On January 4, 2018, Attorney General Jeff Sessions rescinded the Cole Memo. For those that are familiar, the Cole Memo was a rider attached to the annual Federal Budget Bill that restricted funding for enforcement of state legal cannabis. With this saber-rattling from the Attorney General, and the Cole Memo protections being rescinded, many Oregon OLCC licensees are understandably concerned.
More recently, the U. S. Attorney for the District of Oregon, Billy Williams, stated his concerns regarding overproduction of cannabis in Oregon creating a “high risk for illegal diversion of product”.
Oregon, unlike other states, has not put any limitations on the number of licenses being issued. As of January 16, the OLCC website reports 1677 active cannabis businesses, with 3436 total applications, and 67 licenses already surrendered. Both Washington and Colorado will have fewer licenses with greater populations. This unlimited issuing of licenses has created an over-saturated market. Although the OLCC is charged with reporting to the legislature regarding supply and demand, they are unable, as of yet, to obtain good statistics, due to many factors including the short time frame since the inception of OLCC licensing and issues with the new tracking software.
Craig Pope, Polk County Commissioner and current President of the Association of Oregon Counties states “there is an obvious problem with oversupply. Why is the state still issuing licenses with an apparent overproduction problem and a market price that is dropping substantially?” This being the case, many OLCC licensees are asking if it is time to place a moratorium on new licensing. Many Oregon entrepreneurs have put their life savings into these fledgling businesses and expect state officials and the legislature to issue real protections that will keep federal enforcement at bay. Estimates are that 1,000,000 pounds of cannabis are tracked by the state system, with consumption rates estimated to be considerably less. This vast oversupply comes with a considerable risk. Recently in Oregon, the wholesale price of cannabis has dropped dramatically. This is good for consumer pricing and should be sustained over time, but creates a risk for black market diversion in the short term. As licensees, we can no longer stick our collective heads in the sand regarding the historical and current existence of a robust black market that blurs the lines and threatens the newly legalized industry.
The state needs to gather information from industry members that are actually invested and operating these businesses. Most folks running the cannabis associations within the state do not have any direct stake in the market and are not representing what most licensees desire, a moratorium on new licensing. U.S. Attorney Williams has suggested that a summit of Federal, State and local law enforcement, public health organizations, marijuana interests, and other concerned groups, take place to address and remedy the concerns raised. Many licensees support a moratorium on licensing until such time as we can get a better handle on supply and demand. It just makes no sense to forge ahead without gathering information crucial to the appropriate support and protection of the industry. As industry members, we hope to work with officials at all levels to correct the over saturation and oversupply issues that loom large at present.
Washington state industry members, even though they have a cap on licensing, are asking for state officials to reduce canopy sizes, extinguish failed licenses and place a moratorium on new licensing (some not having been let yet). In Oregon, we need to consider carefully what will create a better system for all involved. OLCC licensees are supportive of a moratorium on new licensing. This will help stabilize the fledgling market and enable officials to better serve the needs of our new industry.
The voters of Oregon voted for cannabis to be regulated much like alcohol. Alcohol licenses are issued based on area and population so that the market is not over saturated. Why is this not the case for cannabis? Originally the discussions at the legislature were to include licensing restrictions similar to alcohol, but the language was later removed. Sadly, the OLCC’s website still includes this deleted language and many licensees have relied on this misinformation, believing there would be an eventual consideration of market saturation.
In the coming days, licensee signatures will be gathered and sent to elected officials, in support of a moratorium on new licensing. It is time to serve the needs of the Oregonian’s invested in cannabis. Let’s get a handle on the oversupply that threatens these legal businesses and let’s keep the federal government’s enforcement of legal cannabis at bay. Licensees support enforcement of black market activity.
A moratorium on new licensing will support the licensee’s that are all in on these cannabis businesses, until such time that supply and demand can be balanced. state officials need to stop denying the fact that they are currently limited in their ability to oversee the market. The legislature needs to act now to support the industry, not wait until the problem becomes even worse.
Margo Lucas is the owner of West Salem Cannabis and Cowgirl Cannabis. A believer in good communication and education, Lucas has advocated for the industry at city, county and state levels.