Study: Oregon Has 6.5 Years of Cannabis Oversupply

A study completed last week by the Oregon Liquor Control Commission and submitted to state legislators shows that the level of oversupply in the Oregon market is so high that existing stocks could supply 6.5 years of current demand, The Oregonian reports.

The report was compiled over the last three years of growing and two years of legal sales. Regulators wanted to stay in touch with how the market was developing and identify what policies may need to be adjusted. A previous audit by the Oregon Health Authority showed that regulators were not staying up on inspections or doing enough to prevent the diversion of cannabis product to the illicit market.

Demand consisted of about half of the cannabis produced between July 2017 and June 2018, which was 2,000 metric tons (4.4 million pounds). If licenses continue to be approved as expected, Oregon is expected to produce 4,000 metric tons (nearly 9 million pounds) of cannabis by June 2019.

The main problem created by this oversupply, for the cannabis industry, is plunging prices.

Other interesting data from the report: cannabis sold in legal adult-use stores only consists of about 45 percent of the amount actually consumed in the state by end users. The rest comes from a variety of sources, including legal home grows, medical dispensaries and the illicit market. Medical patients are starting to transition to adult-use stores as well, and the state’s medical cannabis program is shrinking.

Analysts do not believe that there is one clear path on the issue, such as capping producer licenses. Should the federal government legalize interstate commerce of cannabis, for instance, Oregon’s oversupply could suddenly be worth a lot of money once shipped around the U.S.

There is currently a bill in the Oregon legislature that hopes to establish interstate cannabis commerce, though it may not accomplish much without federal legalization.