Oregon produces 2 times too much cannabis

Oregon's cannabis industry is in crisis, with a record harvest in 2024 exacerbating an already oversupply problem.

While Oregon cannabis consumers enjoy historically low prices, independent growers, manufacturers and retailers are struggling to stay afloat as demand stagnates.

According to a’Oregon Liquor and Cannabis Commission (OLCC) released on February 1, the state's cannabis market produced an unprecedented 5.6 million kilos of cannabis last year, an increase of 28% over 2023.

This increase in production was boosted by ideal growing conditions in southern Oregon during the year, driving retail prices down to a record low of just 3.51 $ per gram in December 2024.

Meanwhile, total sales for the year remained stable at around $960 million, suggesting that the demand has reached a plateau and cannot keep pace with the increase in supply.

As a result, OLCC estimates that only 57% of supply met actual consumer demand, meaning that the amount of cannabis available is almost twice as much as that purchased.

Oregon cannabis market faces persistent overproduction issues since adult legalization in 2014. To address this, legislators have put a moratorium on new cultivation and retail licenses in 2019, in the hope of curbing supply.

However, these measures have proved insufficient, as excess inventories continue to depress prices and squeeze companies' already slim margins.

With a backlog of products and a lack of new markets, some manufacturers are looking to illegally sell their surplus cannabis out of state to cover their costs, despite the risks.

Others simply withdraw from the market, selling their licenses to the highest bidder, as tangible assets such as growing equipment and real estate lose their value in a market saturated by supply.

Many industry experts believe that a legalization or re-evaluation at federal level could help alleviate Oregon's cannabis crisis by opening the door to interstate commerce, This would enable surplus products to be sold to countries where supply is limited.

Without intervention, Oregon could see large-scale business closures, layoffs and economic losses in the coming months.