black market pot
Marijuana legalization has done little to change Oregon’s longstanding reputation as a leading black market exporter of premium cannabis, state police say in a new analysis obtained by The Oregonian/OregonLive.
The report offers an unvarnished view of both legal and illegal marijuana production in Oregon at a time of uncertainty for marijuana policy nationally.
It found that Oregon has an “expansive geographic footprint” on the black market across the country. A half-dozen counties — Jackson, Multnomah, Josephine, Lane, Deschutes and Washington — “lead the way” in supplying much of what’s shipped out of state, the analysis said.
The report’s other key takeaways: Overall marijuana production in Oregon far outpaces demand, hash oil manufacturing has fueled a rise in explosions and serious injuries and the state doesn’t comply with key federal marijuana enforcement priorities.
But the report – done by the agency’s drug enforcement section with a January time stamp – zeroed in on Oregon’s role in the lucrative black market and said the state must address the problem.
The Oregonian/OregonLive made multiple requests for the document, but the agency didn’t release it. Capt. Bill Fugate, state police spokesman, said Saturday that this version is a draft that the agency planned to refine.
Though the 39-page report includes extensive footnotes and charts illustrating the findings, Fugate said in an email that “many sources and data are not sufficient for the product we wanted.”
A representative from Gov. Kate Brown’s office couldn’t immediately be reached for comment.
Analysts identified Portland, Eugene, Medford and Grants Pass as cities with the “greatest level of connection” to black market destinations, which include Illinois, Minnesota, New York, Connecticut, Florida, Georgia, Pennsylvania, Wisconsin and Idaho. None of those states have recreational marijuana laws.
“The illicit exportation of cannabis must be stemmed as it undermines the spirit of the law and the integrity of the legal market,” the report states. “It steals economic power from the market, the government, and the citizens of Oregon, and furnishes it to criminals, thereby tarnishing state compliance efforts.”
Black market trafficking is a significant concern for states with legal marijuana laws. The federal government has made it clear that cracking down on the illicit market should be a priority for state regulators.
Under President Barack Obama, the U.S. Department of Justice issued guidelines for states with legal cannabis. In general, the Cole memo as it is known said the government would tolerate recreational and medical marijuana policies provided states develop robust regulations targeting illegal activity.
The guidelines have served as a roadmap for states as they craft regulations for recreational marijuana, which in Oregon generates an estimated $3 million a week in sales.
The current U.S. attorney general, Jeff Sessions, this week said marijuana is “only slightly less awful” than heroin, but he also called the Cole memo “valid.”
According to state police, Oregon falls short of complying with the memo. In addition to creating a legal market for cannabis production, legalization has “provided an effective means to launder cannabis products and proceeds, where in essence, actors can exploit legal mechanisms to obscure products’ origin and conceal true profits, thereby blurring the boundaries of the legal market and complicating enforcement efforts,” the report says.
State police, analyzing Oregon’s recreational and medical production capacity, figure that the state could potentially produce a surplus of cannabis with an estimated street value between $4.7 billion and $9.4 billion.
Senate Majority Leader Ginny Burdick, co-chair of the joint legislative committee overseeing marijuana implementation, said medical marijuana growers are a chief source of cannabis leaving the state. She said she’s confident that tight regulation of the recreational marijuana program is keeping it from leaking out of the system.
Burdick said she hopes the prospect of making money legally is enough to draw some of the thousands of medical growers in the state into the recreational system.
“As the market shakes out and as people gravitate toward the regulated recreational market, I think you will see some of these issues get better, but in southern Oregon there is a lot of marijuana grown and no law enforcement to speak of,” Burdick said.
In 2016 Oregon exported cannabis to the black market at a rate twice that of Washington, home to medical and recreational marijuana programs.
“This provides a strong indication that surplus cannabis is not discarded but is in fact trafficked out of state and sold for a huge profit margin,” the report notes.
In 2014, Oregon legalized marijuana for recreational use and rolled out sales in phases starting in late 2015. The recreational marijuana program is regulated by the liquor control commission, which like Colorado and Washington, has a seed-to-sale tracking system intended to crack down on illegal sales.
The state police report relies on data collected before the state began implementing its marijuana tracking system last fall.
Oregon lawmakers have grappled with how to address the nearly 20-year-old medical marijuana program, with a long history of loose regulation that has made it ripe for exploitation.
During this year’s legislative session, lawmakers considered folding key elements of the medical program into the recreational one, but Burdick said that idea is now on hold to allow more time to work out details. Such a merger, proponents argued, would give medical producers a legal outlet for products that might otherwise end up on the illegal market.
Though the report offers a sober look at the state of the black market in the era of legal cannabis, it makes clear that police aren’t able to keep up.
“Law enforcement,” it concludes, “is unable to keep pace with out-of-state cannabis diversion.”
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