Ron Strider
Well-Known Member
For 20 years, California has been allowing the legal sale of medical marijuana in an unregulated environment and that will change in January 2018. State and local officials are now facing the challenge of bringing in line all of the players that have operated without any rules or consequences of breaking those rules. So far this year, prices for marijuana in the state have been steadily climbing, which is great for growers — not so much for customers.
According to BDS Analytics, Californians spend most of their cannabis dollars on the traditional form of marijuana buds called flower by the industry. Flower sales account for 55% of the cannabis market in the state and that translated to $375 million in just the second quarter of 2017. The BDS report said, "Flower is a term about as descriptive as "wine" – just as wine can mean Syrah, Cremant du Jura, port and thousands of other things, "flower," too, is broken down into thousands of strains." BDS Analytics also tracks sales of 13,000 uniquely named strains, with more getting added every month.
BDS also found that Californians prefer the indica strain of cannabis, which is typically consumed for relaxing purposes. 26% of Californians purchased indica flower in the second quarter of 2017 versus 24% in Washington and 20% in Colorado and Oregon. Only 18% of Californians bought the more active sativa flower for the same time period versus 23% of those in Colorado and 20% in Washington and Oregon.
In the Eaze data report for California for 2016, the top five flower strains actually included three hybrid strains, which is a combination of sativa and indica. The number one flower was called Gorilla Glue #4, a hybrid, followed by Jack Herer, a sativa strain. The only indica strain was number three Bubba Kush, followed by two more hybrid strains Girl Scout Cookies and Headband. Eaze also found that its Cali customers spend more on marijuana the older they get, so it's possible that these baby boomers can afford higher marijuana prices. Baby Boomers on average spent $185 a month in 2016 versus millennials that only spent $136.
The new Mid 2017 Cannabis Benchmarks report tracks marijuana wholesale prices and it noted that California's spot index opened 2017 at $1,413 per pound and has tracked higher for the first half of the year. Prices peaked at $1,724 per pound just popping above the U.S. average price of $1,614. The average price for the first half of 2017 was $1,525 per pound, a drop of 12.2%. The wholesale prices settling above the U.S. Spot is a phenomenon not seen over the past 18 months.
Jonathan Rubin, CEO of Cannabis Benchmarks thinks that the reason prices have been climbing is that growers are working to hold onto the current value of their crops knowing that it will be expensive to operate in compliance with the new rules. He believes that prices in the California market could become erratic as the year-end approaches.
However, growers can't rest easy because the market is about to be disrupted as new regulations take hold. In order to stay within the strict water and environmental regulations, cultivators will have to spend a lot of money and that means the end product will cost more. The black market operators that choose to operate outside the legal market could sell their crops for a cheaper price.
The black market that operates in the state mostly exports its crops for now. However, the report from Cannabis Benchmarks noted that illegal cannabis has been finding its way into the legal market and vice versa. Rubin said, "The historical lack of stringent tracking and reporting in California's medical cannabis program has allowed the black market and legal market to essentially maintain an equilibrium, with supply and demand shifting between the two to maximize revenue for sellers and minimize price for buyers."
Even more enticing for the black market to stay in business is that the five largest cities in the state have only permitted a small number of retailers and two of the five cities have rejected adult-use marijuana completely. Without a thriving legal market, consumers will be motivated to stick with the illicit market.
News Moderator: Ron Strider 420 MAGAZINE ®
Full Article: California Cannabis Retail Market Revealed: Big Data Tells All
Author: Debra Borchardt
Contact: Contact Information
Photo Credit: JOSH EDELSON
Website: {{meta.title}}
According to BDS Analytics, Californians spend most of their cannabis dollars on the traditional form of marijuana buds called flower by the industry. Flower sales account for 55% of the cannabis market in the state and that translated to $375 million in just the second quarter of 2017. The BDS report said, "Flower is a term about as descriptive as "wine" – just as wine can mean Syrah, Cremant du Jura, port and thousands of other things, "flower," too, is broken down into thousands of strains." BDS Analytics also tracks sales of 13,000 uniquely named strains, with more getting added every month.
BDS also found that Californians prefer the indica strain of cannabis, which is typically consumed for relaxing purposes. 26% of Californians purchased indica flower in the second quarter of 2017 versus 24% in Washington and 20% in Colorado and Oregon. Only 18% of Californians bought the more active sativa flower for the same time period versus 23% of those in Colorado and 20% in Washington and Oregon.
In the Eaze data report for California for 2016, the top five flower strains actually included three hybrid strains, which is a combination of sativa and indica. The number one flower was called Gorilla Glue #4, a hybrid, followed by Jack Herer, a sativa strain. The only indica strain was number three Bubba Kush, followed by two more hybrid strains Girl Scout Cookies and Headband. Eaze also found that its Cali customers spend more on marijuana the older they get, so it's possible that these baby boomers can afford higher marijuana prices. Baby Boomers on average spent $185 a month in 2016 versus millennials that only spent $136.
The new Mid 2017 Cannabis Benchmarks report tracks marijuana wholesale prices and it noted that California's spot index opened 2017 at $1,413 per pound and has tracked higher for the first half of the year. Prices peaked at $1,724 per pound just popping above the U.S. average price of $1,614. The average price for the first half of 2017 was $1,525 per pound, a drop of 12.2%. The wholesale prices settling above the U.S. Spot is a phenomenon not seen over the past 18 months.
Jonathan Rubin, CEO of Cannabis Benchmarks thinks that the reason prices have been climbing is that growers are working to hold onto the current value of their crops knowing that it will be expensive to operate in compliance with the new rules. He believes that prices in the California market could become erratic as the year-end approaches.
However, growers can't rest easy because the market is about to be disrupted as new regulations take hold. In order to stay within the strict water and environmental regulations, cultivators will have to spend a lot of money and that means the end product will cost more. The black market operators that choose to operate outside the legal market could sell their crops for a cheaper price.
The black market that operates in the state mostly exports its crops for now. However, the report from Cannabis Benchmarks noted that illegal cannabis has been finding its way into the legal market and vice versa. Rubin said, "The historical lack of stringent tracking and reporting in California's medical cannabis program has allowed the black market and legal market to essentially maintain an equilibrium, with supply and demand shifting between the two to maximize revenue for sellers and minimize price for buyers."
Even more enticing for the black market to stay in business is that the five largest cities in the state have only permitted a small number of retailers and two of the five cities have rejected adult-use marijuana completely. Without a thriving legal market, consumers will be motivated to stick with the illicit market.
News Moderator: Ron Strider 420 MAGAZINE ®
Full Article: California Cannabis Retail Market Revealed: Big Data Tells All
Author: Debra Borchardt
Contact: Contact Information
Photo Credit: JOSH EDELSON
Website: {{meta.title}}
