U.S. prosecutor: Oregon has big pot overproduction problem

PORTLAND – Oregon’s top federal prosecutor said Friday the state has a “formidable” problem with marijuana overproduction that winds up on the black market and that he wants to work with state and local leaders and the pot industry to do something about it.

U.S. Attorney Billy Williams convened the unprecedented summit of influential federal law enforcement representatives, state officials and marijuana industry scions after Attorney General Jeff Sessions withdrew an Obama administration memo that had guided states with legalized weed on how to avoid federal scrutiny.

The meeting included representatives from 14 other U.S. attorney’s offices, the FBI, the U.S. Postal Inspection Service, the U.S. Forest Service and U.S. Customs and Border Protection. Nine U.S. attorneys attended in person, including those from California, Washington, Colorado, Idaho and Nevada.

Williams sought to calm fears among pot growers that his office would target legal growers in Oregon, but said the market has a problem that must be addressed. Everyone needs a “bottom-line answer” on how much excess marijuana is being produced and how much is being smuggled out to other states where weed remains illegal, he said.

The surplus attracts criminal networks and generates money laundering, drug violence and environmental contamination from pesticides and draws down water supplies in rural communities, he said.

“Here’s what I know in terms of the landscape here in Oregon, and that is, we have an identifiable and formidable marijuana overproduction and diversion problem,” he said.

Williams added: “And make no mistake about it, we’re going to do something about it.”

Oregon Gov. Kate Brown, a Democrat, thanked Williams for his “pragmatic approach” but also sought to tamp down fears that legitimate marijuana businesses would be targeted.

“In Oregon, we like to come together around a table and tackle these challenges and (we) call it the `Oregon way’ – that we work collaboratively to solve problems here,” she said, adding that Williams told her Oregon marijuana businesses are “not targets of law enforcement.”

There is general agreement that marijuana from Oregon does wind up in other states where it isn’t legal. Still, it’s hard to say if pot smuggling has gotten worse in Oregon – where illicit pot farmers were thriving long before recreational legalization – or how much of the marijuana leaving the state filters out from the legal side.

Williams has previously said law enforcement in 16 other states have reported seizing marijuana from Oregon and postal agents have intercepted more than 2,600 pounds of pot in outbound packages and over $1.2 million in associated cash.

Advocates dismiss the idea that legalization has caused a spike in black markets sales. It’s just that now, because it’s legal, it’s much easier to track it back, they said.

“When I moved to Oregon in 1979, cannabis was a billion-dollar crop then, so the notion that this is somehow caused by legalization or by the medical program is something that’s misplaced,” said Leland Berger, an attorney who specializes in marijuana cases.

Oregon voters approved the sale of recreational marijuana in 2014, and it became legal the following year. The state has allowed medical marijuana since 1998.

It now has about 900 licensed recreational growers, with more than 1,100 licenses awaiting approval. Another roughly 25,600 growers in the state produce cannabis for medical marijuana patients. More than 500 retailers are licensed to sell recreational weed, with nearly 250 applications pending.

Oregon did not cap the number of recreational pot producers, virtually guaranteeing an overproduction problem, said Seth Crawford, a former Oregon State University professor who’s an expert on marijuana economics and cannabis policy.

Coupled with Oregon’s small population – 4 million people total – and its reputation as a prime cannabis-growing location on a par with Northern California, a surplus was predictable here, Crawford said. He estimated Oregon growers produce up to three times the amount of marijuana that the state can absorb legally each year.

“You created this huge industry that has nowhere to put its product,” Crawford said.

“If you were an investor and you had just dropped $4 million into a (marijuana) grow and you had thousands of pounds of flower that was ready to go but you had nowhere to sell it … if you want any of your money back, the only thing you can do is sell it on the black market,” he said. “It was a system designed for failure.”

Those in the industry are cautiously optimistic about the summit, said Anthony Taylor, president of Compassionate Oregon, which advocates for medical marijuana patients.

“Let’s talk about it,” he said. “I think everybody realizes it’s a discussion that needs to happen.”