Oregon’s cannabis industry is facing a major oversupply problem, and is now sitting on an excess of around one million pounds of cannabis. The growing oversupply is driving down prices for cannabis that consumers see at the counter.

Supply and demand creates problems for a state of only 4.19 million, while a state like California is home to nearly 10 times the population of Oregon at 39.56 million. Oregon simply doesn’t need an enormous cannabis industry to supply its industry. It’s federally illegal to transport cannabis across state lines, so some businesses have expanded into other states.

Trade organizations are recognizing the inevitable impact of oversupply on the community. “What we have is a market-access problem, and it’s a political problem,” Adam Smith, founder and director of Craft Cannabis Alliance, told Business Insider. “It is not efficient to build facilities in states where there’s no reason to grow cannabis. You can grow citrus in New York if you want. It’s just a bad business decision.” According to Smith, millions of dollars in investment in the industry could quickly dissolve.

Sadly, Oregon-based cultivation companies can’t legally transport product across state lines. On April 10, the Oregon Senate rejected Senate Bill 218, a plan to limit the state’s supply. The soaring number of unnecessary production licenses—which will lead to more oversupply—will continue. Other bills such as Senate Bill 582 are currently in the legislative process and could also help by allowing interstate transfers.

More competition generally means lower prices, and for now, cannabis consumers in Oregon should be happy with the price they see at the counter. The median price per gram of cannabis in Oregon dipped below $5 in December 2018. The long-term effects could be different.

The Oregon Liquor Control Commission’s latest Recreational Marijuana Supply and Demand Legislative Report affirmed the growing oversupply problem in the state. According to that report, the state’s supply of cannabis could last 6.5 years. For now, the issue remains unsolved.

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