Oregon may deny new marijuana cultivation licenses due to surplus

Oregon’s oversupply of cannabis has prompted lawmakers to attempt to give the Oregon Liquor Control Commission more leeway to deny new cultivation licenses based on supply and demand.

A bill that passed the Senate and is now before the House would not only reduce the huge surplus but would prevent diversion of unsold legal marijuana into the illicit market and forestall a crackdown by federal prosecutors.

Democratic Gov. Kate Brown indicated she intends to sign the bill if, as expected, it wins final passage.

The legislation could be a lifeline to some cannabis businesses feeling the squeeze of market forces.

Supply is running twice as high as demand, meaning the surplus from last year’s harvest alone could amount to roughly 2.3 million pounds of marijuana, by the liquor commission’s figures.

Retail prices in Oregon for legal cannabis plummeted from more than $10 per gram in October 2016 to less than $5 last December. At the same time, smaller marijuana businesses are feeling competition from bigger, richer players, some from out of state.

Officials worry that some license holders will become so desperate they will divert their product into the black market rather than see it go unsold.

Oregon puts no cap on the number of licenses that can be issued. Last June, the OLCC stopped accepting applications so it could process a monthslong backlog.

But under current law, it has no specific authority to say no to otherwise qualified applicants.

– Associated Press