For pesticide issues in the recreational marijuana industry, the OLCC refers cases to the agriculture department.

As of the beginning of June, the agriculture department had received 122 cases from the OLCC in which marijuana tested positive for pesticides since the program got up and running in October 2016, according to Dale Mitchell, ODA’s program manager.

Following the first positive test, Jones said growers can opt to go through a compliance process. Mitchell added that, for all other infractions, a much larger investigation takes place, and the marijuana must either remain or site or be seized by the agency. Jones added that the case involving High Cascade Farms was referred to ODA, and the grower opted to go through the full inspection.

While the circumstances of the case are new, the conditions that create a black market have been in place for decades, according to Michael Hughes, a Bend-based attorney who specializes in cannabis issues. Hughes said he hadn’t heard any of growers modifying METRC results, though he added that Oregon has always been a source of marijuana consumed in other states, even before medical marijuana was legalized in the state 20 years ago.

“There’s been a lot of cannabis diverted from Oregon since long before 1998,” Hughes said.

Overproduction is brought up frequently by both cannabis opponents and advocates as a hurdle for the industry. At the end of May, the OLCC announced it would cease processing new licenses on June 15, citing the oversupply.

Hughes said he was surprised that marijuana was diverted from an OLCC-licensed grower, but he noted that until conditions change, growers will look to other avenues to offload excess cannabis. Ultimately, Hughes said he didn’t see a true solution until marijuana is legalized nationally.

“If the market’s saturated, people are going to send it someplace else where they’re gonna make more money,” he said.

In the meantime, local and state enforcement agencies are trying to adapt to a changing legal environment. Since marijuana was legalized, the Central Oregon Drug Enforcement team has confiscated 9,513 pounds of marijuana. To that end, the Deschutes County Sheriff’s Office and Bend Police Department are bringing on additional officers to focus specifically on marijuana enforcement.

“Just in general, the enforcement of marijuana has gotten more difficult,” said Parker, of Bend Police.

— Reporter: 541-617-7818,