• Home  / 
  • News
  •  /  Cannabis Oversupply in Some States Lead to Falling Prices

Cannabis Oversupply in Some States Lead to Falling Prices

Supply and demand chart drawn on a blackboard.

A recent report by the Oregon-Idaho High-Intensity Drug Trafficking Area found that about 70% of the state’s recreational marijuana goes unsold. As you could imagine, that’s a lot of precious inventory to toss out—to make things worse, marijuana prices in the state have plummeted since legalization, so what little product they can sell doesn’t bring much to the table.

But this is more than an economic problem. It’s also a legal one. It turns out when you let some business owners and growers sit on a small but unsellable fortune of marijuana, they may start participating in illicit out-of-state trading. There are plenty of people in states that have not legalized cannabis who would be happy to buy it—and for much higher, black market prices.

So concerning is this problem that Oregon’s federal law enforcement officer, Billy Williams, U.S. Attorney for Oregon, demanded local officials and the state to help crack down on this illegal interstate activity. “It’s time for the state to wake up, slow down and address these issues in a responsible and thoughtful manner,” he says, going on to talk about how rampant overproduction of marijuana is putting too much pressure on sellers and growers to partake in illegally transporting it elsewhere so they can maintain a profit.

Oregon authorities say they’ve already collected over fifteen thousand pounds of illegal marijuana routed for out-of-state sale, and that doesn’t even include what they’ve confiscated from airports.
Things look a bit different in Colorado. A study of the state’s marijuana industry by researchers at the University of Colorado Boulder found that most marijuana farmers are only planting half of the cannabis they’re legally permitted to grow—and they’re still meeting demand.

Ever since Colorado legalized marijuana (in 2014, about two years before Oregon), the state placed more numerous and much stricter regulations on it than Oregon did. Some of these regulations were geared toward immediately cutting back the propensity for black market activity. For instance, Colorado capped licenses, gave existing medical marijuana growers priority over newcomers, and incentivized the medical industry’s involvement in the cannabis market, all of which lead to a more balanced and stable economy.

Some experts wonder if the Colorado statistics are misleading. Plenty of marijuana growers are using their crop harvests to join the trending cannabis oil extract market. It takes a lot more cannabis to make extracts—up to ten times more. So perhaps some of the cannabis inventory “leftovers” can be accounted for if we take oil extracts into consideration. But even holding that constant, we can weigh the State’s unsold bud by the ton.

Click here to add a comment

Leave a comment: