Bend dispensaries react to marijuana oversupply report

(Update: Adding comments from Bend dispensaries)

PORTLAND, Ore. (AP) — Two of the first states to broadly legalize marijuana took different approaches to regulation that left Oregon with a vast oversupply and Colorado with a well-balanced market. But in both states, prices for bud have plummeted.

A new Oregon report by law enforcement found nearly 70 percent of the legal recreational marijuana grown goes unsold, while an unrelated state-commissioned Colorado study found most growers there are planting less than half of their legal allotment — and still meeting demand.

But representatives from several dispensaries in Bend said Thursday a large amount of the waste is actually made up of stems and loose leaves that never see the shelves, regardless of how the market looks.

“It’s between a third, I would say, and about half the product that goes to waste that is the undesirable part,” Miracle Greens owner Will Davis said.

The Oregon study released by the Oregon-Idaho High Intensity Drug Trafficking Area — a coalition of local, state and federal agencies — includes the medical and general-use markets and the illegal market, despite gaps in data on illicit marijuana grows.

The Colorado study, released Thursday, focuses on the legal, general-use market, and researchers at the University of Colorado Boulder’s business school and a Denver consulting firm had access to state tracking data to produce the first-of-its-kind analysis.

The law enforcement study noted Oregon still has a serious problem with out-of-state trafficking and black market grows — and the top federal law enforcement officer in Oregon demanded more cooperation from state and local officials Thursday in a strident statement.

“What is often lost in this discussion is the link between marijuana and serious, interstate criminal activity. Overproduction is rampant, and the illegal transport of product out-of-state — a violation of both state and federal law — continues unchecked,” said Billy Williams, U.S. Attorney for Oregon. “It’s time for the state to wake up, slow down and address these issues in a responsible and thoughtful manner.”

The tandem reports nevertheless offer different case studies for California and other pot-friendly states as they ramp up their legal pot industries. They also underscore some key differences in how broad legalization was handled that have helped shape differently evolving markets in each state.

Colorado sales of broadly legalized marijuana began in 2014, roughly two years before Oregon allowed marijuana to be sold at non-medical retail stores. And from the beginning, Colorado had stricter regulations for its growers than Oregon did.

Colorado gave existing medical marijuana growers the right of first refusal for licenses, cutting down right away on a potential source of black market production. The state also requires growers to show they have sold 85 percent of their output before allowing them to expand their growing operation, said Beau Whitney, senior economist at national cannabis analytics firm New Frontier Data.

“That was the right approach, and we’ve made that recommendation to other state regulators to do that because if you exclude the medical folks from entering the market, then there could be propensity for diversion” to the black market, he said.

“Colorado has done a good job in sizing the market. In Oregon, it’s going to take a while for that balance to be established.”

Oregon didn’t give existing medical marijuana growers priority over new applicants, as Colorado did, and it also didn’t cap licenses. That created a perfect storm of endless licenses for all comers, paired with less incentive for medical growers to enter the new industry.

The Pacific Northwest state also had to contend with a long-entrenched culture of illegal marijuana cultivation along its border with California, where there are near-perfect outdoor growing conditions. That tradition of illicit marijuana has created a nightmare for law enforcement agencies in rural, heavily forested counties already stretched thin by budget cuts.

The Oregon report, for example, noted nearly 15,000 pounds (6,800 kilograms) of marijuana with a street value of $48 million has been seized heading to 37 other states. That doesn’t include illegal pot snagged at Portland International Airport.

“I know a lot of the legal industry in Oregon has been asking for stepped-up enforcement to combat illegal operations, but there doesn’t appear in those conversations a clear owner of the law enforcement,” Whitney said.

Although Colorado has been more successful in finding a balance between supply and demand, retail prices for bud, or marijuana flower, have plummeted in both states about 50 percent since 2015.

That statistic could be deceiving, however, because most growers are now cultivating their crop for conversion into the increasingly popular oil extracts that wind up in everything from soaps to vape pens to edible gummies to salves. It takes 10 times more dried flower to make an oil extract, and much of the dried flower is going to that market, Whitney said.

“What the report demonstrates to us is that our licensed operators are operating responsibly,” said Mike Hartman, executive director of the Department of Revenue, which oversees marijuana regulation. “They’re not overproducing the amount of product they’re putting in the marketplace. They are operating to maximize product but also … emphasizing public health and safety.”

