Imbalance worsens as pot prices remain at a record low.
Oregon’s supply of marijuana now doubles demand for the crop, according to a recent report from the Oregon Liquor and Cannabis Commission.
The Oregonian reports it’s a longstanding problem for a long-struggling industry.
“The 2024 harvest indicates there will be larger inventory stockpiles in the system going forward, putting more downward pressure on prices and delaying revenue for marijuana businesses,” reads the OLCC report.
Last year, Oregon set a record for annual outdoor marijuana harvest, the result of dry, hot and smoke-free conditions. By October — the peak of grow season, aka “Croptober” — the annual yield was already 16% over 2023. It finished the year with a harvest of 12.3 million pounds.
At the same time, grams averaged $3.51 in December, a record low, and retail marijuana prices have been under $4 per gram for two years, according to the OLCC report. Sales were flat last year at $960.
Though marijuana grows abundantly here, Oregon’s marijuana industry is far from healthy. A perennially hefty surplus helps keep retail prices well below market value, and spread across a high number of marijuana businesses — 2,400 businesses — there aren’t good odds to make a profit.
The state with the support of the marijuana industry attempted to correct the imbalance in 2019 with a cap on marijuana business licenses, but the disconnect between supply and demand persists.
Oregon voters legalized recreational marijuana in 2014 though pot remains federally illegal. Businesses are further hampered by a federal requirement that marijuana only be sold in the state in which it was grown.
These challenges have a downstream effect on the many businesses that emerged to serve Oregon cannabis companies. They include professional service providers, security companies, law firms, testing labs and product manufacturers. Since the pandemic, many of these ancillary or “non-plant touching” businesses have gone under or switched their focus.
There are now 544 outdoor marijuana producers, 566 indoor producers and 236 producers with a mix. Outdoor production is dependent on weather and varies considerably by the year. The 2024 harvest of 5.7 million wet pounds is 4% higher than the prior record set in 2021.
“The Oregon recreational marijuana market has shown to be resilient and able to adapt to change but is continually disadvantaged by the marketplace being limited to Oregon,” reads the OLCC report. “Until the federal government creates pathways to interstate commerce, the Oregon recreational marijuana market will be characterized by variations on the same theme: a competitive marketplace that features low prices for consumers but low margins for businesses.”
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