Marijuana

Oregon's Recreational Marijuana Market Approaches Collapse

New regulations are crippling the industry.

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MattysFlicks/Flickr

Oregon's recreational marijuana market is rapidly approaching collapse thanks to new state regulations, as supply shortages and price increases hit dispensaries across the state.

Yesterday the Oregonian ran a long piece documenting the struggle of many of these businesses, who have been forced to lay off staff and watch their store shelves stripped bare for want of product.

One such dispensary—Human Collective in Southeast Portland—has experienced a severe decline in the amount of marijuana flower buds it could get its hands on, while its inventory of marijuana concentrates is down to about 10 percent of normal. Owner Don Morse has responded by raising his prices and running with half the normal amount of staff.

Another cannabusiness owner told the Oregonian that he expects 70 to 80 percent of the dispensaries operating today to be closed by next year.

These problems are the natural consequence of the onerous and unworkable pesticide testing regulations that went into effect in October. As Reason has reported, these new regulations have massively increased the time and costs it takes to comply, while also severely restricting the number of labs that are permitted to carry out testing.

The predictable result has been many marijuana growers and processors either increasing their prices dramatically or shutting down their operations altogether due to a lack of labs available to test their products.

And now dispensaries are starting to feel this pain.

A survey of cannabusinesses conducted by Beau Whitney at Whitney Economics has found that 22 percent of respondents report that they are going out of business or in danger of doing so.

A further 80 percent say that the new testing requirements have "severely impacted" their bottom line. Almost all have said they either have raised or will raise their prices substantially just to stay afloat. Yet even with price hikes, about half of the businesses surveyed reported losing $20,000 or more a month thanks to new regulations.

Despite this slow-rolling disaster, the Oregon Public Health Authority (OHA)—the agency responsible for crafting the pesticide regulations—is standing firm. Johnathan Modie, a spokesman for the OHA, told the Oregonian that the ruination of so many businesses is just "the price of public safety."

Anthony Johnson, a longtime legalization advocate and blogger at MarijuanaPolitics.com, disagrees, instead calling overregulation "the new prohibition," with potential to push producers and consumers into black markets where there are no public safety checks. Indeed, there are already reports of this happening, as many smaller grow operations—unable to bear the costs of sitting on their hands while they wait—have returned to selling on the streets.

This is all a far cry from the hopes of marijuana advocates and users, who expected to find a bit of normalcy in the post-prohibition environment.

CORRECTION 12/20/16: An earlier version of this article erroneously said the survey of cannabusinesses was connected by Golden Leaf Holdings. It was conducted by Whitney Economics.

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  1. “We warned you legalization would never work!”

    1. People always speak disparagingly about the “black market,” but isn’t that just… the market?

      I’ve been smoking pot for over 30 years, and I’ve never gotten anything in this so-called black market that was dangerous enough to warrant notice, much less going to the doctor.

      I guess in the same manner that today’s pot is so much “stronger” I guess it’s that much more “dangerous?”

      By the way, Green Crack is nothing like it’s name…

      1. “I’ve been smoking pot for over 30 years, and I’ve never gotten anything…”

        Anecdotal evidence. I know of friends in the past who had pot laced with PCP.

        1. they took it to a lab to test?

          1. So, each consumer of legal or illegal pot would have to test each purchase? Wow, I thought Libertarian system were supposed to be efficient…

            1. to claim a dealer of illegal pot sold a person pcp laced pot, yes, im going to need a lab to confirm.
              the rest of your response is a non sequitur

            2. No, much in the same way as UL or Consumer Reports, companies would be rated on the safety of their product, by independent testing and analysis. Those providing inferior products would be identified as such, and consumers could avoid them, quickly sending them out of business. These rating agencies would thrive based on the accuracy and honesty of their assessments, an incentive which quite frankly doesn’t exist with their governmental counterparts.

              I can’t remember the last time I shopped for a major purchase without first consulting a rating source. This is the way it should be done for pot as well.