At Green Dot Labs in Boulder, CEO Alana Malone estimated the company grows about 1,600 of its allotted 1,800 plants that are used to produce cannabis oil products.

As one of Colorado’s oldest companies focused on producing extracts from marijuana plants, Malone said decisions about how much to plant are based on expected demand — and consumers’ interest in the type of concentrate products that Green Dot Labs produces is growing.

Malone said she was pleased that the Colorado study found about 32 metric tons of marijuana flower left in inventory by the end of 2017.

“That’s not even close to some of the figures you see from other states,” Malone said. “So I’m a little bit proud of that.”

Gillian Flaccus and Kathleen Foody are members of the AP’s marijuana beat team. Follow them on Twitter at https://twitter.com/gflaccus and https://twitter.com/katiefoody .

Follow complete AP marijuana coverage: https://apnews.com/tag/LegalMarijuana

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Statement from Billy Williams, U.S. Attorney for Oregon:

PORTLAND, Ore.–Billy J. Williams, U.S. Attorney for the District of Oregon provided the below statement on the release of the Oregon-Idaho High Intensity Drug Trafficking Area (HIDTA) 2018 Marijuana Insight Report.

“The recent HIDTA Insight Report on marijuana production, distribution, and consumption in Oregon confirms what we already know — it is out of control.

“The industry’s considerable and negative impacts on land use, water, and underage consumption must be addressed immediately. State officials should respond quickly and in a comprehensive manner to address the many concerns raised by this assessment.

“To date, we’ve seen insufficient progress from our state officials. We are alarmed by revelations from industry representatives, landowners and law enforcement partners describing the insufficient and underfunded regulatory and enforcement structure governing both recreational and medical use. A weakly regulated industry will continue to detract from the livability and health of communities throughout the state.”

“What is often lost in this discussion is the link between marijuana and serious, interstate criminal activity. Overproduction is rampant, and the illegal transport of product out of state — a violation of both state and federal law — continues unchecked. My ask continues to be for transparency, responsible regulation, adequate funding, and a willingness to work together. It’s time for the state to wake up, slow down, and address these issues in a responsible and thoughtful manner.”

The Oregon HIDTA program was established by the White House Office of National Drug Control Policy (ONDCP) in June of 1999. In 2015 the program expanded into Idaho and was renamed the Oregon-Idaho HIDTA. The Oregon-Idaho HIDTA consists of 14 counties and the Warm Springs Indian Reservation. Counties in the HIDTA include Oregon’s Clackamas, Deschutes, Douglas, Jackson, Lane, Linn, Malheur, Marion, Multnomah, Umatilla and Washington counties, and Idaho’s Ada, Bannock and Canyon counties
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News release from the group Smart Against Marijuana:

The Marijuana Trail: Oregon-Grown Pot Shipped to More than Half the Nation

(Alexandria, VA) – Today, a new report on marijuana production, distribution and consumption in Oregon is finding major problems since the legalization of the drug. The Idaho/Oregon High Intensity Drug Trafficking Area (HIDTA) report finds there is so much pot in circulation, it’s being shipped to more than half the states in the nation. The study also discovered many illicit growth sites are in impoverished counties that could one day see their economy collapse due to falling pot prices.

Moreover, one in four users are multiple day users in the state and there is about one marijuana grow site for every 19 users when adjusted for population growth. It’s a lot of pot, with most of it moving across borders.

Additionally, the report discovered that:

· More than a third of eighth graders reported exposure to online marijuana ads in the last 30 days

· Marijuana from Oregon had been seized while en route to 37 states including Ohio, Florida, New York, and New Jersey

· From 2011 to 2016, 84 percent of illicit grow sites were on federal lands contributing to $2.1 billion dollars-worth of marijuana grown on such sites

· As of this year, 31 percent of the pot inventory was distributed legally, leaving 69 percent unconsumed

· By 2016, pot was easier to access than cigarettes among 11 th graders in the state

To read the complete report, click here .

“The effects of commercialization on Oregon are painfully clear: more use, more advertising, and more Big Tobacco playbook tactics. There is no potency limit on pot in Oregon, and Big Marijuana is already producing multiple times the demand for pot, which is fueling a massive black market. It’s time we held the industry accountable for its actions.” says Dr. Kevin Sabet with SAM.