What Weed Oversupply?

The biggest story about Oregon cannabis in 2019 has been just how much of it we have—by most accounts, a six-year supply. Like a long-forgotten, dried-out joint, this story caught fire quickly, and burned hot.

No matter where I traveled in the US this year, whenever someone learned I was from Oregon and had a connection to cannabis, they immediately repeated this story. I myself even wrote about it when the Oregon Liquor Control Commission (OLCC) issued the report that made this claim at the end of January.

However, the six-year supply factoid was viewed with dubious skepticism among some in the industry. And the doubting Thomases may be validated by a new report from Confident Cannabis, a Bay Area-based educational and wholesale platform available to Oregon labs and sellers. Confident Cannabis thought the numbers were somewhat questionable, and earlier this summer, they said they believed the supply was actually in danger of running low in some sectors of the markets.

I spoke with Brad Bogus, vice president of marketing and growth, about why he believed the OLCC was incorrect in their assessment.

“The OLCC admits to taking the most straightforward approach to calculating supply,” he says, “which is to try and convert all the different products out there into ‘units’ of THC…. METRC, the state’s source of truth on product inventory and ownership, can’t just spit out a singular inventory total—everything is tracked differently.” (For clarification, METRC is the software system that manages how much cannabis is grown, bought, and sold. It’s also why you sometimes see dispensary staff banging their head against the wall as they make up creative new profanities.)

“Concentrates are in grams, flower are in pounds, and then you have edibles sold in packages or units. Same with topicals,” Bogus continues. “They’re different, and their respective amounts are calculated differently; therefore, the OLCC attempted to equalize them into THC units and calculate the total.

“You can’t pull the current METRC supply from the system as a singular metric. Data modeling needs to be applied. But they’re a regulatory body… and optimized for straightforward [calculating], which traded in on [accuracy].”

Bogus also points out the matter of weed that’s trapped in limbo. (Even though it didn’t do anything wrong, as though the weed itself is in jail. I know, whoa, right?)

“When a farm cures their harvest,” Bogus says, “they may use a storage company to hold that product for them until it’s sold. These storage facilities are METRC licensed, and farms have to officially transfer that inventory within the system to the storage companies.

“But if that farm goes out of business, their inventory is stuck in storage. Storage companies with storage licenses aren’t permitted to sell cannabis they have in stock, because it’s assigned to the original licensee.”

Bogus says that Confident Cannabis has spoken to storage companies who are stuck with hundreds of pounds, all of which are calculated into the OLCC totals.

He adds that the press overlooked the OLCC’s own summary statement saying the oversupply was theoretical. True. “As of January 1, 2019, the recreational market has 6.5 years’ worth of theoretical supply in licensees’ inventory accounted for and contained within Oregon’s Cannabis Tracking System,” the report reads.

Bogus is bothered by all the “ifs” in the report—such as “if all currently pending producer applications were approved, estimated production would increase to nearly 4,000 metric tons of wet weight.” And “if” supply continues to increase, and “if” more licenses are pushed through that cultivate at the average, and “if” converting supply to wet weight tonnage is in any way accurate, then theoretically there’s six and a half years of supply.

Lending support to the idea that Oregon’s oversupply could be over? Prices have begun to rise. Marijuana Business Daily cites analysis tracking the price of wholesale cannabis in Washington, Colorado, and Oregon, and since April 2019, wholesale cannabis prices in Oregon have risen 100 percent. Reasons for the increase include growers changing their crop from cannabis to hemp or going out of business, and an unexpected “stronger demand and weaker supply beyond the typical summer economic dynamics.”

Though growing scarce, $65 ounces still remain available. And budget buyers, fear not—Croptober is just around the corner! Sun-grown goodness for the win!