How do you move mountains of unwanted weed?

Oregon farmers have grown three times what their customers can smoke in a year, causing bud costs to plummet and panic to set in

A recent Sunday afternoon at the Bridge City Collective cannabis shop in north Portland considered a steady flow of customers.

Little wonder: a gram of weed was selling for less than the price of a glass of wine.

The$ 4 and$ 5 grams enticed Scotty Saunders, a 24 -year-old sporting a gray hoodie, to spend $88 picking out new products to try with a friend.” We’ve definitely watched a huge drop in prices ,” he says.

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Across the wood and glass counter, Bridge City owner David Alport was less delighted. He says he’s never sold marijuana this cheap before.

” We have standard grams on the shelf at$ 4 ,” Alport tells.” Before, we didn’t see a gram below $8.”

The scene at Bridge City Collective is playing out across the city and state. Three years into Oregon’s era of recreational cannabis, the state is inundated with legal weed.

It turns out Oregonians are good at growing cannabis- too good.

In February, state officials announced that 1.1 m pounds of cannabis bloom were logged in the state’s database.

If a million pounds sounds like a lot of pot, that’s because it is: last year, Oregonians smoked, vaped or otherwise consumed just under 340,000 lb of legal bud.

That entails Oregon farmers have grown three times what their clienteles can smoke in a year.

Yet state documents depict the number of Oregon weed farmers is poised to double this summer- without much regard to whether there’s demand to fill.

The result? Prices are falling to unprecedented lows in auction houses and on dispensary counters across the state.

Wholesale sun-grown weed fell from $1,500 a pound last summertime to as low as $700 by mid-October. On store shelves, that entails the price of sun-grown flower has been sliced in half to those four-buck grams.

For Oregon customers, this is a bonanza. A gram of the beloved Girl Scout Cookies strain now sells for little more than two boxes of actual Girl Scout cookies.

But it has left growers and marketers with a high-cost product that’s a financial loser. And a new feeling has descended on the once-confident Oregon cannabis industry: panic.

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” The business has been up and down and up and down ,” says Don Morse, who shut his Human Collective II dispensary in south-west Portland four months ago.” But in a lot of ways it has just been down and down for dispensaries .”

This month, WW spoke to two dozen people across Oregon’s cannabis industry. They describe a bleak scene: small businesses laying off employees and shrinking operations. Farms shuttering. People losing their life’s savings are unable to proclaim insolvency because marijuana is still a federally scheduled narcotic.

To be sure, every new marketplace creates wins and losers. But the glut of legal weed places Oregon’s young industry in a precarious position, and could swiftly reshape it.

Oregon’s wineries, breweries and distilleries have experienced some of the same kind of shakeout over time. But the timetable is faster with pot: for many businesses, it’s boom to bust within months.

Mom-and-pop farms are accepting lowball offers to sell to out-of-state investors, and what was once a diverse- and local- market is increasingly owned by a few big players. And frantic growers face an even greater temptation to illegally leak excess grass across nation lines- and into the crosshairs of US attorney general Jeff Sessions’ justice department.

” If someone has got thousands of pounds that they can’t sell, they are desperate ,” tells Myron Chadowitz, who owns the Eugene farm Cannassentials.” Desperate people do desperate things .”

In March, Robin Cordell posted a distress signal on Instagram.

” The costs are so low ,” she wrote,” and without hustling the working day, hoping to find the odd shop with an empty jar, it doesn’t seem to move at any price .”

Cordell has a rare level of visibility for a cannabis grower. Her Oregon City farm, Oregon Girl Gardens, received glowing profiles from Dope Magazine and Oregon Leaf. She has 12 years of experience in the medical marijuana system, a plot of family land in Clackamas county, and branding as one of the state’s leaders in organic and women-led cannabis horticulture.

She anxieties she’ll be out of business by the end of the year.

” The costs only never went back up ,” she says.

‘The ‘ The prices just never went back up.’

Cordell operated headlong into Oregon’s catastrophically bountiful cannabis crop.

The Oregon Liquor Control Commission( OLCC) handed out dozens of licenses to new farmers who planted their first harvest last spring. Mild weather blest the summer of 2017 and stretched generously into the autumn. And growers going into their second summertime season planted extra seeds to make up for flower lost to a 2016 blizzard, the last vestige of a brutal cyclone blown across the Pacific from Asia.

” That storm naturally constrained the render even though there were a lot of cultivators ,” tells Beau Whitney, senior economist for New Frontier Data, which studies the cannabis industry.

It kept supply low and prices high in 2017- even though the state was handing out licenses at an alarming rate.

” It was a hot new marketplace ,” Whitney tells.” There weren’t a whole lot of barriers to entry. The OLCC basically issued a license to anyone who qualified .”

Chadowitz blameds out-of-state money for flooding the Oregon system. In 2016, state lawmakers decided to lift a restriction that barred out-of-state investors from owning controlling shares of local farms and dispensaries.

