Canadian Economists Fear That Cannabis Legalization Will Lead to Overproduction Issues

As Canada prepares to make history as the world’s largest country to legalize the possession, use, and sale of recreational adult-use cannabis, academics and experts across the Great White North are understandably looking towards their southern neighbor for examples of legalization’s successes and missteps.

According to Global News, Stephen Easton, an economics professor and senior academic fellow at BC’s Fraser Institute, is worried that the Beaver State’s severe legal weed overproduction problem could surface in Canada once widespread legalization goes into effect later this year.

“There is no reason to think it won’t happen here as well. In a broader sense, we are adding legal production to an already robust illegal production,” Easton told Global News. “Consumption may simply not increase in proportion to our ability to grow.”

In the three years since recreational cannabis sales first began in Oregon, the state’s regulatory body, the Oregon Liquor Control Commission, has awarded about 1,000 cultivation licenses among 2,014 applicants. With so many pot producers and no limit on how much they can grow, the state’s retail weed market has seen nearly one million pounds of overstocked product sitting on shelves.

In Canada, regulators have restrained from imposing any strict cultivation cap or acreage limits on licensed growers, but they’ve also approached the transition out of prohibition more slowly than Oregon, adding a number of safeguards to try and establish a regulated market that is safer, more accessible, and more economically viable than the existing black market.

To date, Canada has only licensed 104 potential recreational cannabis growers out of nearly 2,000 applications, with a permit review process that takes more than a year to complete.

Dan Sutton, CEO of B.C. cultivation company Tantalus Labs, said Canada will avoid Oregon’s oversupply issues due to “Far more relaxed regime.” He added, “Right out of the gate, you’ve got a far more sophisticated production regulation regime [in Canada], which inherently applies a barrier to entry.”

Canada’s legal cannabis growers will also have a number of benefits and financial incentives not seen by Oregon cultivators. While America’s continued federal prohibition has prevented Beaver State operators from exporting their overstocked product across state lines, Canada’s move towards nationwide legalization means that growers in Vancouver and Toronto will be able to ship their bud across the country to seasonal ski towns and underserved provinces. Canada’s MMJ producers are already sending products to medical marijuana markets in Israel, Australia, and more, with recreational growers expected to follow suit. While Oregon may have thousands of pounds of shoddily-produced outdoor bud, Tantalus Labs CEO Sutton pointed out that high-grade product cultivated by craft farmers is still fetching above average prices at Oregon pot shops, suggesting that at least some customers around the world still value quality over quantity.

“In Oregon, while there are massive over-supplies of commodity-grade quick and easily grown cannabis, there are still cannabis products that sell for $15 or $20 a gram at the dispensary level,” Sutton told Global News.

About Merry Jane

is the definitive cannabis resource on culture, news, video, food and style dedicated to expressing a new cannabis mentality. Through exclusive content and relatable perspectives, MERRY JANE highlights the best of cannabis lifestyle while also offering vital, interactive tools to explore the new frontier of products, dispensaries and community.