              1. and these vary between yelp (comsumer reviews) and Underwriters Laboratory (testing and labeling products).
                theres also things like ANSI and BHMA.

              2. You overestimate the consumer’s ability to discern truthful claims

        2. “I didn’t know you liked to get wet.”

        3. did they go to the same dealer ever again?

        4. “Anecdotal evidence. I know of friends in the past who had pot laced with PCP.”

          I’ll see your anecdotal evidence and raise you one anecdotal evidence.

          1. Exactly. Now, we null out and are left with nothing. 🙂

            1. The difference being I’ve never gotten sick from any of the pot I bought, and know that for a fact. On the other hand, I’m not sure how you could know for a fact that your friends (more than one you imply) ingested pot laced with PCP.

              So it’s more like a NULL versus an empty string.

        5. Did they wind up in Deebo’s chicken coop?

      2. The black market is where any moron can make any untested claim and still turn a profit. .

  2. Marijuana sharing industry. You heard it here first.

    1. Puff, puff, pass.

  3. Pretty sure CA is taking lessons from OR and will repeat the mistakes in a larger venue.

    1. You can bet that CA will double down on OR.

  4. Progs: Legalize something so we can regulate it out of business! Genius!

    1. It’s the prog way.

    2. If the death of all is the cost of public safety. So be it.

      1. Apparently the Constitution is a suicide pact.

        1. Thank god cause I’m already standing on the edge looking down into that beautiful abyss.

  5. “Yet even with price hikes, about half of the businesses surveyed reported losing $20,000 or more a month thanks to new regulations.”

    Feature not bug. What’s important is that the regulators have created their new fiefdom and will be expanding it.

    1. That was such a fail it can’t be called SF’ing the link and needs to be put into its own category.

      I think this is what you were trying to link to.

      1. Early beers… I am chagrined

  6. What are odds that progtards will finally realize that government is the problem? Even when it comes to legalizing weed, which the government did not do but voters voted for, the government will always serve its interests first.

    1. Alternative headline: Oregon Progressives* Bump into Marketplace Realities; No Lessons Learned

      *An assumption. In Colorado, a couple of the movers/shakers in the marijuana legalization movement were conservatives/libertarians. I don’t recall them being fired up about pesticide testing, though.

      1. yeah, here we seem to have a good number of regulations on the whole industry.
        they have changed the requirements for storage more than i can count. the safes/access control things are ridiculous. they cant make up their mind.

      2. Duh…why would a conartist want full disclosure…especially if it raises costs by 3%?

      1. Damn you!

    2. “What are odds that progtards will finally realize that government is the problem?”

      Zero

      1. Wasted too much time quoting.

  7. My friends in Oregon have been driving to Washington for their pot. Ends up being cheaper and easier, even taking into account having to drive an hour or two.

  8. Yesterday the Oregonian ran a long piece documenting the struggle of many of these businesses, who have been forced to lay off staff and watch their store shelves stripped bare for want of product.

    Oregon. The Venezuela of the Northwest.

    1. They won’t hire a superior human and hand over ownership…they deserve failure.

  9. Can’t fix the feckin link… funny story about some Polish dude who drank himself to death… woke up in the morgue and went back to the bar…. new level set for drunkards

  10. So, if I understand this site stance correctly, we should allow pot sellers to put whatever pesticide they want into the product? We should trust they report it accurately? I mean, bitching is cute, but what’s the solution? NO regs whatsoever?

    1. Could you provide an accurate report detailing the number of people sickened by pesticides in Marijuana over the decades while the product was illegal?

      1. Be sure to subtract the paraquat victims, because paraquat was applied by governments, not growers.

        1. +1 Carlton Turner.

      2. No. Nor is it relevant.

        1. How is a problem that likely did not exist before government was involved be irrelevant when the government destroys an entire business sector trying to fix it?

