Cannabis prices fall to historical lows in the US
The latest spot price index for a pound of legal weed shows that marijuana prices have tumbled nationwide to an all-time low. Cannabis Benchmarks, a group which tracks the costs of retail marijuana across the country, released the data in its latest weekly report. According to them, last Friday saw the lowest price this year for a pound of cannabis.
Cannabis Prices Hit Lowest Point This Year
The price point for marijuana dropped 2.5 percent from the previous week alone. In the prior week, the price for a pound was $1,466. However, now it’s $1,430. And while that may seem like small change, for an industry that’s growing and selling more cannabis than ever, those 2.5 points add up.
The price on futures also dropped. For the upcoming months, futures prices decreased between $25 and $65. Those numbers aren’t what investors in the legal cannabis industry are looking for. The other primary source for checking up on marijuana prices, MJCharts, also indicated a price drop to unseen lows.
Additionally, the low prices cannot be attributed to significant weather or fire issues which could haver impacted this year’s outdoor crop. There have also been no major raids, infestations, or quarantines. Harvests of mature cannabis flowers have seen record abundance. Therefore, it’s possible that supply is outpacing demand and lowering the cost of cannabis.
The Trend Toward Toppling Prices
The cost of getting high has been getting lower across the country for several months straight. In Washington state, for example, the pot prices have plummeted. As recently as March 2016, the price for a gram of legal cannabis in Washington was $9.32 per gram, according to data from the state’s Liquor and Cannabis Board. Wholesalers were able to purchase grams for just $2.99 per unit. Compare that to September 2014, when cannabis was selling for upwards of $25 per gram. Just a year later, that price dropped more than 50 percent, down to $11 per gram.
Wholesale prices also fell dramatically in Colorado. According to the online wholesale marketplace Cannabase, the average monthly price for a pound of cannabis was $2,106 at the start of the year in January. By June, half-way into the year, that price was down to $1,402.
Industry insiders are blaming the yearly low on too much supply, and no one is exactly sure when the downward trend will stop. The low prices are likely to affect the indoor growers the most. Because indoor farmers, especially with more outdated technology, cannot keep up with low prices and remain competitive.
“We all knew it was coming because more and more production capacity is coming online,” said Jay Czarkowski, an industry consultant at Boulder-based Canna Advisors. “Medical [marijuana] is hanging in there, but [recreational] is finally starting to plummet. I’ll use that word – ‘plummet.’ Roughly 30% in the last 4-5 months.”
The issue is one of simple supply and demand. And it’s going to impact the recreational branch of the cannabis industry more than the medical. There are now more licensed recreational cannabis cultivators than ever, with an increase of more than 20% compared to last year. In contrast, medical growers grew by just 3% in the same period.
The “plummeting” prices may be a boost to retail cannabis stores. If the wholesale price goes down, but customers are still willing to pay the difference, then retail shops would be able to pocket the difference.
In the end, “It’s just a plant,” says Professor Jonathan Caulkins of Carnegie Melon University. He said that eventually, the drug could become so cheap that certain types would essentially be given away for free.