The Oregon Liquor Control Commission, the state agency charged with regulating Oregon’s two-year-old legal cannabis market, has reported that growers in the state are producing far more recreational weed than is being consumed at the retail level.
According to OLCC data, licensed cannabis cultivators produced more than one million pounds of dry cannabis flower in 2017. But retailers sold only 108,330 of herb to consumers. That leaves an additional 891,000 pounds of weed in the market.
However, officials aren’t sure that the state is really growing too much pot. Mark Pettinger is a spokesman with the OLCC. He said that analysts are still trying to determine the connection between retail sales and production. He noted that retail sales aren’t the only market for the flower. So, the difference might not indicate a glut of cannabis.
“We just can’t draw a corollary between the amount on hand, the 1 million pounds, and sales,” Pettinger said.
He noted that with so many variables and a newly legal industry, regulators don’t yet know what the data means.
“There’s a lot of unknowns about this,” Pettinger said. “We’ve not even processed two full years of legal recreational cannabis through the OLCC system. It’s been a challenge to forecast this market.”
He also noted that retail flower sales are not the only market for the state’s cannabis production.
“We need to do a deeper dive into the data and look at the value-added products (concentrates, oils, edibles, and tincture). We need that to answer the question of how much inventory of flower is enough for the regulated market.”
Survival of the Fittest
Although regulators don’t yet have enough information to identify trends, the market is showing signs of overproduction. Wholesale prices are already dropping, even as more growers are applying for licenses to begin cultivation.
After an impressive harvest in 2017, average prices for sun-grown cannabis dropped more than 50 percent in a matter of months– from $1500 to about $700 per pound, according to local media. Prices of $400 per unit, or even less, were not unheard of.
Lizette Coppinger, founder of Bend-based cannabis dispensary Cannabend, believes that some growers will be forced out of business as the market continues to mature.
“Oregon is going through a survival of the fittest phase, and only the top producers will survive,” she said.
Prices More Stable for Indoor Flower
Coppinger also noted that wholesale prices for high-quality indoor flower are more steady. Consequently, retail prices for top-shelf bud at dispensaries like hers haven’t dropped much.
“We have not cut prices because we still pay top dollar for the flower we buy,” she said. “It is the outdoor market that is suffering from the oversaturation of flower and competing against each other to survive. The producers we work with have not had to adjust their pricing as the quality of the product has only gotten better.”
Gary Bracelin owns cannabis cultivator and retailer Tokyo Starfish. He told local media that as the cannabis industry in Oregon and elsewhere matures, market forces are bound to take over.
“People are going to jump in because it looks promising,” Bracelin said. “The free market takes over and normalizes the supply and demand of the emerging market. California will probably go through the same growing pains. It’s simple economics.”
