This story was originally published by InvestigateWest, a nonprofit newsroom dedicated to change-making investigative journalism. Sign up for their Watchdog Weekly newsletter to receive stories like this one in your inbox. The tales of illicit cannabis operations were coming from all corners of O regon, and by 2018 — four years after the state voted to legalize recreational weed — lawmakers were feeling the pressure to act. Workers on unlicensed grows just miles north of California were sleeping in shipping containers and being held on site by armed guards. In clandestine hash oil laboratories in Central Oregon and Portland, jerry-rigged electrical wiring and pressurized butane gas had sparked explosions, blasting buildings apart and sometimes scorching people to death. Along the coast, local sheriff’s deputies were intercepting hundreds of pounds of processed marijuana bound for Texas and Florida, bypassing state inspectors and tax collectors on the way out. Legislators responded to the crescendoing concern by creating a new grant program seven years ago to support law enforcement efforts to bust these types of operations. The Illegal Marijuana Market Enforcement Grant was placed under management of the Oregon Criminal Justice Commission with an initial $3 million in cannabis taxes funding it. Over time, that funding swelled, expanding to a growing group of counties and nonprofits.  In total, Oregon has spent $46 million in the last seven years. Millions of cannabis plants have been seized, and hundreds of workers have been helped out of danger.  But has the money put a dent in the black market? Officials can’t say. “It is not possible to draw conclusions about whether the grant has reduced Oregon’s illegal marijuana market at this time,” the commission’s annual report on the grant program stated in 2024 and again this January. “Due to the clandestine nature of illegal markets, the distribution and scope of the illegal marijuana market in Oregon is not known, making it difficult to determine whether grant-funded activities result in a reduction of the black market and associated illegal activities.” These are the agency’s most frank admissions yet of how little is known about the scale of Oregon’s illicit cannabis market, even as lawmakers allocate millions each year trying to crack down. The lack of insight into Oregonians’ return on investment spotlights how state agencies have made limited efforts to coordinate their operations to reduce supply and demand for illicit cannabis. Experts and advocates say more can be done — and the inaction leaves workers and the legal market vulnerable. “I think we have a compelling case that this is all the consequence of how we set up legal cannabis in Oregon,” said Corinna Spencer-Scheurich, executive director of the Northwest Workers’ Justice Project, which has used grant money to provide legal assistance to immigrant workers exploited in the cannabis industry. “Oregon is kind of a warning about what it looks like to deregulate the growing of cannabis — to make it legal, but also not to really build up a good enough enforcement mechanism and coordination. Now we’re dealing with the consequences of that.” If lawmakers want to understand the size and nature of the illicit cannabis market, officials would need to tap more sources for information, two drug policy experts said. Insights from economists, legal cannabis business owners and consumers could help regulatory agencies to better understand economic drivers of the illicit market. Research indicates that stagnant prices and massive oversupply in Oregon’s legal cannabis market may be contributing to increased participation in the illicit market, as licensed growers look for other ways to recover losses. But so far, Oregon’s efforts to collect any data beyond legal supply and demand and drug busts has been limited, state officials, advocates and cannabis experts said. “We really have a very poor idea of what’s going on in our illicit markets, and often our policy is driven by these misunderstandings and miscalculations,” said Jason Eligh, drug market and policy expert with the Global Initiative Against Transnational Organized Crime, a Switzerland-based global civil society organization that studies organized crime. “The money demonstrates a will to do something. The problem is the information.”  Shifting goalposts Some lawmakers listening to presentations by state Criminal Justice Commission staff during this legislative session have expressed a desire for more robust insights into the illicit market. “I would be interested as the session goes on to learn whether appropriated funds like this have any impact,” Sen. Mike McLane, R-Powell Butte, told agency Executive Director Ken Sanchagrin in a Senate committee hearing on Jan. 22. “I do have a question about the ability of this Legislature to follow up and prove that we’re doing something more than relieving local law enforcement’s financial burdens by grants.” When the Legislature created the grant, however, it didn’t require the Criminal Justice Commission to draw conclusions about the illegal market as a whole. It simply required the agency to establish a process “for evaluating the efficacy of local law enforcement programs and services funded by the grant.” From the beginning, that process involved collecting data from law enforcement grantees on the number of incidents they handled, the amount of illicit cannabis they recovered and destroyed, and the amount of firearms, cash, and other drugs seized during search warrants. In more recent years, the commission’s grant reports have also included enforcement data collected from other state agencies that assist in shutting down and citing illicit operations, including the Oregon Liquor and Cannabis Commission, which oversees cannabis licensing and compliance, the Water Resources Department, and the Oregon State Police. Even taken together, the record of enforcement activity paints only a partial picture of where illicit cannabis is being grown, processed and moved out of state.  “If you say seizures are up, it’s not necessarily that production or supply has been affected,” Eligh said. “Seizures demonstrate the presence of law enforcement. They give you an indication of law enforcement’s efficacy in trying to seize drugs.” After peaking in 2021 and 2022, the number of law enforcement busts have fallen, and so has the amount of product they are seizing at each site. Law enforcement officials attribute some of the decline to a shift to indoor grows, which are more difficult to detect than outdoor grows and hoop houses. They also tend to be smaller. Many say the grant has made an undeniable impact in reducing the kinds of issues that caught lawmakers’ attention seven years ago. Nathan Sickler, sheriff of Jackson County in Southern Oregon, said communities there have found “significant relief” from the environmental degradation and public safety problems caused by illicit grows.  “We’ve done the work on making it very difficult for people to profit from the illegal market,” he said. “Today, we’re in a pretty good spot.” While law enforcement in Southern Oregon often encounter illicit cannabis grows that are outdoors and use hoop houses, illicit grows in other parts of the state are often smaller and indoors. This property in rural Southern Oregon was searched by the Josephine Marijuana Enforcement Team in 2022. (Josephine County Sheriff’s Office) Jackson County, by far, has received the most money through the grant program: nearly $14 million since 2019. During that time, the Illegal Marijuana Eradication Team at the Jackson County Sheriff’s Office has seized and destroyed around a million plants and 200 tons of processed cannabis, nearly 400 pounds of extract, and 538 weapons, according to its most recent grant application.  The scope of the grant also expanded beyond its original mandate when nonprofits such as the Northwest Workers’ Justice Project became eligible for funds for humanitarian work. The nonprofit grantees have served more than 700 people, Spencer-Scheurich said, helping workers find food and temporary shelter when they are displaced after busts, and providing legal assistance to file for unpaid wages or immigration relief. That includes recovering more than $300,000 in unpaid wages and damages. While the cannabis grant was pitched as a support for law enforcement and local prosecutors to take on cartels and other criminal networks, more recent data makes clear that funds are also spent on busts and prosecutions of smaller operations. In 2024, only 15% of the incidents that grantees investigated were connected to larger criminal organizations, according to the grant report. Bringing in the market To better understand trends in the illicit market, state officials could also look to cannabis business owners in the legal market — and to consumers. But so far, these groups haven’t factored into the Criminal Justice Commission’s analysis. Oregon cannabis experts who spoke with InvestigateWest said they thought the Oregon Liquor and Cannabis Commission could also be well-positioned to support a more nuanced analysis of Oregon’s licit and illicit markets. An agency spokesperson, however, said the illicit market is strictly the domain of law enforcement. Meanwhile, in-depth study of the interplay between legal and illicit cannabis sales has been limited, even as the legal market sinks into deepening distress due to oversupply.  A decade into legalization, prices for flower, extract and concentrates are stagnant or falling, according to data published by the state cannabis commission. Amid that turmoil, research by one Portland economist suggests that legal, regulated product is losing market share in Oregon — likely to illicit sources. Beau Whitney, founder of Whitney Economics and an expert in U.S. cannabis and hemp markets, studies what he calls the “legal participation rate” in Oregon’s cannabis industry, using an estimate of annual cannabis consumption and data on legal sales to forecast how much of the cannabis sold in Oregon each year is coming from legal retailers. That rate has declined over the last few years, he said. In 2020, legal sales accounted for 75% of all sales in Oregon. In 2024, that number had fallen to 68%, according to his estimates. “The state has way too much growing capacity,” Whitney said. “And right now, the regulators are erring on the side of public safety and driving out illicit activity, and really their policies are simply increasing illicit activity, not reducing it.” Processed cannabis is packed into moving boxes for shipment. The Josephine Marijuana Enforcement Team reported finding 90,000 pounds of processed cannabis during searches of four properties in rural Southern Oregon in August 2022. (Josephine County Sheriff’s Office) While cannabis remains illegal at the federal level, all that is grown in Oregon can only be legally sold within the state. Beyond driving licensed growers out of business, the oversupply and pricing collapse is pushing some to look beyond regulated channels to recoup some of their losses.  “Everybody’s suffering,” said Andy Shelley, co-founder and CEO of CannXperts, a regulatory compliance company that advises legal businesses. “People grow a lot of marijuana, and it’s not selling, and that’s a lot of money that they need to make up for and pay people and pay all their bills. Everything is tracked, but there’s ways around that. People are pretty crafty.” Experts and regulators alike acknowledge that some illicit cannabis producers, such as organized criminal groups, have no intention of participating in the legal market, and their activity remains the most difficult to capture in research. But for others straddling the line of licit and illicit, studying the barriers that drive cannabis growers and retailers away from the legal market can be useful to remove unnecessary hurdles and bring people back in, said Daniel Bear, a drug policy expert and Canadian research lead for the Global Cannabis Cultivation Research Consortium. That goes for consumers as well as producers. “Law enforcement isn’t the answer that will eliminate the black market,” Bear said. “You just have to make it incentivized for people to come into the legal market, and see how actions against the black market are overall (affecting) social impacts and well-being.” In Colorado, for example, a 2014 study of supply and demand in the cannabis market wrapped in data not just on legal sales, but also national and state surveys that provided information on use prevalence, frequency and level of consumption. A 2021 survey-based study of cannabis use in Washington found consumers preferred legal products at higher rates than in other legal states.  Shelley and other cannabis industry experts said they weren’t aware of recent instances where Oregon’s licensed cannabis operators were consulted about how to reduce unlicensed competition.  “But I think it would be a fantastic idea because our licensees know what’s going on out there,” Shelley said. “Some of them have inside knowledge and experience in what the black market is doing. And they should be in the conversation.” ‘The million dollar question’ The cannabis enforcement grant’s future is undetermined at this point.  The Criminal Justice Commission identified it as one of few programs that could withstand cuts if the agency’s budget is reduced. But it remains widely popular with its grantees, who are writing letters, submitting testimony and paying close attention. “There is a belief that if we stop what we’re doing, we will be inundated with the same behavior, when we didn’t have resources to address it,” said Sickler, the Jackson County sheriff. “Will it be as bad? I don’t know, but if we were to say we no longer have the resources to address this, they will flood back here, set up shop again, and see how much money they can make in a year before everybody freaks out again.” An initial proposed appropriation outlined in January was less than half of what grantees requested and roughly $7 million less than the amount needed to sustain their current spending level. Lawmakers are trying to work out the right amount. In a Feb. 11 meeting of a budget subcommittee on public safety, co-chair Rep. Paul Evans, D-Monmouth, asked agency Director Sanchagrin to clarify the amount of money needed to make more progress. He pointed to a $20 million one-time funding boost the Legislature authorized just four years ago. “I have a feeling that the $20 million — I voted for it — made us feel good,” Evans said. “But I don’t know that $20 million was enough to actually do the job. I’m curious what the amount would be to actually do the job.” In another meeting, Sanchagrin described it as “the million dollar question.”  “It might even be more expensive than that,” he said. The Criminal Justice Commission is one of Oregon’s smallest agencies, with fewer than 40 staff. Rima Ah Toong, who manages the cannabis enforcement grant with two other support staff, said it would almost certainly require more resources to take on an economic analysis of Oregon’s illicit cannabis market.  “I think we could be open to doing that,” she said. “We would need to dedicate more resources than we have now on it.” The Legislature’s joint budget committee hasn’t yet held a public hearing on Criminal Justice Commission funding. The first one is scheduled for April 3.  McLane, the state senator who also questioned the broader effects of the cannabis enforcement grant, suggested that as his fellow lawmakers consider how much to keep funding the program, they should be clear about their goal in doing so.  “Very often the programs start and they’re very hard to turn off, and so we find we’re appropriating a lot of money over time with not a lot of accountability,” he said. “And again, I think grants that local law enforcement come to rely on are important. But if our purpose is to reduce illegal markets for marijuana, I’m not sure we’re succeeding.” InvestigateWest (investigatewest.org) is an independent news nonprofit dedicated to investigative journalism in the Pacific Northwest. Reporter Kaylee Tornay covers labor, youth and health care issues. Reach her at 503-877-4108, kaylee@invw.org or on X @ka_tornay. STORY TIP OR IDEA? Send an email to Salem Reporter’s news team: info@salemreporter.com. 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