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Oregon's legal weed is being undermined by cheap supply, and a black market

Recreational marijuana in Oregon, the first U.S. state to decriminalize cannabis, is suddenly facing an unexpected challenge — there’s too much of it.

Low barriers to entry have created a supply so voluminous, there’s enough marijuana to satisfy more than 6 years worth of demand, according to an analysis published by the Oregon Liquor Control Commission.

And that glut may be re-energizing a black market that proponents had hoped to squash.

“When Oregon set its laws up, one of its primary concerns was incorporating as many participates from the black market into the legalized market as possible,” Old Apple Farm owner Michael Getlin told Yahoo Finance’s YFi PM.


Getlin runs a 15,000-square-foot cannabis farm in Oregon City. “We purposely built very low entry barriers and made it very inexpensive to produce cannabis in Oregon,” he said.

The economics have made Oregon the cheapest state to buy marijuana in the U.S. An ounce of high-grade pot sells for an average $211 per ounce, compared to $326 nationally, based on the latest figures from the Oxford Treatment Center.

“There’s no doubt we’re still growing more than we need here in Oregon,” Getlin told Yahoo Finance.

‘Prolific trafficking’

As a result of the over-supply and rock-bottom prices, Oregon’s surplus marijuana is flooding the black market.

A recent threat assessment report by the U.S Office of National Drug Control Policy highlights the “prolific trafficking of [Oregon] product across state borders…largely destined for distribution points in the eastern half of the United States.” In many of those states, pot is still not fully legal.

Marijuana plants at a legal cannabis grow facility in Oregon.
Marijuana plants at a legal cannabis grow facility in Oregon.

But growers like Getlin remain optimistic that better times are ahead. “Oregon has always been, and will always be, a production hub for cannabis nationwide,” he said.

“Hopefully in the not-too distant future, we’ll be able to start shipping our products like a more normalized marketplace,” he added.

Two newly enacted laws are aiming to do just that. S.B. 582 allows the creation of a legal framework for Oregon’s marijuana licensees to export their product to proprietors in other states where recreational pot is legal.

Meanwhile, S.B. 218 gives the Oregon Liquor Control Commission the power to refuse new production licenses based on supply and demand.

“We will become more like soybeans over time,” Getlin told Yahoo Finance.

Nick Robertson is a senior producer at Yahoo Finance.