According to a new report from the state police, Oregon continues to be a top source for marijuana on the black market that dominates most of the United States. In fact, 6 counties in Oregon account for the vast majority of cannabis that is leaving the state, destined for an illegal purchase near you.
Although data is sketchy for obvious reasons – for example, those who ship marijuana across state lines illegally don’t keep the best inventory records – the 39-page report is chock full of what data is available and analysis of said data.
Among the findings: Cannabis production in Oregon far exceeds the demand in the state and hash oil production is on the rise. To be more specific, the state produces a surplus of cannabis worth somewhere in the $4.7 billion to $9.4 billion range. This surplus is flowing out-of-state, putting the state’s legal program in the crosshairs of the federal government for violating the Justice Department’s “Cole Memo,” which tacitly allows states to operate legal marijuana programs as long as they heavily regulate illegal activity – like shipping cannabis out-of-state.
Under the heading of “Strategic Findings”:
-Criminals are exploiting Oregon’s cannabis industry for financial crimes and fraud.
-Legal entities in Oregon’s cannabis industry have been targeted by violent criminals and armed robberies.
The report lists several high-profile cases that back up these findings, but I don’t think there is really any doubt that criminals are using the cover of legality in Oregon to continue their illegal activities. They would be engaged in these activities whether Oregon had legalized recreational marijuana or not; they are, after all, drug dealers.
The point being missed here is that many of these dealers used to sell their wares within the state. But as more legal suppliers come on line, the more criminals and gangs are forced to find buyers out of state…in states where marijuana is not legal, at least not for adult use. And as more legal marijuana suppliers open businesses in other states (like California, Massachusetts, Nevada and Maine) the less customers there will be for criminals trying to circumvent state law and sell marijuana across state lines.
It may seem like a simple and convenient solution to those who don’t support legalization. They will say “well, of course your answer is more legalization, you just wanted to get stoned hippie.” But like it or not, the laws of supply and demand cannot be repealed. As supply increases relative to demand, prices fall, making the risk of selling cannabis illegally less worth the time, effort, and money. As prices fall, more customers leave the black market and buy from the legal one because A) they want to spend less money for similar quality and B) their dealer probably went out of business or will be soon.
You can imagine where things go from there. Falling prices will expand the legal market and restrict the illegal one. More customers will raise demand which legal suppliers will have to meet if they want to stay in business. So supply will increase, costs will be cut, producers will become more efficient in getting their product to market and prices will settle around where they would be if marijuana had never been made illegal, which by some estimates could be as low as $1 a gram.
That is a price that illegal dealers could never meet, and even if they could, the profit margins would be so small it would not be worth the risk of being busted.
Oftentimes the simplest answer to a problem is also the best.