Marijuana Business Magazine October 2019

Marijuana Business Magazine | October 2019 42 The likelihood of a free market where cannabis from Oregon can be trucked to customers in Nevada is quite low.” O regon has too much marijuana, and in June, Gov. Kate Brown signed a bill into law that would permit the state to enter agreements to ship cannabis elsewhere in the United States. Not long after, U.S. Sen. RonWyden and U.S. Rep. Earl Blumenauer, both fromOregon, introduced congressional legislation to allow states, including Oregon, to export cannabis to other state-legal marijuana markets. Is this really the remedy oversup- plied markets should be calling for? A Toll on Small Business Looked at shallowly, this plan seems to make sense. Oregon’s cannabis growers, like their neighbors to the south in California’s Emerald Triangle and those to the north in Washington state, are some of the best in the business. The tough competition in Oregon, with little to no barrier to entry to the market and rock-bottom wholesale prices, has forced these growers to become extremely efficient while maintaining high levels of quality. So the growers have produced more stellar marijuana than a state of just over 4 million people can consume. Surely, the good people of, say, Nevada would rather pay less for sustainably grown outdoor cannabis from the Pacific Northwest than spend top dollar for plants grown in an air-conditioned room under lights in the desert. But it’s not that simple. We often hear that the U.S. cannabis industry should be careful when the calls for federal legalization get too loud. Naysayers warn that national legalization would open the doors for massive waves of consolidation, and the state-by-state framework of markets—which currently work in favor of independent, smaller businesses—would cease to exist. There may be some truth to the consolidation point, but if you look a little deeper (in particular, consider the way state governments operate), I’d argue that the likelihood of a free market where cannabis from Oregon can be trucked to customers in Nevada is quite low. State Governments and Alcohol States like to function as their own economies. Consider the reluctant states that approved some form of legal marijuana for the monetary benefits and the job creation. I suspect lawmakers in the conservative parts of the United States didn’t get on board with legalization, even if it’s just a limited medical market, because they wanted to see Oregon marijuana growers get rich. They approved cannabis laws in part because they saw the tax revenue and new industry it created, the benefits to education and infrastructure. They saw the money. Here’s another consideration: The marijuana industry likes to compare itself to the alcohol space. So let’s take that comparison to how states regu- late spirits, wine and beer—including how alcohol is sold and distributed. The alcohol distribution system has three tiers: producers, distributors and retailers. Producers The ProblemWith Oregon’s Plan to Export Marijuana to Other States Trends & Hot Topics | Bart Schaneman