Dear Pot Lawyer,
My budtender says there are too many people with weed licenses nowadays. Is the state going to do anything to keep pot farmers from going out of business?
This is a hard issue that has been getting a lot of traction over the past few months. Right now, the state isn’t doing anything to limit the number of licenses awarded by the Oregon Liquor Control Commission (OLCC), whether for production, processing, wholesaling, or retailing weed. If you are invested in this industry, it’s a fight. And it’s an open question as to whether the state will intervene, or let the market bottom out.
To be clear, the OLCC could not cap the number of licenses it awards, even if it wanted to. The relevant statute says that OLCC can only control canopy sizes, although last I spoke with them, they had no intention of doing so. On the grow side, there are two main sizes, or “tiers,” for indoor production licenses, and two main tiers for outdoor grows. The outdoor tiers are larger, topping out at 40,000 square feet (which is roughly an acre). As of December 15, OLCC reports that it had received 1,841 applications to produce cannabis, with 876 active licenses. It’s not clear how many of those applications were for indoor or outdoor grow, but that’s a lot of weed regardless.
Approved outdoor crops are what worry most people right now. This is because we are coming off of the famous Croptober harvest schedule, and all of that weed is currently drying out and will soon leech into the stream of commerce. Recently, people have been talking about incredibly cheap cannabis, at prices like $400 per pound. The indoor prices will probably float higher, but there is also plenty of flower being trimmed at those sites, which can harvest on shorter cycles. In a regulated or unregulated market, it’s difficult for scaled grows to remain viable at rock-bottom prices.
The legislature will next meet for a short session in February. They may look at all of this and shrug, because one theoretic reason for rolling out an adult-use program is to drive prices down and undercut the black market, even if you collect less tax. Like a lot of theories, though, it’s hard to understand exactly how this will play out: National prohibition creates strong export demand, and there are other, local markets to consider—like the Oregon Medical Marijuana Program and wholly unregulated markets (such as homegrown and the black market). To truly regulate price, you also need committed program enforcement—as in law enforcement—which the state has only recently began to ramp up.
Oregon has created a wide-open adult-use market, where almost anyone, including non-residents, are welcome. The state has made licenses easier and easier to acquire (my paralegal aces them), and unless you are in a cumbersome local jurisdiction like the City of Portland, red tape is minimal. So are there too many people with weed licenses these days? Probably. Will the state do anything about that? It’s a great question.
Got a question? Email us at potlawyer@portlandmercury.com.
And remember that if you have a legal problem, contact a lawyer! Our educational musings cannot be relied upon as specific legal advice.
The OLCC has the authority to restrict the market in many fashions under their current framework. See 475B. 145. “The OLCC may establish merit based criteria for licensure or renewal …..” This is just one way for the OLCC to limit the market, they are choosing not to restrict the market. While they may not be authorized to have a hard cap, the OLCC can restrict the market in many fashions given the current framework.
First, I think the whole weed thing is ridiculous, I don’t use it myself … but … The state should not restrict the number of licenses. There are restrictions built in place. You have to pay license fees. You have to invest in the stuff you need to get a license. Let the market be as free as it can be. If some can’t survive in it, then that is the nature of every market. Restricting the market will only increase the cost. Let the market be as free as it can be.