Oregon Taking a Hard Look at Interstate Marijuana Sales

09 Jan Oregon Taking a Hard Look at Interstate Marijuana Sales

Once again, Oregon is working on becoming a marijuana maverick. The Beaver State is on the verge of introducing a bill that would allow marijuana exports to other states by 2021.

In an attempt to tackle the oversupply crisis that has plagued Oregon the last few years, the Craft Cannabis Alliance, an Oregon-based membership association of cannabis and allied businesses, has spearheaded a campaign aimed at reintroducing the idea of exporting Oregon cannabis, a plan that was first proposed in 2017 by Senator Floyd Prozanski (D-Eugene).

The idea was memorialized in Senate Bill 1042, which would have permitted interstate transfers of cannabis products with adjacent legal states that complied with Oregon’s testing, packaging and labeling rules as well as any rules imposed by the receiving state. Although the original proposal died in the House last year, a lot has changed since then.

First, the popularity of marijuana among American adults has been on the rise. According to a 2017 Gallup survey, 64 percent of Americans favor the legalization of marijuana for recreational purposes.

Second, Oregon’s supply has far exceeded local demands: the state is currently sitting on approximately 1.4 million pounds of marijuana that state and federal laws prohibit from selling outside state lines. This tremendous oversupply in Oregon has caused prices to crater, putting many licensed growers on precariously thin ice. Indeed, in 2018, the wholesale price of Oregon flower dropped from $3.90 per gram at the beginning of the year to $1.86 as of the end of the summer.

Third, interstate exporting has seen a growing support from lawmakers and local media.

So in theory, this idea should materialize; unfortunately, federal law remains in the way as we discussed last year.

Though the use and sale of recreational cannabis is currently legal in 10 states, the plant remains a Schedule I substance under the Controlled Substance Act (“CSA”). Specifically, Section 801 of the CSA provides that the distribution of controlled substances in “interstate commerce and foreign commerce” justifies federal control of said substances. federal guidance also expressly forbid the “diversion of marijuana from states where it is legal under state law in some form to other states.” Accordingly, federal law would put Oregon and other legal states engaged in such interstate transfers at great risk of federal enforcement actions and would most certainly compromise the cannabis exchange.

However, the passage of this idea into state law could arm the Beaver State with a big advantage. Specifically, the state would be able to start exporting its cannabis products the moment federal cannabis prohibition is lifted. Such strategic advantage would position Oregon as a leading marijuana exporter (assuming it can find some buyers) and would serve as an escape valve for the chronic oversupply issue.

For now, we must sit tight and see how the proposed bill, which has yet to be drafted, will be received by the Oregon legislature. We will keep you updated on this issue.