Anatomy of a Cannabis Price Crash
Market prices in cannabis have been crashing in more mature markets due to massive oversupplies of cannabis products:
Canada:[1]
…product oversupply led to price drops of more than 50 per cent...
To compete, illicit growers have also slashed their prices by about 30 per cent.
California:[2]
… wholesale market, with prices said to be dropping by up to 60% since at least mid- June for outdoor-farmed flower.
… many indoor growers appear to be on better footing, for instance, with wholesale prices reportedly down 10%-20% compared to outdoor farmers.
Colorado and Oregon:[3]
In Colorado, the average price per pound has declined 51% since the fourth quarter of 2020. In Oregon, it’s down 36%.
Michigan:[4]
Retail adult use cannabis prices in Michigan are half of what they were a year ago and newly reported data from state regulators suggest they have even further to drop this year [see Figure 1].
Nevada:[5]
… prices have dropped by 50% this year.
“Wholesale flower prices that we are seeing right now around the state are closer to $450 to $600 for freshly harvested, high quality sun grown … Last year at this point in the season, we were looking at prices around $1,100 to $1,200.”
Washington: [6]
Similar to Colorado’s marijuana market, Washington is in a race to the bottom. Their prices are already drastically lower than Colorado’s and seem to keep dropping.
Figure 1
Sources claim that legal market cultivators in California are growing two[7] to three[8] times the amount of cannabis sold in legal dispensaries. Similar such excesses are no-doubt causing the price crashes in other markets as well. What’s going on in these markets? How can there be such drastic surpluses in supply, contributing to so much red ink for businesses? These are the questions this analysis seeks to answer.
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