It was a controversial selection- one that many longtime growers still resent.

” The root of the entire thing was allowance of outside money into Oregon ,” Chadowitz says.” Anyone could get the money they needed. Unlimited money and limitless licenses, you’re going to get limitless bloom and crash the market .”

As of 1 April, Oregon had licensed 963 recreational cannabis grows, while another 910 awaited OLCC approval.

That entails oversupply is only going to increase as more farms start harvesting bud.

The OLCC has said repeatedly that it has no authority to limit the number of licenses it awards to growers, wholesalers and dispensaries( although by contrast, the number of liquor stores in Oregon is strictly restriction ).

Since voters decriminalize recreational marijuana in 2014, many industry veterans from the medical marijuana years have chafed at the entrance of new money, cautioning it would destroy a carefully crafted farm ecosystem.

The same problem has plagued cannabis industries in other states that have decriminalize recreational weed. In 2016, Colorado assured wholesale prices for recreational bloom drop-off 38%. Washington watched its pot drop in value at the same hour Oregon did.

The OLCC remains committed to facilitating a free market for recreational marijuana in which anyone can try their hand at growing or selling.

“[ The law] has to be explicit that we have that authority to limit or put a cap on licenses ,” tells OLCC spokesman Mark Pettinger.” It doesn’t say that we could put a cap on licenses. The only thing that it is possible to regulate is canopy size .”

The demand for weed in Oregon is robust- the country reeled in $68 m in cannabis sales taxes last year- but it can’t keep pace with supply.

A A cannabis harvest at East Fork Cultivars, Oregon.

Whitney says it’s not unusual for a new industry to attract speculators and people without much business savvy.

” Whenever you have these emerging markets, there’s going to be a lot of people entering the market looking for profit ,” he says.” Once it becomes saturated, it becomes more competitive. This is not a phenomenon that is unique to cannabis. There used to be a lot of computer companies, but there’s not so many anymore .”

Across rolling hills of Oregon farmland and in Portland dispensaries as sleek as designer eyewear shops, the narrative plays out the same: Business owners can’t attain the low prices pencil out.

Nick Duyck is a second-generation farmer and proprietor of 3D Blueberry Farms in Washington county.” I was born and raised on blueberries ,” he says.

But last June, Duyck launched Private Reserve Cannabis, a weed grow designed to create permanent jobs for seasonal workers.

” By start their own businesses the cannabis business ,” says Duyck,” it maintains my guys busy on a year-round basis .”

He invested $250,000 in the structural build-outs, lighting, environmental controls and other initial costs to achieve a 5,000 sq ft, Tier I, OLCC-approved indoor canopy.

Ongoing labor and operational costs added another $20,000 a month.

Weed prices were high: Duyck forecast a $1,500 return per pound. If Duyck could make 20 lb of bloom a week, he’d stimulate back his money and start banking gains in simply three months.

‘A ‘ A gram of weed was selling for less than a glass of wine.’

October’s bumper crop tore those schemes apart.

” We got in at the incorrect hour ,” Duyck tells.” The outdoor harvest flooded the market .”

By the start of the new year, Duyck was sitting on 100 lb of ready-to-sell flower- an inventory percolating out to dispensaries in single-pound increments.

So he turned to a wholesaler, Cannabis Auctions LLC , which holds monthly fire sales in various undisclosed locatings throughout Oregon.

Weed auctions operate under a traditional model: vendors submit their wares, and buyers- dispensary owneds, intake managers and extract manufacturers- are given an opportunity to inspect products before bidding on parcels awarded to the highest dollar.

Duyck sent 60 lb of pot to the auction block in December. He had adjusted his expectations downward: he hoped to see something in the ballpark of $400 a pound.

It selling off $100 a pound.

” The price per pound that it expenses us to raise this product is significantly higher than the hundred dollars a pound ,” tells Duyck.( A little light math points to a $250 -per-unit production cost .)” Currently, we’re operating at a $15,000 -per-month loss ,” Duyck says.

If costs don’t improve soon, Duyck says he won’t be able to justify renewing his OLCC license for another year.

” The dispensaries that are out there, a lot of them have their own farms, so they don’t buy a lot of product from small farms like us'” Duyck tells.” If you really want to grow the product, you nearly have to own the store also .”

Middlemen- store owners without farms- are also suffering. Take Don Morse, who gave up selling weed on New Year’s Eve.

Morse operated Human Collective II, one of the earliest recreational stores in the city, which first opened as a medical marijuana supplier in 2010. At periods, Morse stocked 100 strains in his Multnomah Village location.

A A cannabis crop.’ I think if we let it be a painful moment, and not try to cover it up, we’re going to be better off for it.’

Morse lobbied for legal recreational weed and founded the Oregon Cannabis Business Council.