          1. That it did not exist before is an assumption given the absence of data.

            1. The data that you just claimed was not relevant? That data?

              1. Yup, it’s (I think) non-existant, and if it was, it would be irrelevant. Not so hard to understand, is it?

                1. So then what basis is there to assume that there are dangerous pesticide levels in Oregonian pot?

                2. Fair cop, you managed to snag a couple

        2. Can you point to any issues in Colorado or Washington, which have legalized marijuana without the type of strangling regulation reported on herein?

          1. there are thousands dead here!

          2. No, I cannot.

            However, no regs in Colorado doesn’t mean there shouldn’t be any. Egregious regs in Oregon doesn’t mean there shouldn’t be any. IMHO, of course.

            And, yes, this is probably where some more extreme Libertarians would disagree in principle.

            1. In the same vein, unsubstantiated hypotheticals don’t prove the need for regulations, either.

              1. The concept that some businesses do dangerous things to ingested products destined consumers is VERY well documented. Given that many types of products across many industries have had this happen, it isn’t an unreasonable stretch to assume it could happen in the nascent pot industry at some point.

                1. “it isn’t an unreasonable stretch ”

                  Is too.

                2. And there is even better documentation that tort law exists and provides a way to address such dangers as and when they occur.

            2. we have regulations here.

    2. what’s the solution? NO regs whatsoever?

      Works for me. If you are paranoid about people selling you poison, don’t buy anything. If enough people don’t buy anything, the industry will develop a certification that isn’t stupidly overreaching and expensive.

      1. So, you are ok with oversight, as long as it is not under the label of “government”?

          1. So, it’s businesses all the way down? Corporatocracy comes to mind. And, the idea that businesses are engines of efficiency is ludicrous to anyone who’s worked in enough large companies.

            1. The nice thing about businesses is that I don’t have to give them my money if I don’t like the value they provide.

              1. Is that an approach you can use if you need or use whatever it is medically?

                1. Yes. There’s this thing called competition.

            2. So the only possible alternative to Big Government is Big Business?

            3. The Department of Consumer Reports doesn’t have a SWAT team. If you can’t see that difference, there’s probably little else I can help you understand.

              1. Neither does the Oregon Public Health Authority, as far as I know.

                1. Neither does the Oregon Public Health Authority, as far as I know.

                  Yes it does.

            4. Grow your own damn pot. It’s allowed under my state’s version of legalized recreational marijuana (too lazy to look up Oregon’s law).

            5. Free association comes to mind for me, with independent testing and rating agencies taking the place of bureaucrats. Commercial testers live and die by the accuracy of their assays, whereas bureaucrats are incentivized by their desire to get their bosses re-elected, which often depends upon corrupting the very science we all depend upon.

              Example: Obama failing to make the day-after pill available OTC, contra to every bit of science available.

            6. So alphadogg, you only buy consumer electronics with a U.S. seal of approval – none of that UL crap, right?

              1. Can you buy electronics certified by the US gov’t?

                1. what if its laced with pcp?!

            7. the idea that businesses are engines of efficiency is ludicrous to anyone who’s worked in enough large companies.

              I’ve worked in many.

              Its not ludicrous at all. Not because businesses are amazingly efficient in any absolute terms, but simply because they’re vastly more-efficient than government. AND! (the kicker) you don’t actually have to steal money from people to keep them operating. A significant side benefit which you may not appreciate.

              1. I know that this will light a fire in a Libertarian site, but there is, in practice, little difference between a tax and a price tag on an essential good or service….in the short term. The market doesn’t always correct or correct fast enough.

                1. The market doesn’t always correct or correct fast enough.

                  And the government corrects less often and slower than that.

                  There is a difference between a tax and a price tag; the price tag pays for the good/service itself, while the tax pays for something else. The government is a less responsive, less accountable, and more violent agent than any business in a marketplace.

                2. The market doesn’t always correct or correct fast enough.

                  You’re a veritable buffet of fallacies.

                  So what? government doesn’t necessary correct *at all*.

                  You’re not lighting any fires. You’re recycling tired falsehoods.

