Oregon's Cannabis Farmers Seek Constitutional Protection To Ship Surplus Weed Out Of State

Oregon's cannabis market is having another oversupply issue, amid all the other challenges that have, still do, plague the state.

When it comes to marijuana, in 1973 Oregon decriminalized possession of up to one ounce reducing the penalty to a $100 fine. It was also one of the first states to legalize recreational cannabis in 2015.

Oregon was also the first in the nation to decriminalize the possession of small amounts of illegal drugs, such as heroin, oxycodone, methamphetamine, and LSD among others with the voters approving Measure 110 in 2021. This legislation created a support program for drug abuse and addiction.

While being progressive as it is, Oregon is now having difficulties making its laws and marijuana program work to the benefit of its residents. Willamette Week’s Nigel Jaquiss reports that almost every day the state is seeing new cannabis lawsuits over unpaid bills, a new claim for unpaid taxes and another company thinking about quitting. Not to mention, this year’s scandal which led to a federal investigation into Oregon’s former Secretary of State’s $10,000 cannabis consultant job.

What’s more, following the rise in opioid-related deaths and the fentanyl crisis, Measure 110 came under attack. Earlier this month, state Republicans called on Democratic leaders to amend it.

Oversupply Is A Major Problem

The biggest problem in the state’s cannabis market, however, is oversupply. There are too many retailers selling marijuana, which has naturally resulted in declining prices, leading to producers’ and processors’ losing money. To make things even more complicated, the support program for drug abuse and addiction created by Measure 110 is funded with quarterly cannabis tax payments.

And while the larger part of 2023 seemed hopeful for the industry as the production slowed up a bit, the October harvest put the problem back on the table.

According to state economists Mark McMullen and Josh Lehner, the latest industry forecast is not looking bright. 

“Through the first nine months of the year, the marijuana harvest was nine percent lower than a year ago, and 15 percent lower than the record crop back in 2021,” the economists wrote. “As the market appeared to be adjusting, prices were stabilizing. That changed with the large October outdoor harvest which is 15 percent larger than last October.”

Beau Whitney, an independent Portland economist who tracks marijuana markets across the country, says the October’s harvest “couldn’t have come at a worse time.” Whitney’s industry survey, still underway, revealed that more than a third of respondents are having a hard time paying taxes and even more confirmed they're struggling to pay their debts. “People are walking away from cannabis licenses or selling them for pennies on the dollar,” Whitney said, reported the outlet.

Whitney added that to raise prices, the state should reduce the number of licenses or their capacity, as some other states have done.

However, Mark Pettinger, a spokesman for the Oregon Liquor and Cannabis Commission said a lot of blame could be put on the federal government’s policy. 

“The state and the industry and elected officials envisioned Oregon becoming a net exporter under federal legalization,” Pettinger said. “The oversupply we’re seeing underscores the dilemma in all states where marijuana is legal—it’s the equivalent of an Iowa corn farmer only being able to sell his crop within Iowa.”

Federal Lawsuit Challenging Oregon’s Marijuana Export Ban 

One cannabis entrepreneur, however, is not giving up.  Matt Ochoa, who runs the Jefferson Packing House in Medford, Oregon, which provides marijuana growers with services like drying, trimming, and packing their product is taking things to the federal court. About a year ago, Ochoa’s lawyer Andrew DeWeese filed a lawsuit in federal court arguing that the state’s ban on cannabis exports and imports to and from other states violates the U.S. Constitution. 

New Planet Money podcast about my client Matthew Ochoa and our dormant commerce clause lawsuit against the State of Oregon! https://t.co/8grgmtwVZo

— Andrew DeWeese (@OrCannabisLaw) November 30, 2023

The point of their lawsuit is that one state can pass whatever laws it wants, but those laws cannot contradict the U.S. Constitution. The Constitution is clear that the federal government makes the rules about interstate commerce. For example, New York can’t pass a law demanding its supermarkets sell only apples grown in state. This would be restricting interstate commerce, which is illegal. DeWeese believes that the same standards should apply to cannabis, even though the plant is illegal on the federal level. 

However, even if they win that would not be the end of it because other states have laws that ban cannabis imports, which would also have to be challenged in court. 

Find out more about the lawsuit on the Planet Money podcast. 

See Also: Oklahoma Produces 32 Times More Marijuana Than Necessary And It's Going Into Wrong Hands

Photo: Benzinga edit with images from OpenClipart-Vectors, Clker-Free-Vector-Images

via Pixbay, and CRYSTALWEED cannabis via Unsplash