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Oregon Senate Passes Bill to Stop Recreational Marijuana Production

Oregon Senate Passes Bill to Limit Recreational Marijuana Production


Oregon Senate Passes Bill to Stop Recreational Marijuana Production

Will it nip the oversupply issue in the bud?

Since the inception of Ballot Measure 91, which officially legalized recreational marijuana throughout Oregon, the state has struggled with a problem that, upon first glance, would seem like a good problem to have—they produced too much marijuana. As a result, state lawmakers are moving forward with a bill that would effectively limit the amount of legal cannabis being produced throughout Oregon.

On Monday, the Senate voted 18-10 to pass a bill that would freeze marijuana production at its current levels, rather than continuing to produce the plant, which has, in turn, decreased its overall value. Studies have shown the price of cannabis has dropped nearly 50 percent since the industry’s 2016 inception, due to oversupply. The price of a gram, for example, has dropped from roughly $10 to $5.

Fighting Oversupply with Regulation

Per a report from the Associated Press, Portland Sen. Michael Dembrow (D), claims the state has enough cannabis, currently, to last six-and-a-half years, requiring government intervention to ensure dispensaries can continue to sell their product at competitive pricing and stay afloat.

An earlier version of the bill was shot down last month by Republicans, who argued that prices should be dictated by free market supply and demand, rather than controlled government intervention. However, after additional thought, some Republican lawmakers have appeared reversed course, citing the new bill to be “narrower in scope.”

Back in February, lawmakers introduced Senate Bill 582, which would allow “cross-jurisdictional coordination and enforcement of marijuana-related businesses,” or in other words, allow Oregon to supply other legal cannabis states with their abundance of cannabis. Due to the current federal status of cannabis as a Schedule I substance, it remains illegal for cannabis to cross state lines.

Back in 2017, the state also proposed Senate Bill 1042, which also would have allowed interstate exporting between Oregon and states like Colorado, Washington, and California. Bill 582 would have, presumably, included some provisions from the original Bill, before it was ultimately shut down.

Experts argue that that method would have nipped oversupply in the bud—pun not intended.

“ would create more of a market in which quality and branding and other things would come into play more so than just pure price,” Beau Whitney, a Washington D.C.-based Senior Economist with cannabis consulting firm, New Frontier Data, told the Statesman Journal. “It would either slow or stop the price declines, because there wouldn’t be any more excess.”

Interstate exporting doesn’t seem to be on the latest Bill’s docket. Instead, the state will not issue new production licenses to growers but will allow already- licensed growers to renew theirs. This would help keep cannabis production at its current levels.

The Bill must now go through the House for further consideration. If it passes, Oregon’s oversaturated market might finally take a turn.

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