                3. “I know that this will light a fire in a Libertarian site, but there is, in practice, little difference between a tax and a price tag on an essential good or service….in the short term. The market doesn’t always correct or correct fast enough.”

                  One more fucking ignoramus who is here to tell us what every one of us has missed, lo, all the years.
                  What we’ve missed is that alpahdogg is a fucking ignoramus.

    3. next time, just type:

      markets, how do they work?

      it’s less typing for you, less reading for us. and it says the exact same thing in about 1/10th the effort.

      1. The same could be said about Libertarians who don’t seem to understand problems like monopoly power, collusion, market failures, etc.

        1. Governments are monopolies that collude with each other and fail to reach their stated goals all the time. What on earth makes them suited to proactively regulate businesses?

        2. Uhm, point of order, we’re the ONLY ones who understand monopoly power, collusion and market failures.

        3. alphadogg|12.2.16 @ 2:25PM|#

          The same could be said about Libertarians who don’t seem to understand problems like monopoly power, collusion, market failures, etc.

          Yet, every post you’ve made has been *advocating for* monopoly power and collusion in response to a market failure that doesn’t exist yet.

          You do know that the government *is a monopoly*, right? So why is a government monopoly ‘good’ while a private monopoly – which can only exist with government support or by supplying what its customers want at near cost (or else a competitor appears to drive prices down) – ‘bad’?

          1. Where did I advocate for monopoly power and/or collusion in general?

            To the point here, I just don’t disagree with the idea that there should be some regulation of testing/certification of ingested substances because the benefits outweigh the negatives. I guess I’m a light-handed Libertarian more than others here who tend more towards the anarchic end of the spectrum?

    4. …what’s the solution? NO regs whatsoever?

      People just doing whatever they want, without asking permission first, without knowing if it’s safe? In the land of the free and home of the brave?

      Naw, man that’s crazy talk.

    5. You are exactly right. Businesses will kill their customers if it means making a profit. And customers are so stupid that if a product makes them sick they’ll rush back for more. Besides, no private company like Consumer Reports exists to independently evaluate products. Only government can do that. Businesses lie all the time and government can be trusted. Not only that, but all regulations are born of good intentions, so they can’t be bad. They just can’t. I mean, government is the people right? So whatever government does is good. While businesses are them. They are the ones who steal from us and enslave us by forcing us to work for them and buy their products. You are so completely right. We need more regulations. That is the answer to everything.

      1. Some businesses *will* kill their customers, esp. if it means a short-term profit. Whether from ignorance or malice. Kinda like some regulations are good, even if it’s easier to point out the bad ones.

        It’s hard to talk to Libertarians. They are so prone to fits of hyperbolic rage…

        1. An entire business sector is being killed off due to regulations that were instilled to solve a problem that didn’t exist, and we’re the hyperbolic ones.

          Kayyyyy.

        2. I’m hearing more patience with you than rage at you, for what it’s worth.

        3. alphadogg, meat tort law. Tort law, please smack alphadogg around for a bit.

          1. So, you’re ok with tort law but not marijuana regs? They are both the same from of control of “people just doing whatever they want”, aren’t they?

            1. Tort law is reactive, not proactive. It applies only once harm has been done, and only insofar as harm has been done. Regulations punish people before they’ve done anything wrong and have no inherent connection to actual harm.

            2. No, not at all. Tort law attempts to redress an issue that allegedly occurred and serves as a signal to others that they could be on the same hook.

              Regulations often attempt to fix something that never, hasn’t or isn’t occurring and can often create absurd incentives and perversions of the thing its attempting to fix.

              1. So, there shall be no State-enforced systems that (attempt to) prevent tort, even if the likelihood is high? If so, what of Defense? Is that a state-enforced system for preventing hypothetical personal tort?

                1. Show me a regulation that is as strongly predictive as prosecuting attempted murder or thwarting an imminent invasion and maybe I’ll buy that it’s justified even if I doubt its necessity.

                  All I see right now is inapt analogies.

