Study: Oregon would double marijuana supply if all producer licenses allotted

A new study of the economics of Oregon’s recreational cannabis industry shows the state would nearly double its cannabis supply if regulators approved all pending producer applications, which could potentially strain an already glutted market.

Oregon’s market has struggled with oversupply issues, driving prices down for adult-use cannabis growers and attracting pressure from federal regulators concerned about diversion of cannabis out of state.

The study, released Wednesday, suggests the oversupply situation is unlikely to change anytime soon.

The report comes as state regulators and policymakers have raised the idea of imposing caps on the number of business licenses and curbing – or even reducing – canopy size limits for growers.

Here are some key findings from the biennial Recreational Marijuana Supply and Demand Legislative Report, conducted by the Oregon Liquor Control Commission, which regulates the state’s marijuana program:

  • Between July 2017 and June 2018, recreational cannabis demand represented 50% of supply; the other 50% remained accounted for in recreational licensees’ inventory and contained within the recreational system.
  • Licensed recreational producers harvested more than 2,000 metric tons of wet, untrimmed marijuana in 2018; if all currently pending producer applications were approved, estimated production would increase to nearly 4,000 metric tons of wet weight.
  • As of Jan. 1, 2019, the recreational market has 6½ years worth of theoretical supply in licensees’ inventory accounted for and contained within Oregon’s cannabis tracking system.
  • An estimated 55% of total statewide marijuana consumption among Oregonians 21 or older is procured from recreational cannabis retailers versus the black market. Based on existing levels of production, all consumption of marijuana among Oregon adults could be supplied by the legal market.
  • Increased supply has resulted in consumer prices falling from more than $10 per gram of marijuana in October 2016 to less than $5 per gram in December 2018. Despite those falling prices, the overall sales have continued to increase year-over-year, rising nearly 16% between December 2017 and December 2018.

The report also notes that “even under assumptions of growth in demand caused by more Oregonians consuming more marijuana, supply will almost certainly continue to exceed demand at current levels of production.”

3 comments on “Study: Oregon would double marijuana supply if all producer licenses allotted
  1. Rick on

    A friend visited Portland a year ago and told me that prices here in Washington were cheaper with the exception of edibles. He’s driving down again next week to visit some friends and we’re both curious to see if cannabis is cheaper in Oregon.

    Reply
    • George on

      The stats don’t lie. If the state and OLCC were working in the best interests of all state LEGAL businesses they would limit growers to current licensees and shut down illegal grows, thus turning a struggling state industry into a vibrant tax producing partner. This would also tremendously reduce product leaving the state. Common sense.

      Reply

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