Study: Oregon’s Marijuana Supply More than Doubles Demand

The Oregon Liquor Control Commission is required to issue an annual report regarding marijuana supply and demand. The study’s data has been released indicating that the supply far exceeds the demand. It’s estimated that the overstock could supply the market demand for about 6 ½ years.

The study looked at production data from the 3 previous years and 2 years of sales records, according to Oregon Live. One of the issues could be that there is no cap on producer licensing (growers). The licensing fees in the state are also rather low in comparison to the rest of the country.

A gram of marijuana used to cost around $10 in Oregon, but with the huge supply, those prices have dropped to under $5/gram in most areas.

In 2018, producers harvested 4.4-million pounds of marijuana.

It’s estimated that 45% of the marijuana consumed is not purchased from licensed stores – it’s coming from home grows, the black market and medical marijuana cultivators.

Non-flower products such as edibles, concentrates, tinctures and extracts have seen continued increases in sales, with December showing as the strongest month for sales.

Medical marijuana patients are visiting regulated stores, which is good news for the industry. It’s estimated that monthly sales to patients averages about $5-million.

From 2017 to 2018, sales of extracts and concentrates rose 40% from $12.5 million to $17.5 million.

The report says, “Supply exceeding demand in and of itself is not an indicator of illegal activity that warrants drastically policy action, but may instead be an indication of speculative bets and pending market corrections.”

The existing cultivators in the state could benefit from federally legal marijuana as interstate trade might be allowed.

The report says, “In this way, businesses in Oregon’s recreational marijuana markets are in some ways analogous to technology start-ups.”

What this means is that these are seasoned cultivators in a seasoned market that can benefit new markets.

It isn’t known what steps the state might take to help regulate this massive oversupply, but it is speculated that a cap on cultivator licenses or a moratorium on them could take place. An approach similar to Colorado’s where a cap on how much can be produced is also an option.