The shift to recreational was costly. With his business partner Sarah Bennett, Morse says he expended more than $100,000 in equipment to gratify country regulations.

By last summer, new stores were popping up at a rapid pace. Morse’s company wasn’t vertically integrated, which means it did not grow any of its own pot or operate a wholesaler that might have subsidized low sales.

” Competition around us was fierce, and the company started losing money, and it wasn’t worth it anymore ,” Morse tells.” At our peak, we had 20 employees. When we shut, we had six .”

Prices went into free fall in October: the average retail price dropped 40%.

Morse couldn’t see a way to stimulate the numbers work. Human Collective priced grams as low as$ 6 to compete with large chains like Nectar and Chalice, but it struggled to turn a profit.

” When you’re the little guy buying the product from wholesalers, you can’t afforded to compete ,” he tells.” There’s only so far you can lower the price. There’s too much of everything and too many people in the industry .”

So Morse closed his store:” We paid our creditors and that was that. That was the end of it .”

Despite losing his business, Morse stands behind Oregon’s light touch when it comes to regulating the industry.

” It’s just commercialism at its finest ,” he says.” Let the best survive. That’s just the way it goes in capitalism. That’s just the way it runs .”

Just as mom-and-pop grocery stores devoted route to big chains, people like Morse are losing out to bigger operations.

Chalice Farms has five stores in the Portland area and is opening a sixth in Happy Valley. La Mota has 15 dispensaries. Nectar has 11 storefronts in Oregon, with four more slated to open soon.

Despite the record-low prices in the cannabis industry, these chains are hiring and opening new places, sometimes after buying failed mom-and-pop shops.

The home page on Nectar’s website prominently declares:” Now buying dispensaries! Please contact us if you are a dispensary proprietor interested in selling your business .”

Nectar representatives did not respond to a request for comment.

Mason Mason Walker, the CEO of East Fork Cultivars.

Because the federal government does not distinguish legal marijuana, the industry cannot access traditional banking institutions or even federal tribunals. That entails business owners can’t declare bankruptcy to dissolve a failed dispensary or farm, leaving them with few options. They can try to liquidate their assets, destroy the product they have on hand and eat the losses.

Or they can sell the business to a company like Nectar, often for a fraction of what they’ve invested.

” This time last year, it was basically all mom-and-pop shops ,” tells Mason Walker, CEO of Cave Junction cannabis farm East Fork Cultivars.” Now there are five or six companies that own 25 or 30%. Stores are selling for pennies on the dollar, and people are losing their life savings in the process .”

Deep-pocketed companies can survive the accident and wait for the market to contract again.

” What this entails is, the market is now in a position where merely the large[ industries] or the ones that can create at the lower cost can survive ,” Whitney tells.” A plenty of the craft growers, a lot of the small-capacity cultivators, will go out of business .”

Oregon faces another outcome of pot business closing up shop: leftover weed could end up on the black market.

Already, Oregon has a thriving illegal market shipping to other states.

US attorney for Oregon, Billy Williams, has said he has little interest in cracking down on legal marijuana businesses, but will prosecute those shipping marijuana to other states.

” That kind of thing is what’s going to shut down our industry ,” Chadowitz says.” Anything we can do to prevent Jeff Sessions from being right, we have to do .”

Ask someone in the cannabis industry what to do about Oregon’s weed surplus, and you’re likely to get one of three answers.

The first is to cap the number of licenses awarded by the OLCC. The second to further reduce the canopy sizing allotted to each license- Massachusetts is trying that. And the last, equally common answer is to simply do nothing. Let the market sort itself out.

Up Up in smoke: opinions differ about what Oregon must do to address its weed surplus.

Farmers, such as Walker of East Fork Cultivars, argue that restriction the number of licensed farms in Oregon would stunt the state’s ability to compete on “the member states national” stage in the years ahead.

” We’re in this sort of painful moment right now ,” tells Walker,” but I think if we let it be a painful moment, and not try to cover it up, we’re going to be better off for it .”

Walker and other growers hope selling across country lines will someday become legal.

Every farmer, wholesaler, dispensary owner and economist WW talked to for this story said that if interstate weed sales became legal, Oregon’s oversupply problem would go away.

Under the current presidential administration, that might seem a long shot. But legalization is sweeping the country, Donald Trump is signaling a looser approach, and experts say Oregon will benefit when the feds stop fighting.

” The thing about Oregon is that it is known for its cannabis, in a similar way to Oregon pinot noir ,” Whitney tells.” For those who are able to survive, the objective is positioned extremely well not only to survive in the Oregon market but also to take advantage of a larger marketplace- assuming things open up on a federal level .”

Looking for more great work from the Portland, Oregon, alt-weekly newspaper and website Willamette Week? Here are some suggestions 😛 TAGEND A school employee was assured he could use a CBD tincture and still pass a drug exam. He didn’t This Portlander wants to stimulate medical weed as dependable as Ibuprofen

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