One of the world’s first legal cannabis markets is plotting a surprise move to start exporting product. In doing so, it could open a sort of superhighway for cannabis trade.
For much of the short history of the legal cannabis business, exporting was at best a theoretical conversation. But cannabis companies and sharp analysts have always known the huge potential that awaited once markets become more open to inter-border cannabis trade.
Less than two weeks ago, Israel‘s parliament unanimously passed a bill allowing the export of medical cannabis just days after the National Institute for Cannabis Investors predicted that the start of its program would be one of the big industry stories of 2019.
That development places Israel on a short list of countries who have authorized the exportation of medical cannabis behind countries such as the Netherlands, Canada, and Australia.
Timing aside, no one should really be surprised Israel made this move. The small nation has been a trailblazer in medical cannabis research for years, with highly regarded minds like Dr. Raphael Mechoulam, who discovered THC, and Dr. Michael Dor, senior advisor for the General Medical Division at the Israeli Ministry of Health.
Dr. Dor, a founding advisory board member here at the Institute, expected this legislation would come in short order. Dor tells us the opportunities that arise from a thriving cannabis export market are boundless – and they’ll be even greater when the United States begins to loosen some more of its restrictions. The latter is something we expect within a couple of years, certainly no more than five.
But another trailblazer, this one much closer to home, is plotting an even more surprising move.
In doing so, it could open a sort of superhighway for cannabis trade, which would be a massive catalyst that few, if any saw coming.
Here’s what I’m talking about…
Oregon Prepares to Battle Federal Government With Plans to Export Marijuana
While East Coast states – like New York and New Jersey – are set to resume negotiations this week to approve recreational marijuana and while California works to fix its botched regulations to start its second year of fully legal status, Oregon is racing to become the first state to legalize the interstate export of cannabis.
State Senator Floyd Prozanski is working with industry advocates to finish off a bill that would allow state growers to ship cannabis to other (border) states that also have state-legalized cannabis programs. Product would not be allowed to be carried through states which do not agree to participate, and air travel is regulated at a federal level.
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This ambitious proposal flies in the face of several regulatory conventions, not the least of which is ongoing federal prohibition. But it’s worth noting that the federal government has chosen so far not to interfere with states that have cannabis laws on the books. And there have been historically positive steps in the form of pro-cannabis bills in recent months (i.e., legalization of industrial hemp through the Farm Bill signage, the STATES Act picking up more bipartisan advocates and verbal support from President Donald Trump.
Especially since legal cannabis’ top opponent, Jeff Sessions, is no longer serving as Trump’s attorney general, it begs the question whether the federal government will do anything of substance to stop interstate trade between two states that have legalized cannabis.
Supporters of the bill also have to convince state lawmakers. Oregon statue expressly requires that cannabis grown or sold in the state remains within its borders. That really holds back growers in a state that is able to grow a significant surplus of product at a time when neighbors face shortages.
Interstate Exporting Would Fix Many Supply, Market Problems
Oregon’s state-mandated “track and trace” system revealed the state produces at least three times as much cannabis as the state consumes. Some independent estimates suggest actual growing capacity could be nearly double that. That supply glut has proven problematic, causing a steep price decline.
Opening the state to export “would either slow or stop the price declines, because there wouldn’t be any more excess,” according to New Frontier Data Senior Economist Beau Whitney. And considering the supply shortages we’ve seen in states like Nevada and one looming in California, the largest individual cannabis market in the world, it’s not hard to envision states jumping at the chance to enter into agreements with Oregon and its best producers.
Perhaps even more important to the long-term health of the markets, Whitney believes this export “would create more of a market in which quality and branding and other things come into play more so than just price.” And as I’ve said repeatedly, branding is one of the most important aspects of the entire cannabis industry going into 2019.
Plus, Oregon does have a bit of history of craft product branding and exporting in other industries. Mention the Willamette Valley to a wine lover from anywhere in the country, and you’re sure to get an earful of rave reviews. The same goes for some of its craft beer operations.
Now the state is taking a much bolder step by trying to become the first U.S. state to export its cannabis. In the process, it may not just make its producers a ton of money and keep dispensaries in the gigantic markets of Nevada and California fully stocked – Oregon might just change the entire trajectory of the cannabis industry forever.
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Executive Director, National Institute for Cannabis Investors
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