From a macro level, the Oregon cannabis industry is doing great. Governor Kate Brown states that 19,000 new jobs have been created thanks to legal marijuana and the Oregon Revenue Department statistics show that retail taxes are generating more than $20 million every quarter, over twice what the state initially projected. However, a closer examination details the obstacles that businesses face, particularly while cannabis remains illegal at the federal level: the tough competition and regulatory hurdles.
Competition in the adult use cannabis industry is going to be an issue in every legal market as investors and those that love the plant will always flock to the new burgeoning industry. It is exciting to enter a once prohibited market and the potential for profit is great. Only those that can provide a great product and set themselves apart will thrive.
The regulatory hurdles are the most maddening obstacles for the industry because unnecessary rules come from an irrational place out of a failed and harmful policy: federal cannabis prohibition. Because marijuana remains illegal at the national level, every state imposes strict tracking requirements on top of draconian federal policies that overly tax cannabis businesses and block their access to banks and other important services such as reasonable insurance rates.
Now, due to pressure from Jeff Session’s Justice Department, Oregon has been pressured to curtail the “surplus” of legal cannabis that has been registered in the state’s tracking system. As OPB reports, the Oregon Liquor Control Commission, which regulates the state’s recreational marijuana system, will now require outdoor growers to provide them with dates of their harvest so inspectors can have the ability to pop in to inspect:
The harvest doesn’t arrive until September, but a large over-supply of cannabis last year seriously depressed prices. And state regulators worry all that excess cannabis is flowing into the black market. If that market grows too big, it could prompt a federal government crackdown.
So the OLCC has drafted new rules to better monitor the harvest. The rules would require outdoor growers give the state advance notice before harvesting and several possible harvest dates.
The goal is to keep growers focused only on the amount of cannabis that can be sold on the legal, regulated market; a rogue grower, the thinking goes, will be less likely to divert crops to the black market if they know regulators could turn-up at any time.
Of course, many growers aren’t happy about this as it is hard to predict when you want to harvest when bad weather hits. Also, dealing with these inspections is another issue that these licensed growers must face as they are swamped by the logistics of finishing off their crucial harvest. Understandably, many licensed and regulated cultivators are feeling unnecessarily targeted when they have paid their fees, followed regulations, and had their harvest cannabis tracked, while those growing illegally are more likely to be shipping marijuana across state lines.
State regulators, on the other hand, are stuck between a rock and a hard place. They don’t want to quash an industry that is creating thousands of jobs and generating millions in new revenue for the state, so they feel forced to take incremental steps that will keep Jeff Sessions at bay while not hindering the overall system (too much).
The regulatory challenges Oregon has faced will likely be experienced by future legal markets, so long as cannabis remains illegal at the federal level. Until we end cannabis prohibition, marijuana will always be overregulated. While it is necessary to be focused on state and local laws impacting the cannabis industry, it is ever so important that we keep moving towards ending prohibition at the federal level, then the cannabis community can be freer, and the industry can be regulated more appropriately.
Keep up to date with the latest rules and regulations in Oregon, the U.S., and around the world at the upcoming International Cannabis Business Conference in Portland, Oregon, this September 27th-28th. Learn how to best comply with ever-changing rules and how you can set your cannabis business apart to survive and thrive in the coming years. Get your tickets by September 12th to save $200!