Law enforcement authorities intercepted $48 million worth of black-market marijuana headed from Oregon to 37 states over a three-year period, and officers blame the illegal exports on a statewide glut of regulated marijuana and low prices.

Some of the black-market marijuana comes from illegal growers, some diverted from legal recreational producers, processors or retailers and some comes from medical growers, acknowledged the Oregon Liquor Control Commission, which oversees the Oregon’s legal recreational marijuana program.

Most of the illegal product seized — about 14,500 pounds — was probably grown on U.S. Forest Service land, and came from Jackson, Multnomah, Josephine, Lane, Deschutes and Washington counties, according to a report from the Oregon-Idaho High Intensity Drug Trafficking Area, a federally funded program that collects data from 14 counties in Idaho and Oregon.

“This could be larger in scope than the data sets show,” said Chris Gibson, executive director of the Oregon-Idaho High Intensity Drug Trafficking Area. “We have a state law that says cannabis cannot go out of state, and that’s our focus.”

Deschutes County has seen a six-fold increase in the amount of seized marijuana so far this year, said Bend Police Lt. Brian Kindel, who is part of Central Oregon Drug Enforcement team. In 2017 the CODE team confiscated about 100 pounds of cannabis, compared to 600 pounds in the first 10 months of this year, Kindel said.

“We’re only stopping a small amount of it,” he said. “There’s a lot more going out. We’re not getting all of it.”

With more than a million pounds of excess cannabis logged into the Oregon cannabis tracking system and retail prices at a record low, black market sales — skimmed product from the legal recreational market, medical growers or illegal growers — have become tempting and profitable.

In many cases, it’s as easy as loading up an SUV and driving it to another state.

Officials say it will take a multipronged approach to combat black market sales. Allowing Oregon-grown cannabis to be sold in other states could relieve the pressure caused by the surplus, said Gary Bracelin, owner of Bend cannabis store Tokyo Starfish.

Many argue in favor of tightening regulations to prevent diversion, when cannabis grown in the regulated market finds its way on the black market.

Three recent criminal cases in Deschutes County underscore the rise of illegal growing and processing sites. One of the cases was even from a Oregon Liquor Control Commission sanctioned site.

In the most recent case, two Bend residents were charged with unlawful manufacture of marijuana and unlawful possession of marijuana for allegedly exporting cannabis products out of state. They are alleged to have used picture frames to hide cannabis to mail from a farm on Back Alley Road in Bend to Massachusetts. Law enforcement officials seized 93 mature marijuana plants and 55 immature plants, 5.8 pounds of dried marijuana and butane hash oil.

In another case, police charged two Crooked River Ranch residents with unlawful manufacturing of marijuana and charges related to allegedly running a butane hash oil operation used to produce a concentrate.

And in September, the OLCC revoked the license of a legal marijuana producer, High Cascade Farms, after numerous violations were uncovered along with alleged black market activities.

“We acknowledge there may be licensees conducting illegal activity, but it comes to light through anomalous activity in the cannabis tracking system, which is especially noticeable since our monitoring and detection has improved,” said Mark Pettinger, OLCC spokesman.

“Even before the High Cascade case surfaced, we were paying attention to the unusual ‘wasting’ activity and in some instances asking for video recordings to reconcile and do compliance checks,” Pettinger said.

With one cannabis growing site for every 25 users, Oregon has the ability to produce more than 2 million pounds of marijuana per year, far beyond what it can consume, leading law enforcement to believe that the surplus is contributing to diversion into the illegal market.

In addition, prices have fallen in the legal market from over $3,300 a pound to about $330 a pound, and cannabis businesses say some enterprising people are taking advantage of the lower prices and shipping product out of state, said Kindel, of the CODE team.

“What we’re seeing now is because it’s become lucrative to ship out of state, and Oregon has a reputation for quality cannabis,” Kindel said.

“Illegal grows are still at heart, illegal,” said Bracelin. “With the legal market and the glut, prices are so good for consumers to buy legal cannabis, I would guess the local black market is actually a pretty bad business model. Black market growers probably opt to ship out of state where they can get better prices. Illegal black market growers have been doing this for years.”

Bracelin said that regulated cannabis growers and retailers take a great risk diverting legally grown cannabis into the black market. They face license revocation and criminal charges by selling to the black market, he said.

“I’m not so naive to think this does not happen,” Bracelin said. “There will always be bad players.”

Lizette Coppinger, an owner of Cannabend, a Bend retail cannabis outlet, believes that legalizing the exportation of cannabis is important and could grow the cannabis industry. Legal exportation would enable growers to sell off the surplus to other states, Coppinger said. Allowing the export of legally grown cannabis to other states where pot is also legal could wipe out black market sales, she said. As of mid-2018, nine states and Washington, D.C, have legalized marijuana for recreational use for adults over the age of 21.

Said Bracelin: “Oregon is stifling its newest bounty crop and craft industry. While we fight over counties and state’s borders and federal acceptance, other countries are moving much faster and looking at international import/export markets.”

A byproduct of export would enable regulated shops, growers and processors to showcase the best Oregon growers have to offer. Products with high THC (tetrahydrocannabinol) content, unique terpenes and flavor all can be found at the corner retail outlet.

“There’s so much talent, and it’s a fun process,” Coppinger said. “You don’t get that in the black market. You don’t have any choices, just what the dealer offers.”

In Oregon the OLCC has taken steps to prevent the diversion of legally grown cannabis to the black market. This summer saw the start of Operation Good Harvest, a program that requires a growers to notify the OLCC when harvesting begins.

Nearly 70 inspections were done of outdoor grow sites, Pettinger said.

“We acknowledge there may be licensees conducting this type of illegal activity, but it comes to light through anomalous activity that comes through the cannabis tracking system, which is noticeable since our monitoring and detection has improved,” he said.

When growers identify plants as waste, they must take them off their inventory, report the waste to the OLCC, store the plants under video surveillance for three days and dispose of the plants by mixing the plants with yard debris, wood chips or sawdust and taking it to the landfill if composting is not feasible.

This summer also saw the transfer of 2,000 medical growing sites that grow for three or more patients in the Oregon Medical Marijuana Program to the regulator authority of the OLCC. Those growing sites must tag and register their plants in the cannabis tracking system.

Another step the OLCC took to tighten the system came in August when it began limiting the daily purchase amount for medical card holders to 1 ounce.

Previously, the limit was 24 ounces for medical card holders. The restriction lifts in six months.

“None of us have figured out where the point of diversion is occurring,” said Carol Yann, Oregon Medical Marijuana Program section manager. “The majority of our growers are growing for themselves. We want to get a handle on the diversion.”

— Reporter: 541-633-2117, sroig@bendbulletin.com

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