Pot farmer says industry in state is unbalanced, with oversupply of marijuana

SEATTLE -- For pot smokers, prices may be a reason to smile.

Since legalization, prices have dipped every single month.

Statewide a gram of pot is now about $7 on average compared to $20 in 2014 when the first pot stores opened.

“My brother is visiting from Miami and we are doing some marijuana tourism,” said one consumer.

The siblings stopped in Diego Pellicer in Seattle's Sodo's district. It's an upscale pot store but even at this one you can find low prices.

Insiders say even high-quality pot goes for half what it would cost on the black market.

Consumers may be loving the low prices but some pot farmers say the industry is in trouble.

They say it boils down to an oversupply of marijuana compared to the number of retailers.

“That’s going to be a recipe for disaster,” Timothy McCormack said.

McCormack took Q13 News deep into the crops on his Chelan pot farm several years ago.

“I am inspired by these things,” McCormack said.

That inspiration is now muted.

“The wholesale price of marijuana is so low it’s hard to produce it ... it’s going to have ripple effects in the market,” McCormack said.

McCormack added that he’s not in the green but actually on the verge of shutting down. He said as more pot farmers become financially desperate, some may be tempted to sell off crops to the black market.

“If they are barely making it, then it incentives that back door problem,” McCormack said.

He blames the state for what he calls an unbalanced system.

There are 1,200 licenses carved out for pot farms versus 520 licenses for retail stores.

But the Washington State Liquor and Cannabis Board said there is no evidence of diversion. The state says many pot farms are thriving, while others are not based on their business model.

“What’s clear is that no one knows exactly for sure the impact of price and so we are engaging our consultant,” Brian Smith with the WLCB said.

Smith says the board is open to adjustments and research but there are no plans to decrease the number of licenses.

But McCormack believes if enough pot farms go out of business, that means consumers could pay more.

“You are going to end up with a small group of people that controls the entire market,” McCormack said.

McCormack’s solution to the problem is to allow pot farms to operate like wineries.

“Here is an opportunity to take some home and try it -- that’s what the wine industry does and it turns out very well,” McCormack said.

The idea is to increase marijuana outlets without increasing the traditional brick and mortar shops like Diego Pellicer.

“I wouldn’t be against that because that’s needed to progress the industry to where we want to see it right.” Diego Pellicer owner Alejandro Canto said.

Canto still worries McCormack’s idea is too risky right now, with the feds scrutinizing the state’s industry.

So Canto’s idea instead is to open up centralized distribution centers similar to the alcohol industry.

That would help lower transportation and marketing costs for everyone, especially the struggling farmer.

“There is an overflow of product in this state -- it’s driven prices way down,” Canto said.

Canto says the profits are not what he dreamed of with almost 50% of sales going to state taxes. There are also federal taxes to contend with even before he pays his employees and manage operations.

“Am I making millions walking out? Absolutely not,” Canto said.

He says he is nowhere near it.

McCormack says retailers are still the winners in this volatile business, an industry dealing with growing pains but attracting more consumers every day.

The pot farmer is lobbying lawmakers to sponsor his idea of allowing farmers to directly sell to consumers. So far no lawmaker has drafted a bill.