Oregon Has Way Too Much Legal Weed: This Is Where It’s Going

Cannabis field in Oregon USA Photo: Shutterstock

Oregon has a weed problem. How big of a problem it is depends on whom you ask, but the gist is that people in the state are growing way too much cannabis. In fact, you may have heard: As of January, there was officially enough pot in the state to last for six and a half years.

Part of the story of this abundance has to do with simple geography: Southern Oregon, like Northern California and its famed Humboldt County, features near-ideal outdoor growing conditions for cannabis. But after legalizing weed in 2014, Oregon also featured among the lowest barriers to entry of any legal weed state. The situation has led to what State Senator Floyd Prozanski described in an interview as “so much capital flooding in, and overproduction.” While Prozanski supports the state’s emerging cannabis industry and thinks Oregon “can and should be an export state,” he said he was deeply worried all that oversupply was going into the illicit market.

He’s not alone. Politicians were so concerned Oregon was too good at growing cannabis that they were able to get two laws regarding weed supply signed into law earlier this summer. But with an apparently massive oversupply, what happens to all that weed when there’s no one to sell it to?

Conversations with a bevy of industry players and local officials painted a picture less of black market infiltration and more of hundreds of pounds of weed rotting in trash bags, while processors who make dabs and other extracts rapidly ramp up their production. Yet even as the state’s oversupply became an ingrained fact of life, spirits remained, well, high. In other words, people are still willing to believe it’s just a matter of time before Oregon takes over the American weed industry.

And if a bunch of weed rots in the meantime, so be it.

If you go to a dispensary in Portland right now, the prices likely won’t be as low as you might expect in a state overflowing with buds. With careful looking around, it is possible to find weed for $60 an ounce, but quality bud is currently around $120-$200 an ounce. In fact, when asked about the reported oversupply, Alisha Satterfield, general manager at Urban Farmacy in Portland, smirked: “Good luck finding it.”

While prices in the recreational market are lower than what they were a few years ago, in the past few months prices for wholesale flower—the buds that most people think of as “weed”—have actually been going up, industry insiders said. It’s getting tougher for Satterfield to find flower at low wholesale price, she noted, and VICE heard similar stories from other dispensaries and other players throughout the state.

According to Todd Jeremy, manager at Papa Buds, another Portland dispensary, “Pretty much all the cheap bud is gone,” and it feels like they are in a bit of a shortage until the next “Croptober.” That is in October, when Oregon’s large outdoor harvest comes in, which accounts for the bulk of the cannabis produced in the state, according to the Oregon Liquor Control Commission (OLCC), the state’s chief weed regulatory agency. The story was the same from the grower side. “Everyone is calling us because we have flower left,” said Steve Penman, a part owner of SugarTree Farms in Southern Oregon. It is “night and day compared to this point in 2017,” when oversupply first became a serious concern.

In fact, it’s worth casting a bit of skepticism on the official numbers highlighting the oversupply in the first place. The OLCC, from whose January report the 6.5-year figure emerged, measures THC that could be deprived from all existing products in the system. Yet the report admits this number is meant to be an upper theoretical limit, noting, “Almost certainly some amount of the existing inventory in the recreational system will never be sold. It may become too stale to be sold or is of insufficient quality to compete in the current market environment. In fact, anecdotally some of it may already be waste that has not yet been disposed of.”

When looking at just yearly production and not back inventory, according to the report, supply is twice the expected demand—a still large but more modest number.

How much of the official inventory is unusually old product or marginal trim is a big question. Rules on disposal of extra weed, optimism about low quality product eventually having some value, and the raw emotional attachment many longtime growers have to their crop have created incentives to rarely—if ever—throw out flower. OLCC officials shared data with VICE that lended credence to this idea: According to the Commission, a quarter of the “usable marijuana” plant material in the system is from before the 2018 harvest.

It is a “pain in the butt to waste out,” according to Tim Garrison, a procurement manager at Hydra Distribution, who said it’s normally a last priority for many operations. The destruction of any useless cannabis must be well documented and done on-camera in a specific manner to comply with regulations. Garrison said there were “hundreds of pounds” of what is effectively waste material on farms but still technically in the system, sometimes “just sitting in big black bags.”

Penman echoed his account, noting that while SugarTree Farms was trying to be good at dealing with waste quickly and not getting overly sentimental, he was “sitting on a couple hundred pounds [of a particular type of trim that] may go to waste, may go to one of these new extractors.” Extractors, or processors, make the fancy weed-derived products that include vape pens and dabs. (Another reason the total potential THC in the system might be skewed is what growers call lab shopping, the practice of sending samples to different labs until they get a desired result, which is often a high THC content they can advertise, according to the government’s audit.)

Indeed, the biggest single source of where all the extra weed went in Oregon is to processors who turn it into cartridges, shatter, distillate, and dabs. According to the OLCC report, “Processors appear to be taking advantage of low prices on input material to ‘stock up’ for projected future sales; extracts and concentrates are more shelf-stable than either usable marijuana or edibles and tinctures.”

Not only do concentrates go bad more slowly, but at least some of these concentrate products can be made from less attractive source material.

Of course, during the last Croptober, when prices were low and many growers needed cash, financed processors were picking up a lot of quality bud, along with trim. Some were “picking up a lot at dirt cheap prices,” according to Ian Van Veen Shaughnessy, CEO of Rare Industries, a maker of CO2 extract vape pens, who said he saw B-grade bud selling for “next to nothing several months ago.” Jason Merkel, a lab manager at Dab Factory, an extraction company, said that during the last harvest there were some growers even selling their A-grade bud to extractors at a low price.

So while prices for quality flower have stabilized and perhaps even started to grow slightly in recent months, the “dab market is seeing the lowest prices they have ever been,” according to Aviv Hadar, co-founder and CEO of Oregrown, whose account echoed that of other processors.

Still, virtually every grower, processor, and policymaker stressed how much people in the industry have their eyes set on the future. Whether it is the stories of growers just trying to hold on until prices go back up, or processors heavily investing to position their brand regardless of the short-term losses, the vast majority were convinced it was only a matter of time before federal law changed to allow them to sell across the country.

Of course, a lot needs to line up just right for them. First, federal law must change. Then Oregon would potentially also need to convince other states to allow their weed to be shipped in—all while being prepared to possibly compete and/or lobby to keep out well established international businesses from countries in which weed has already been legal. Especially the looming, extremely well-capitalized rival that is Canada.

But when that happens, the thinking goes, Oregon’s unique climate, terroir, and expertise could make it the main supplier for the country. “Anyone not looking to ramp up is missing the boat,” according to Van Veen Shaughnessy. Or as Merkel put it, the industry is focused on “doing small things now, so they can do big things later.”