https://upload.wikimedia.org/wikipedia/commons/thumb/3/38/Marijuana_in_Front_of_a_Million_Dollars_in_Vegas.jpg/800px-Marijuana_in_Front_of_a_Million_Dollars_in_Vegas.jpg
source

In Legal States Wholesale Cannabis Prices Are on The Rise

Wholesale cannabis prices appear on the rise in longstanding adult-use cannabis markets Colorado, Oregon and Washington state, according to two recent reports and insight from growers.

The upward-trending prices seem to be increasing because of:

Stronger demand and weaker supply beyond the typical summer economic dynamics.

  • More growers going out of business.
  • Farmers pivoting to hemp.
  • Cultivators sitting on product hoping for a more favorable market.

Seaport Global, an investment bank with offices in New York and New Orleans, recently released an analysis that shows wholesale marijuana prices going up since mid-April in the three states that first legalized recreational cannabis: Colorado, Washington and Oregon.

According to the report, wholesale marijuana prices have risen by:

  • 100% in Oregon.
  • 46% in Washington.
  • 17% in Colorado.

The wholesale market for legal cannabis is marked by great regional variation, but the oversupply that has sent prices plummeting in Oregon and other Western states has not been able to dampen the general upswing on the national level.

Regional and Seasonal Variation

In response to the flooded market, the Oregon Liquor Control Commission (OLCC) announced in May that it was to suspend the processing of license applications as of June 15. Back in January, the OLCC reported that the state was producing two times more cannabis than was being consumed —with more than six years’ worth of supply wasting away at farms, warehouses and retail outlets.

The market reaction to overproduction is noted by New Frontier Data. Hardly surprisingly, Oregon saw a 64% decline in wholesale prices from October 2016 to March 2019, while Colorado experienced a 60% drop from January 2015 to April 2019. However, the “downward slides in wholesale prices are not linear, but in both cases reflected seasonality.” Prices partially recovered in both states in the second and third quarter of this year. And in March, Oregon wholesale prices matched Colorado’s for the first time.

The report notes that a moment of reckoning looms with the approaching harvest season in Oregon (more of an issue than in Colorado where only indoor is permitted). “Will it lead to further price declines, or are prices in both Colorado and Oregon bottoming out?”

As New Frontier Data’s vice president Beau Whitney writes in an analysis for Bezinga this week, “Oregon’s woes are directly attributable to the (originally unlimited) number of licensed cultivators in its program.” Whereas Colorado had guarded itself against glut by requiring any growers applying for an increase in capacity to demonstrate proven demand for their previous crop.

In Colorado, where legalization took effect in 2014, it took until 2017 for the state’s legal market to effectively absorb the pre-existing illicit market, with legal supply effectively meeting demand. This more cautious approach has led to a somewhat more stable market.

On a national level, Cannabis Benchmarks finds that the simple average wholesale price increased $65 to $1,557 per pound by August this year. The lower prices in the western states are in part offset those on the East Coast. Marijuana Business Daily, citing interviews with local industry leaders, reports a range from $2,000 a pound for the medical market in Maryland to as high as $4,200 per pound for the adult-use market in Massachusetts. This contrasts Colorado, where last month the wholesale price stood at $850.

There is also a considerable price differential between indoor (the most highly valued), greenhouse-grown (the middle range) and outdoor (least valued, however disappointing this news will be to its hardcore aficionados).

Growing prices

Though he admits Oregon has been oversupplied in the past, Portland-based grower Shane McKee also took issue with the 6½-years-of-supply storyline, noting it doesn’t support the upward trend in pricing he’s experiencing.

According to McKee, he’s now selling wholesale flower for more than $2,000 a pound and has buyers lined up before his next harvest comes out. He said he hasn’t seen prices this good since 2016.

Here’s what McKee is seeing in wholesale prices per pound in the Oregon market as compared to last summer:

  • Indoor-grown flower: $1,800-$2,4000 (up from $1,000-$1,500 last year).
  • B-buds, or midgrade flower: $500-$600 (up from $300-$350).
  • Trim: $250 (up from $100).

He also doesn’t believe the increase in prices is simply a seasonal trend.

“I’ve been getting good money on big orders,” McKee said. “It wasn’t just a normal summer deal.”

He said that while he also believes that many of his fellow Oregon growers have turned to hemp, he also attributes the dip in supply to farmers going out of business.

“You’re losing bad operators,” McKee said.

The liquidity is good enough now that he doesn’t have to pay a wholesaler 15% of the sale to help him move product.

“I’m getting calls from multiple wholesalers that literally can’t find weed,” he said.

“Before, everybody and their brother was calling the wholesalers and saying, ‘Hey, can you help me sell my weed?’”

In Colorado, Joshua Haupt, master grower and chief revenue officer with Medicine Man Technologies in Denver, said prices for wholesale recreational cannabis were going up each week throughout the summer.

https://upload.wikimedia.org/wikipedia/commons/thumb/3/38/Marijuana_in_Front_of_a_Million_Dollars_in_Vegas.jpg/800px-Marijuana_in_Front_of_a_Million_Dollars_in_Vegas.jpg
source

Right now, he’s seeing $1,400 a pound for indoor-grown flower, up from $700-$750 this time last year, and $150-$200 a pound for trim, compared with $50 a pound in summer of 2018.

“There’s such a lack of it in the state,” he added.

“It’s wonderful. It’s been four years since I’ve had this feeling.”

Check out certified organic CBD products or feminized cannabis seeds. We are offering a wide range of popular, award winning, feminized Sativa, Indica and Autoflowering seeds.

LoginJoin the weed revolution. Post your cannabis content without prejudice and censorship. Create your own groups. Join our online social cannabis community, anonymously!

Check Also

https://www.flickr.com/photos/marcn/8013700958

Joe Biden: “Cannabis Should Remain Illegal As A Misdemeanor”

Last week, former Vice President Joe Biden said during the Democratic debate that cannabis offenses …

https://www.flickr.com/photos/vapescom/26384212502

Synthetic Cannabis Found in CBD Products Across United States

CBD edibles and vapes spiked with a variety of synthetic marijuana compounds have found their …

https://www.wikileaf.com/thestash/get-rid-of-weed-smell/

First-Ever Odourless Cannabis – Yea or Nay?

A Canadian company announced last week that cannabis without the smell could be coming soon …