SPRINGFIELD, Ore. -- A glut of legal marijuana is driving Oregon pot prices to rock-bottom levels, prompting some growers to start pivoting to another type of cannabis to make ends meet -- one that doesn't come with a high.
Applications for state licenses to grow hemp -- marijuana's non-intoxicating cousin -- have increased more than twentyfold since 2015, making Oregon No. 2 behind Colorado among the 19 states with active hemp cultivation. The rapidly evolving market comes amid skyrocketing demand for a hemp-derived extract called cannabidiol, or CBD, which is seen by many as a health aid.
In its purified, distilled form, cannabidiol oil commands a high price, and farmers can make more than $100,000 an acre growing hemp plants to produce it. That distillate can also be converted into a crystallized form or powder.
"Word on the street is everybody thinks hemp's the new gold rush," said Jerrad McCord, who grows marijuana in southern Oregon and just added 12 acres of hemp. "This is a business. You've got to adapt, and you've got to be a problem-solver."
It's a problem few predicted when Oregon voters opened the door to legal marijuana four years ago.
The state's climate is perfect for cultivating marijuana, and growers produced bumper crops. Under state law, none of it can leave Oregon. That, coupled with a decision to not cap the number of licenses for growers, has created a surplus.
Oregon's inventory of marijuana is staggering for a state its size. There are nearly 1 million pounds of "usable flower" in the system, and an additional 350,000 pounds of marijuana extracts, edibles and tinctures.
Usable flower refers to the dried marijuana flower -- or bud -- that is most commonly associated with marijuana consumption.
The Oregon Liquor Control Commission, which regulates the industry, said some of the inventory of flower goes into extracts, oils and tinctures -- which have increased in popularity -- but the agency can't say how much. A comprehensive market study is underway.
The retail price for a gram of pot has fallen about 50 percent since 2015, from $14 to $7, according to a report by the Oregon Office of Economic Analysis. Growers and retailers alike have felt the sting.
"Now we're starting to look at drastic means, like destroying product. At some point, there's no more storage for it," said Trey Willison, who switched his operation from marijuana to hemp this season. "Whoever would have thought we'd get to the point of destroying pounds of marijuana?"
That stark prospect is driving more of Oregon's marijuana entrepreneurs toward hemp, a crop that already has a foothold in states like Colorado and Kentucky. In Oregon, the number of hemp licenses increased from 12 in 2015 to 353 as of last week.
Colorado and Washington were the first states to broadly legalize marijuana. Both have seen price drops for marijuana, but not as significant as Oregon's.
Like marijuana, the hemp plant is a cannabis plant, but it contains less than 0.3 percent THC, the compound that gives pot its high. Growing industrial hemp is legal under federal law, and the plant can be sold for use in things like fabric, food, seed and building materials.
But the increasing focus in Oregon is the gold-colored cannabidiol oil that has soared in popularity among cannabis connoisseurs and is rapidly going mainstream. At least 50 percent of hemp nationwide is being grown for cannabidiol extraction, and Oregon is riding the crest of that wave, said Eric Steenstra, president of Vote Hemp, a nonpartisan organization that advocates for pro-hemp legislation.
"There are a lot of growers who already have experience growing cannabis, and when you're growing for CBD, there are a lot of the same techniques that you use for growing marijuana," he said. "Oregon is definitely a hotbed of activity around this."
Cannabidiol is popping up in products including cosmetics, chocolate bars, bottled water and pet treats. One Los Angeles bar sells drinks containing the oil. Massage therapists use creams containing cannabidiol, and juice bars offer the stuff in smoothies. Dozens of online sites sell endless iterations of cannabidiol oils, tinctures, capsules, transdermal patches, infused chocolates and creams with no oversight.
Proponents say cannabidiol offers a plethora of health benefits, such as relieving pain and taming anxiety. Scientists caution, however, that there have been few comprehensive clinical studies of how it affects humans -- mostly because the U.S. Drug Enforcement Administration still considers cannabidiol extract off-limits, and the government requires special dispensation to study it.
Pre-clinical studies have shown promise for treatment of chronic pain, neuro-inflammation, anxiety, addiction and anti-psychotic effects in animals, mostly rodents, said Ziva Cooper, an associate professor of clinical neurobiology at Columbia University who focuses her research on the therapeutic potential of cannabis and cannabinoids.
The U.S. Food and Drug Administration next month could approve the first drug derived from cannabidiol. It's used to treat forms of epilepsy.
Christina Sasser, co-founder of Vital Leaf, isn't waiting for government action to market cannabidiol products in stores and online. She sells about 500 bottles of Oregon-sourced cannabidiol oil a month and ships only to customers living in states with state-run hemp pilot programs, to better avoid the possibility of legal trouble.
"Everybody in the CBD world has recognized the risks involved, and I would say the vast majority of us really believe in the power of the plant and are willing to operate in this, sort of, gray area," she said.
Business on 05/15/2018