                  1. “surely theres a theoretical situation that could justify a regulation, therefore every pot reg is needed!”

                  2. Let’s take the banning of lead solder as an example.

                    Lead is poisonous when ingested in dosages above certain thresholds, eventually reaching a level of “lethal to most people”. No one, practically speaking, denies this, although the CDC obfuscates what those thresholds are.

                    But how does lead solder end up ingested? It isn’t eaten, it isn’t breathed in (except, potentially, by workers, but that can be mitigated with PPE, ventilation, automation, etc.), it isn’t applied to the skin, etc. The claim is that it leaches into the water supply by disposal through landfills. But no serious attempt to measure the incidence or effect of this alleged phenomenon has been undertaken.

                    So lead solder is banned, despite being ideal for manufacturing electronic components, on the basis of an unsubstantiated hypothetical. Anyone who disobeys this ban is fined, anyone who refuses to pay the fine is jailed, and anyone who suffers from the consequently inferior components is SOL. No one has a choice in this matter, because it has been decided by government (in this case, European governments) for all.

      2. What ever rich people do is good…you seem to have missed the point.

    6. what’s the solution? NO regs whatsoever?

      I know you may be developmentally disabled, so i forgive your confusion…

      … but if you actually look back at the entire period prior to legalization? This same product was actually widely available, efficiently distributed, and of consumer-approved quality and safety … not just “despite” lack of government regulation, but while simultaneously facing massive government efforts to poison and destroy the product.

      and amazingly = it remained incredibly affordable all that time as well. sans any agricultural subsidy or anything!

      1. I am not developmentally-disabled. Not sure if I should engage you in dialogue, given the hostility, but…

        Do you have any data to support your statement that illegal marijuana has been continuously and reliably safe to consumers?

        Also, what is this “government efforts to poison” you mention? I confess to not having heard of any published investigative work on this.

        1. Intellectual dishonesty is not necessarily a genetic disability, and may simply be a personal-failing.

          1. You know, I don’t think I’ve seen any research on assholiness or argument-avoidance having a genetic component too. Any input on that?

            1. See, the thing is? You think you’re the cat = but you’re actually the ball of string.

              argument-avoidance

              Not possible. You don’t have one.

              1. No, I’m pretty sure I’m not thinking I’m a cat. If you must know, I’m really starting to believe you need to join a specific study mentioned above.

                1. If you must know

                  No one asked.

      2. Surely, lowering standards won’t enable more retards with money to profit.

    7. Private sector competing certification agencies and tripadvisor like rating systems for the cert agencies and sellers.

      If the government has any role, it would be to protect the raters from being sued, courts being a valid function of governments and all.

  11. Johnathan Modie, a spokesman for the OHA, told the Oregonian that the ruination of so many businesses is just “the price of public safety.”

    I’ve learned over the last few years that when something like this happens, more often than not there’s a union official skulking in the background somewhere.

  12. Oregon law allows up to 4 plants per household. Thanks to 50 years of selective breeding, today’s varietals produce a tremendous amount of buds and will flat kick your ass. Who needs dispensaries?

    1. ^bingo

      also, if you’re in a legal state or hold a mmj card, then you have to lie on the 4473 when the ATF asks about cannabis use.

    2. Stoners are not really known for their industriousness…

      1. Great insight there.

        Most of the ones I know are fully self-sufficient in regards to weed.

        1. By self-sufficient, they’re able to find their own supplier?

          1. The sun supplies all we need,man.

            1. Stop with that bullshit guy, the number of people who grow their own is vanishingly small, and you don’t know more than a, few if you know any.

              1. M’kay, cool story bro.

    3. Who’s regulating the pesticide use in those four plants?

      1. *Looks around and doesn’t see any hands raised*

        Mother of God, somebody get the Governor on the line!

      2. Its not legal to sell, so no one.
        Why should your common moron get to make baseless claims and profit?

  13. Re Don Morse, owner of Human Collective. I do not feel sorry for him, not one bit.

    For Morse, the gridlock is ironic because he pushed for the rules. He helped convince growers and processors that reasonable pesticide limits and testing regulations would be better for them and consumers. But now the fledgling businesses are in jeopardy, he said.

