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Give OLCC breathing room on cannabis licenses

The Senate should take another look at a bill to ease pressure on the Oregon Liquor Control Commission, which is scrambling to keep up with demand for cannabis production licenses.

Senate Bill 218 would let the OLCC refuse to issue new production licenses based on the supply and demand for marijuana. Senators voted the bill down two weeks ago, 17-13, with lawmakers from both parties expressing reluctance to protect private businesses from competition. Ordinarily, that would be a valid concern. But the state’s fledgling marijuana industry is not just another business.

Marijuana is a tightly controlled product, and for good reason. Despite legalization of the drug in a growing number of states, it is still illegal under federal law, and diversion of surplus production into other states where it remains a black-market item is still a concern.

There is a reason why the OLCC is the state agency charged with regulating the industry. While the state does not own marijuana, as it does all liquor sold in the state, and marijuana retailers are not state contractors, as is the case with liquor store operators, the state has a clear interest in a smoothly functioning market.

Oversupply has sent prices plummeting, increasing the temptation for growers to divert surplus harvest out of state. Whether a significant number of licensed growers is doing that is really beside the point. The OLCC itself reports there is 6.5 years’ worth of supply in the market. The OLCC has struggled to keep up with demand for new and renewed licenses, and imposed a “pause” on new applications last June while it attempted to clear a backlog.

After the bill failed on its first floor vote, the Senate sent SB 218 to the Rules Committee, which added a two-year sunset clause ending the OLCC’s ability to deny new licenses after Jan. 2, 2022. Backers of the bill hope that will be enough to convince wavering senators to approve the measure.

Oregon’s marijuana industry has the potential to make a positive contribution to the state’s economy, but it continues to suffer from growing pains. Giving the OLCC a temporary tool to manage the marketplace is a reasonable way to address the oversupply problem.