Goodbye marijuana industry

Government destroyed an important Southern Oregon industry: Legal cannabis. 

It didn't enforce its laws.

It was good while it lasted. 

Four years ago entrepreneur cannabis growers with an acre of marijuana in cultivation made a half million dollars and more in a season. Farm worker employees made $50,000 and $100,000 in a season. There had been a lot of cannabis money flowing through the local economy, identifiable by merchants because it was being paid with cash--currency--not plastic. Sometimes the currency had a whiff of cannabis smell. That era is ending.

From: Forbes

Southern Oregon had been the epicenter of top-quality outdoor cannabis. We have a concentration of professional expertise, geography, and investment capital. Our industry was made possible because THC-bearing cannabis was illegal in most places, but legal to grow here in small, regulated amounts. Demand was high, supply was low. Five years ago a pound of trimmed buds containing THC sold for $2,000 a pound. A single person managing a half-acre grow-site might produce 250 pounds of product--worth $500,000--at a cost of perhaps $60,000. This includes land preparation, plant starts, soil amendments, fertilizers, bug suppression, some hired help at planting and harvesting. Subtract $100/pound for the trimming process that turns dried flowers into a sellable package of buds. A person could net $400,000 if everything worked out.

Now the price is $200-$400 a pound, if it can be sold at all, and most cannot be. Now only perfect, beautiful, un-seeded product is sellable at any price. At 250 pounds, times $300 a pound, the gross revenue is $75,000. Then subtract the trimming cost. A grower might have net revenue of $50,000 after out-of-pocket costs of $60,000. It doesn't work. It could be even worse. There is the ever-present risk of an unsellable crop because of wet-weather mold, seeds from an upwind neighbor's male plants, or loss from hail or bugs or theft. 

Yes, next year's price could be higher. Farmers always hope for that. The price also might be lower. The U.S. House of Representatives just voted to decriminalize marijuana. Although gridlock and logjams are the norm in D.C., possibly the Senate will go along. If THC-cannabis can be grown anywhere and everywhere, prices will likely fall further. 

Entrepreneurs are leaving the business. Cannabis employees are seeking other work. Landowners who in previous years leased to marijuana growers are looking for other uses of their land.

Negligent law enforcement is the immediate cause of the collapse in prices for THC-bearing flowers. We have a THC glut. Growing THC-bearing cannabis legally has enormous regulatory burdens, and it is taxed at every level. Jumping through all the hoops kept quality high and supply low.

Arial view: hoop houses 

The 2021 growing season was a disaster for the industry. In 2019 and 2020 hemp (the cannabis with CBD, not THC) grew legally in open fields. Nearly everyone who grew it lost money. People expected a large market for CBD, but it did not materialize. In 2021 many out-of-area growers came to the area and set up shop claiming to grow CBD, while in fact growing THC. The plants look alike and can be distinguished only by testing them. On site and laboratory tests are readily available. 

What was happening quickly became obvious to every market participant. There was illegal THC being grown everywhere. Local law enforcement agencies and state regulators under the OLCC--the Oregon Liquor and Cannabis Commission--were ineffective in enforcing THC-cannabis rules. They appear to have given up. Their leaders spent time asking for more money, not demanding destruction of illegal fields of THC.  Literally thousands of hoop houses constructed from PVC tubes and sheets of plastic dotted farm areas. Most had no permits of any kind. Growers were brazen. Hoop houses were set up alongside roads. They were visible from the air. Some had permits to grow CBD, so they had a tissue-thin explanation for what they were doing or pretending to do. Most did not. The OLCC did some sporadic testing of licensed CBD grows--the ones with the "wink-wink" CBD excuse--but largely ignored the obviously illegal grows. In many cases crops got tested, were found to have illegal quantities of THC, but then nothing happened. The crop was allowed to grow to maturity and enter the market. The result is a massive oversupply of THC. 

This has been a difficult time to be an Oregon governor or other state officeholder. Southern Oregon citizens who are unhappy at the proliferation of hoop houses and the flagrant illegal water use in a drought year have reason to feel frustrated. Like the disturbances in Portland this summer, the cannabis grows here are another iteration of government being ineffective. This is one more thing in the list of frustration and discontent that will shape the 2022 election.