    1. Nope. It’s maddening the number of people who desperately want their product to be accepted by craving the attention and regulation of government institutions.

    2. Poetic justice – much better than social justice.

      1. Agreed. I can mourn the industry and laugh at the people who thought this would help.
        I do think this will end with a few huge companies who can manage the costs.
        Colorado has it. There are only a few parent companies.

  14. As Reason has reported, these new regulations have massively increased the time and costs it takes to comply, while also severely restricting the number of labs that are permitted to carry out testing.

    Venezuela just wasn’t doing it right. That’s all.

  15. And we forget so soon. Commisar Dinosaur AKA Sessions is coming soon to fix this little problem.

  16. …because marijuana is so different than any other crop grown in Oregon, it has to have this worthless regulation applied to it.

  17. onerous and unworkable pesticide testing regulations

    Shades of “Paraquat pot”!

    1. From your link.

      However, a 1995 study found that “no lung or other injury in cannabis users has ever been attributed to paraquat contamination”.[23] Also a United States Environmental Protection Agency manual states: “… toxic effects caused by this mechanism have been either very rare or nonexistent. Most paraquat that contaminates cannabis is pyrolyzed during smoking to dipyridyl, which is a product of combustion of the leaf material itself (including cannabis) and presents little toxic hazard.”[24]

  18. This is just going to end up with these businesses failing, and the government stepping in to sell pot claiming that the free markets have failed.

    1. The state ABC (OLCC) is salivating at the thought of a reason for its continued existance as the possibility of losing its hard alcohol monopoly grows.

  19. The Oregon pot market will adjust itself to governmental and competitive conditions because…free markets. Right? Spontaneous order emerges, no?

    1. It will adjust by being subsumed by moving back underground.

      1. Damn your lack of an edit button, Reason:

        It will adjust by moving back underground.

        1. Subsumed is a much scarier sounding word though.

  20. Oregon’s recreational marijuana market is rapidly approaching collapse thanks to new state regulations, as supply shortages and price increases hit dispensaries across the state

    – Take market that has thrived for decades despite billions of $ spent and multiple overlapping agencies with a mandate to destroy it.

    – “legalize it”. Put government officials in charge.

    – Watch it collapse in record time

    1. Didn’t happen w liquor, even in states that created their own monopoly on sales.

  21. First off – let me smoke some Dead Head OG – Ahhh – that’s better.

    I’ve supported Marijuana Policy (MPP) Project but I’ve stopped sending them money because of it’s ‘tax and regulate’ stance.

    Frankly, the T&R stance drives me crazy and I can’t convince MPP that it the wrong way to achieve justice.

    Do any of you better informed folks know of any organization that wants to end the war on drugs because it’s un Constitutional?

    I give to CATO, Reason and the Institute for Justice.

    But is there an advocacy group that focuses on ending the war on drugs because it’s un Constitutional?

    Just end it and let people purchase what they want through the market.

    Is the notion that the government has no authority to tell us what we can or can’t put into our own body too ‘way out’ for most people?

    Has the USA strayed too far from the founding principles of limited government and individual liberty?

    Am I sounding like Judge Andrew Napolitano? 🙂

    1. i do not, but my search starts now.

  22. TLDR, However I have heard there may already be a viable black market/(free market) hack available in this particular case…

  23. TLDR, However I have heard there may already be a viable black market/(free market) hack available in this particular case…

  24. Its because these people are morons. The dumber you are, the lower the standard you can meet.

    Why do we allow capital to erode standards so losers can profit?

    1. A better question is why do we allow losers and morons to vote? The potential for harm to the public is just too great for us not to pass some common sense vote control regulations. FOR THE CHILDREN!!

  25. In other words – the state’s lawmakers have effectively created a bureaucratic bottleneck as a backdoor in defiance of public will.

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