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State Police Scrutinize Oregon’s Billion Dollar Black Market for Cannabis

Oregon is still the place to go for black market high quality buds, according to new Oregon State police analysis seen by The Oregonian/OregonLive.

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The report paints Oregon as having an “expansive geographic footprint” in the black market in the U.S..

The report also notes that marijuana production is much higher than demand, and hash oil manufacturing led to an increase in explosions causing serious injuries for which taxpayers picked up the tab. The report also noted that the state doesn’t comply with key federal marijuana enforcement policies. Overall, the report said the state must do something to address its black market.

Capt. Bill Fugate, state police spokesman noted the 39-page report, which police plan to refine, suffered from the fact that “many sources and data are not sufficient for the product we wanted.”

Portland, Eugene, Medford and Grants Pass are cities with the “greatest level of connection” to black market end-points like Illinois, Minnesota, New York, Connecticut, Florida, Georgia, Pennsylvania, Wisconsin and Idaho, where no recreational marijuana laws currently exist.

“The illicit exportation of cannabis must be stemmed as it undermines the spirit of the law and the integrity of the legal market,” the report states. “It steals economic power from the market, the government, and the citizens of Oregon, and furnishes it to criminals, thereby tarnishing state compliance efforts.”

Black market trafficking is a significant concern for states with legal marijuana laws. The federal government has made it clear that cracking down on the illicit market should be a priority for state regulators.

According to state police, Oregon’s legalization has “provided an effective means to launder cannabis products and proceeds, where in essence, actors can exploit legal mechanisms to obscure products’ origin and conceal true profits, thereby blurring the boundaries of the legal market and complicating enforcement efforts.”

State police conjecture the value of Oregon’s surplus marijuana sits somewhere between $4.7 billion and $9.4 billion. State police analysts determined that, as of 2016, Oregon exported cannabis to the black market at double the rate of Washington to the north, which like Oregon has medical and recreational programs.

“This provides a strong indication that surplus cannabis is not discarded but is in fact trafficked out of state and sold for a huge profit margin,” the report notes.

The rise of butane hash oil manufacturing is “the most immediate cannabis threat,” according to state police.  Explosions at such facilities sent at least 30 people to the Oregon Burn Center between July 2015 and July 2016. Medicare and Medicaid covered the medical costs. Government programs paid out $7.6 million for medical care for hash oil burn victims between 2013 and 2016.

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Profits from illegal sales are driving some of the activity, state police argue. “These substances are particularly suitable for out-of-state smuggling, since concentrates can be virtually odorless, unlike plant material, and are more easily concealed,” the report notes.

The state police report is based on data collected before last fall’s state tracking system was instituted.

“Law enforcement,” it concludes, “is unable to keep pace with out-of-state cannabis diversion.”

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