More than any state that has legalized marijuana, Oregon is a champion when it comes to producing the drug.
Seth Crawford, a marijuana policy researcher at Oregon State University, estimates the state grows three to five times the 150,000 pounds or so consumed by Oregon pot users — a crop potentially worth more than any other single agricultural commodity in the state.
A report from a Seattle venture capital firm specializing in pot says the state’s legally allowed producers – those who grow for medical marijuana patients – harvest enough to meet the needs not only of patients in Oregon but in Washington, Colorado and Arizona as well.
“We’ve got plenty of supply,” says Senate Minority Leader Ted Ferrioli, R-John Day, and a member of the committee overseeing implementation of the pot legalization initiative. He wholeheartedly endorsed the common quip that Oregon is the “Saudi Arabia of marijuana.”
As a result, the legislative debate over how to implement the November initiative that legalized recreational marijuana has revolved around how to turn this thriving – if often illegal — industry into an economic and societal success story.
The abundance of the state’s marijuana crop is driving some of the biggest decisions that legislators face, from how strictly to regulate medical marijuana growers to whether to put a sales tax on pot despite the state’s historic hostility to such taxes.
A growing number of legislators on the Joint Committee on Implementing Measure 91 say they want to start retail sales as early as possible to entice growers into the legal market.
The Oregon Liquor Control Commission, which Measure 91 charged with regulating the recreational marijuana market, says it probably won’t be ready to allow retail outlets to open until fall of 2016.
But key lawmakers on the marijuana committee say they are seriously looking at allowing the sale of at least smokable pot starting Oct. 1 at existing medical marijuana dispensaries.
“There are already well-established black-market channels,” says Sen. Ginny Burdick, D-Portland and the co-chair of the Measure 91 committee, “and we need to make this (legal) market as appealing to people as possible.”
Burdick has been a particularly strong champion of legislation putting stricter limits on the size of medical marijuana growing operations, saying she wants to channel larger and more commercially minded producers into the recreational market.
Oregon has nearly 35,000 registered grow sites, according to the latest Oregon Health Authority records, but three-quarters serve just one or two patients, each of whom can have up to six plants grown for them. Nearly 400 sites grow for at least 10 patients and account for much of Oregon’s marijuana crop.
The heart of the industry is in southern Oregon, where growers have plenty of sun and rural isolation.
“You can’t compete with the quantity and quality produced in southern Oregon,” says Crawford, the OSU expert who has extensively researched the area’s marijuana culture. He says many growers have been producing pot for decades, perfecting their strains and earning a supplemental income for their family.
Privateer Holdings, the Seattle firm, estimates that Oregon medical marijuana growers produce more than 400,000 pounds a year – enough to supply each of the 70,000 medical marijuana patients with more than 7 grams a day. The firm cites a Rand Corp. study saying that the heaviest users on average consume about 1.2 grams a day.
Patrick Moen, a former federal Drug Enforcement Administration official who works for Privateer Holdings, argues that the proposed medical marijuana legislation isn’t strict enough.
Medical marijuana growers, who now face little state regulation, should have strict inventory and tracking controls as well as tight testing requirements to ensure the quality of their product and to make sure it’s free of contaminants, he says.
Otherwise, Moen adds, “We’ll continue to see vast quantities of cannabis products on the streets of Oregon and outside of Oregon that are unregulated” and continue to undercut the legal market.
Moen’s firm is lobbying against legislative provisions to require people to be Oregon residents to invest and run pot businesses in the state.
Moen says Privateer hasn’t decided whether to invest in Oregon but says the firm believes that outside capital is needed to produce the kind of professional growing, processing and retail operations that will encourage public acceptance of legal marijuana.
Supporters of the residency requirements say they want to protect and nurture the local industry, and avoid a few large outside players dominating the market.
“We have a great opportunity to help Oregon’s small businesses,” says Rep. Ann Lininger, D-Lake Oswego, the marijuana committee’s other co-chair.
She notes that much of southern Oregon has struggled economically, but with marijuana it has an industry that “has an unparalleled advantage in growing conditions and a brand that people like.”
Not everyone in southern Oregon’s marijuana business sees the committee as a champion. Alex Rogers, who owns medical marijuana clinics in Ashland and Eugene, has been urging patients to fight legislation putting stricter controls on growers. He says that could endanger patient access.
Burdick disagrees, saying Rogers is primarily interested in preserving his business.
The latest version, Senate Bill 964, is headed to the Senate floor. But it faces opposition from House members who think it gives cities and counties too much power to prohibit medical marijuana dispensaries.
Ironically, one issue that seems to have wide support involves use of a sales tax – which Oregonians have repeatedly rejected.
Measure 91 called for a harvest tax based on plant weight. But supporters of a “point of sale tax,” as legislators like to refer to it, say a tax based on the retail price of marijuana would be much more effective in bringing consumers and producers into the legal market.
That’s because a tax on weight becomes a bigger part of the cost to consumers if marijuana prices go down – and a drop in price is certainly a possibility with all the pot sloshing around Oregon.
Beau Whitney, an economist involved in the medical marijuana business, calculates that a sales tax of between 12.5 and 17.5 percent would raise as much for the state as the weight-based tax, which could equate to more than 30 percent of the current price of marijuana.
Whitney, whose firm Greenpoint Oregon owns a dispensary in Portland, says he found that customers were very sensitive to price. When he lowered the price of marijuana flowers by 21 percent, sales shot up 156 percent.
“It supported my hypothesis that if you lower the price by lowering the tax, you’re going to see more conversion from the black market to the regulated market,” he says.
Burdick says she is willing to lower taxes even more at first to bring additional people into the legal market. But she concedes that she doesn’t know how that would fly with legislative budget leaders looking forward to gaining a new revenue stream for the state.