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The only relief for oversupply is interstate commerce, according to Casey Houlihan, Executive Director of the Oregon Retailers of Cannabis Association, an industry advocacy group. He expects the market to remain oversupplied and for growers to continue to overproduce even in the face of falling prices. Outdoor grown is fetching $400 – 600 per pound in some instances but “outdoor ‘A’ bud is trading as low as $85 [per pound] for big transactions.” Houlihan does not see prices increasing from a holiday surge due to massive oversupply and in fact notes, “harvest may create a race to the bottom” this year as growers seek to reduce inventory overhang. He notes that plenty of Oregonians “grow their own” and his experience is that prices drop during harvest.

Outdoor grown product is coming under the most price pressure and, as noted, big transactions can crater price. That said, according to Houlihan, “indoor, top tier product is fetching $2,700 per pound. … and that’s what’s really holding the market up.” In fact, he says that there is “huge demand for maybe two dozen [indoor] growers,” whose “crops are spoken for while still in the ground.” Houlihan also notes product grown in “hoop houses” enjoys a “slight premium” over outdoor-grown product and acknowledged that the largest demand is for indoor-grown product. He noted people grow their own and receiving a handful of home-grown from a friend for free is a regular occurrence. In short, there is so much outdoor-grown available, indoor flower has become much sought after by those purchasing cannabis at legal stores.

So how are growers dealing with the massive oversupply, such that people regularly give friends “handfuls” of cannabis for free? According to Houlihan, growers are fully cognizant of the oversupply but will continue to grow, adding more canopy if possible, because there is a full expectation Senate Bill 582 will create an outlet for Oregon’s excess supply. SB 582 was passed into law in 2019 and will allow the governor to “enter into agreements with other states for the licensed transfer of cannabis between legal markets,” once the federal government allows such commerce in some form.”  Full federal legalization of cannabis and interstate commerce is the accepted wisdom in Oregon, according to Houlihan, who expressed confidence that interstate sales are but two years away.

At the end of the day, Oregon’s growers are counting on SB 582 and full federal cannabis legalization. Until then, oversupply appears as if it is the rule, not the exception.

Source: https://www.cannabisbenchmarks.com/oregon-cannabis-oversupply/?utm_source=Weekly+Report+Subscribers&utm_campaign=261fa11acc-EMAIL_CAMPAIGN_2020_04_22_08_10_COPY_01&utm_medium=email&utm_term=0_fc4ce88a6f-261fa11acc-185147589