The marijuana industry has been booming for over a few years at this point. With so many companies working to outproduce the next. It seems as though the issue of overproduction is something that many have begun to worry about.
One of the key parts of the marijuana market has been US states implementing their own cannabis laws. It is difficult to characterize the industry in America as a whole. Given each state has chosen to set laws up differently.
While some have stated that the cannabis markets individuality determined by the state-wide basis is a good thing, others have argued that the segmentation may in fact be its demise.
Oregon as an Example
The state of Oregon has long been considered one of the founding locations for marijuana legislation. The state recently announced that they have signed a new bill into law that would allow the exportation of cannabis across state lines if the federal law complies. This seems like an effort to curb the overproduction that the state has seen in the past few months.
Only four years ago when Oregon decided to legalize the substance, the state gave out more than enough marijuana licenses. Since that time, consumers have seen the price of weed drop by as much as $5 per gram. This amount is quite unheard of as the taxed amount of cannabis should lead the price to be much higher.
It seems as though the state failed to consider the principle of supply and demand. This is due to the state handing out a large amount of licenses to grow. One of the ways to curb this has been other states more selective choice of who they give grow licenses to. This has meant less competition in the market and therefore, higher prices.
What’s Next for the Industry?
Another key factor that has increased the suspicion of overproduction and oversupply, has been the amount of investments into the growth of the substance. Since 2018, around $3.5 billion has been invested in the growth of cannabis across the board.
The amount of money put into the industry has not been segmented to effect the different parts that need capital such as software and increasing the amount of distribution opportunities that they have. This has created yet another problem for businesses that are overproducing to deal with.
The thing is that it seems as though this is hitting upon some middle-ground. As we continue to inch toward the future, growers are beginning to see the demand that they need to produce rather than just reaching toward the highest amount of production.
This however, is something that is good for those who consume the substance as prices should remain quite low. The hopes are that in the near future, cannabis companies can maintain some stability in terms of production and the price of the substance overall.
