When the State of Oregon began an initiative to begin stringently testing cannabis products for pesticide use in October 2016, most in the industry saw it as a welcome development. After all, pesticide use is a hot and highly controversial topic for every segment of agriculture, from growing corn crops to cotton—resolving the issue for the cannabis industry just makes sense. However, the gulf between a good idea and its execution is a wide one; the current implementation of testing standards is costing Oregonians much-needed jobs.
Now that representative batches of every cannabis product on the market need to be verified —an expensive and time-consuming process— at one of only a handful of state-sanctioned laboratories, an enormous backlog of cannabis producers find themselves stuck in the bottleneck waiting for testing to occur. This gravely affects an infant industry where most brands are start-ups by nature, eagerly reliant on turning a profit in order to keep running.
The Economics of Laboratory Testing
Look around any Portland dipensary and you’ll see the same thing: supply falling, prices rising and consumers competing to buy product. As a result of decreased revenues, many dispensaries are forced to lay off workers. So what’s happening? The state of Oregon has been debating how to handle pesticide use in the cannabis industry ever since decriminalizing cannabis products. In the end, the state opted for the most stringent rules in the nation, which include an enormous list of compounds to test for, special protocols for failed products and a final verification by a state-appointed assessor.
Being in the name of public safety, it’s understandable that the rules should be made stringent. However, the entire state of Oregon only employs three permanent full-time assessors. These are the conditions that have led to a backlog of hundreds of products awaiting to hit shelves, with dispensary and growing employees unsure about whether they’ll get their paycheck if testing doesn’t speed up.
The Cost of Inefficient Testing
Cannabis industry economists and analysts predict that the State of Oregon will lose out on $10 million in tax revenue due to the flawed execution of its marijuana testing program. Dispensaries and growers are already laying off workers they can’t afford to keep, hoping to be able to hire them back once the state testing mechanism provides faster, better results for clearing product to hit shelves across the state.
And of course, whenever regulation impedes the natural economic order of supply and demand, black market activity pops up and complicates matters further. Considering that one of the primary benefits of cannabis legalization was getting marijuana out of the hands of criminal syndicates, maintaining this ineffective regulatory position can only hurt the cannabis industry, and by extension the State of Oregon itself, in the long run.
How have you been impacted by the new testing standards? Let us know on Facebook, or check out our Salem, Oregon dispensary.
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