saw a steady flow of customers.
Little wonder: A gram of weed was selling for less than the price of a glass of wine.
The $4 and $5 grams enticed Scotty Saunders, a 24-year-old sporting a gray hoodie, to spend $88 picking out new products to try with a friend. “We’ve definitely seen a huge drop in prices,” he says.
Across the wood-and-glass counter, Bridge City owner David Alport was less delighted. He says he’s never sold marijuana this cheap before.
“We have standard grams on the shelf at $4,” Alport says. “Before, we didn’t see a gram below $8.”
The scene at Bridge City Collective is playing out across the city and state. Three years into Oregon’s era of recreational cannabis, the state is inundated with legal weed.
It turns out Oregonians are good at growing cannabis—too good.
In February, state officials announced that 1.1 million pounds of cannabis flower were logged in the state’s database.
If a million pounds sounds like a lot of pot, that’s because it is: Last year, Oregonians smoked, vaped or otherwise consumed just under 340,000 pounds of legal bud.
That means Oregon farmers have grown three times what their clientele can smoke in a year.
Yet state documents show the number of Oregon weed farmers is poised to double this summer—without much regard to whether there’s demand to fill.
The result? Prices are dropping to unprecedented lows in auction houses and on dispensary counters across the state.
Wholesale sun-grown weed fell from $1,500 a pound last summer to as low as $700 by mid-October. On store shelves, that means the price of sun-grown flower has been sliced in half to those four-buck grams.
For Oregon customers, this is a bonanza. A gram of the beloved Girl Scout Cookies strain now sells for little more than two boxes of actual Girl Scout cookies.
But it has left growers and sellers with a high-cost product that’s a financial loser. And a new feeling has descended on the once-confident Oregon cannabis industry: panic.
“The business has been up and down and up and down,” says Don Morse, who closed his
Human Collective II dispensary in Southwest Portland four months ago. “But in a lot of ways it has just been down and down for dispensaries.”
This month, WW spoke to two dozen people across Oregon’s cannabis industry. They describe a bleak scene: Small businesses laying off employees and shrinking operations. Farms shuttering. People losing their life’s savings are unable to declare bankruptcy because marijuana is still a federally scheduled narcotic.
To be sure, every new market creates winners and losers. But the glut of legal weed places Oregon’s young industry in a precarious position, and could swiftly reshape it.
Oregon’s wineries, breweries and distilleries have experienced some of the same kind of shakeout over time. But the time table is faster with pot: For many businesses, it’s boom to bust within months.
Mom-and-pop farms are accepting low-ball offers to sell to out-of-state investors, and what was once a diverse—and local—market is increasingly owned by a few big players. And frantic growers face an even greater temptation to illegally leak excess grass across state lines—and into the cross hairs of U.S. Attorney General Jeff Sessions’ Justice Department.
“If somebody has got thousands of pounds that they can’t sell, they are desperate,” says Myron Chadowitz, who owns the Eugene farm
Cannassentials. “Desperate people do desperate things.”
In March, Robin Cordell posted a distress signal on Instagram.
“The prices are so low,” she wrote, “and without hustling all day, hoping to find the odd shop with an empty jar, it doesn’t seem to move at any price.”
Cordell has a rare level of visibility for a cannabis grower. Her Oregon City farm,
Oregon Girl Gardens, received glowing profiles from Dope Magazine and Oregon Leaf. She has 12 years of experience in the medical marijuana system, a plot of family land in Clackamas County, and branding as one of the state’s leaders in organic and women-led cannabis horticulture.
She fears she’ll be out of business by the end of the year.
“The prices just never went back up,” she says.
Cordell ran headlong into Oregon’s catastrophically bountiful cannabis crop.
The Oregon Liquor Control Commission handed out dozens of licenses to new farmers who planted their first crop last spring. Mild weather blessed the summer of 2017 and stretched generously into the fall. And growers going into their second summer season planted extra seeds to make up for flower lost to a 2016 storm, the last vestige of a brutal typhoon blown across the Pacific from Asia.
“That storm naturally constrained the supply even though there were a lot of cultivators,” says Beau Whitney, senior economist for
New Frontier Data, which studies the cannabis industry.
It kept supply low and prices high in 2017—even though the state was handing out licenses at an alarming rate.
“It was a hot new market,” Whitney says. “There weren’t a whole lot of barriers to entry. The OLCC basically issued a license to anyone who qualified.”
Chadowitz of Cannassentials blames out-of-state money for flooding the Oregon system. In 2016, state lawmakers decided to lift a restriction that barred out-of-state investors from owning controlling shares of local farms and dispensaries.
It was a controversial choice—one that many longtime growers still resent.
“The root of the entire thing was allowance of outside money into Oregon,” Chadowitz says. “Anyone could get the money they needed. Unlimited money and unlimited licenses, you’re going to get unlimited flower and crash the market.”
As of April 1, Oregon had licensed 963 recreational cannabis grows, while another 910 awaited OLCC approval.
That means oversupply is only going to increase as more farms start harvesting bud.
The OLCC has said repeatedly that it has no authority to limit the number of licenses it grants to growers, wholesalers and dispensaries (although by contrast, the number of liquor stores in Oregon is strictly limited).
Since voters legalized recreational marijuana in 2014, many industry veterans from the medical marijuana years have chafed at the entrance of new money, warning it would destroy a carefully crafted farm ecosystem.
The same problem has plagued cannabis industries in other states that have legalized recreational weed. In 2016, Colorado saw wholesale prices for recreational flower drop 38 percent. Washington saw its pot drop in value at the same time Oregon did.
The OLCC remains committed to facilitating a free market for recreational marijuana in which anyone can try their hand at growing or selling.
“[The law] has to be explicit that we have that authority to limit or put a cap on licenses,” says OLCC spokesman Mark Pettinger. “It doesn’t say that we could put a cap on licenses. The only thing that we can regulate is canopy size.”
The demand for weed in Oregon is robust—the state reeled in $68 million in cannabis sales taxes last year—but it can’t keep pace with supply.
Whitney says it’s not unusual for a new industry to attract speculators and people without much business savvy.
“Whenever you have these emerging markets, there’s going to be a lot of people entering the market looking for profit,” he says. “Once it becomes saturated, it becomes more competitive. This is not a phenomenon that is unique to cannabis. There used to be a lot of computer companies, but there’s not so many anymore.”
mou mooouunt..mouuuuntainssss
