Katelyn Baker
Well-Known Member
Legal weed sales are booming. And in certain states, prices are plummeting.
This wasn't entirely unexpected. While Forbes called 2016's 30% spike in marijuana sales (a whoppin $6.7 billion) a bigger, faster industry explosion than we saw in the dot-com era, weed policy experts, retailers and growers have long known that legalization also cuts costs.
"We anticipated that the price of marijuana would drop substantially once the adult-use vertical-integration requirements were removed in Colorado in late 2014," said Sally Vander Veer in an email. Vander Veer is president of Medicine Man, a major marijuana cultivation dispensary in the state. "We saw hundreds of cultivators move into the cannabis space, and once their crops were ready, [we] saw a steady and rapid decline in the wholesale price per pound of marijuana."
After all, cannabis is just a plant, and the circumstances that made it worth up to $5,000 per pound under prohibition – namely, the risk of arrest, covert business operations, lack of standard regulations, etc. – simply don't exist in a legal weed economy, whether it's being grown for recreational purposes or medicinal needs.
Factor in the potential savings of growing the stuff on a mass scale instead of in your basement and the price drops even further. According to the Washington Post, "wholesale prices in Colorado tumbled 24.5% over the past year to $1,471 per pound" as the pot industry took off in the state.
Here's what that means for you.
What do those marijuana prices look like for consumers?
Potheads shouldn't necessarily expect to pay less and less for their drug of choice over the coming months. Weed itself may indeed drop in value, leading to more pressures and competition among producers. But well-branded retailers can keep their markups more or less the same, relying on customers who are willing to spend a bit more on high-quality product.
What might the price range look like in states where it's legal vs. ones where it's illegal? First we'll look at black market prices across the country according to the site Price of Weed, which crowdsources user input to create a broad index. In this map, a green dollar sign means you'll pay up to $300 for an ounce of high quality weed on the street, a yellow dollar sign means $300 to $400 for the same amount and a red dollar sign means more than $400. If you're buying in eighths, that translates to under $40 per eighth, closer to $50, and up to $60, respectively. If you're just buying grams, that would be about $10, $15 and up to $20 or more, depending on the dealer's markup.
As you can see, street weed is generally cheaper in and around states on the West Coast, where it's largely already legal and widely grown, as well as in Florida, Michigan and Maine. The first two have continued to open up the market for medicinal marijuana, while Maine fully legalized weed through a November 2016 ballot measure, making things more competitive for illegal dealers. Meanwhile, the Midwest and mid-Atlantic (especially Washington, D.C., where legalized weed runs up against strict federal influence) are paying significantly more for their black market weed.
Then there are the dispensary prices to consider. For these numbers we'll turn to MJCharts, whose "indexes are derived firsthand from legal sales only, sourced from current public advertisements." The following graph shows the average advertised price for a gram across more than a dozen major legal weed hubs, including Denver, Los Angeles, San Francisco, Detroit, Seattle, Phoenix and Portland, Oregon. (Note that Michigan and Arizona only permit the sale of medicinal marijuana. The same goes for California, where weed will not be sold for recreational use until 2018.)
MJCharts only captures trends over the past 30 days, so what looks like a precipitous drop in price mid-month is more like a gentle fluctuation: The overall gram price fell just $1 in January, from $12.20 to about $11.20, which puts it on par with the black-market price in those same regions of the U.S.
Over that same period, though, the gram price rose in some of the areas indexed. Salem, Oregon, for example, saw a mild bump from $9.80 to $10.20 – still a dollar below the average, but indicative of how each state and city are susceptible to their own microeconomic conditions.
For at least the past year, however, legal marijuana has held to one constant: It's barely (if at all) more expensive than the street weed sold in the same place. And even if it does climb back above that going rate, what's an extra buck or two for quality control and the assurance that you won't be arrested for buying your pot?
Besides, dispensaries offer a much wider range of prices, depending on special promotions and overstock: MJCharts also lists a number of grams that were advertised for as little as $4 a pop. On the other side of the spectrum, the premium bud can go for $25 per gram, and to a true connoisseur, it may be worth every penny. Stores have even been known to throw in a free gram or two if you've already spent over a certain amount on your haul. In the long run, then, legal weed can be a lot cheaper – or at least more bang for your buck.
Why weed prices drop
Prices "will go down as efficiencies in production increase," Ron Throgmartin said in an email. Throgmartin is CEO of Diego Pellicer, a brand with premium marijuana boutiques in both Seattle and Denver. "[W]hen I first entered the industry, everyone was flocking towards the 'production' model, for its short-profit appeal," meaning they saw that supply had yet to catch up with demand, creating the opportunity to grow tons of pot and thereby snatch up customers.
But marijuana "is just another commodity," Throgmartin said, and "there will always be pressure to produce it faster and cheaper, usually at the cost of quality." Instead, he's focused on the boutique retail experience, which he believes is a better long-term bet. "Anyone can grow marijuana; building brand and retail recognition is a little more challenging." he said. "However, as many brand/retailers have proven over the years, once you build customer confidence/loyalty, you've secured consistent present/future revenue stream."
Meanwhile, the growers who scale up drastically to attain "the financial capability to reinvest into their infrastructure," Throgmartin said, will create new efficiencies but deliver "average" weed, since their focus will be on cultivating as much marijuana as possible. They do this rather than the sometimes costly and time-consuming process of developing and experimenting with new strains or growing conditions, which tends to drive quality upward.
Why weed prices keep changing – and why the range is so large
Basically, the laws that apply to marijuana are different everywhere, and legislators keep rewriting them. Enforcement of these laws is just as fluid. In this volatile climate, you'll never have a true baseline for prices, let alone a stable infrastructure for shipping, packaging and retailing. Unforeseen shifts in the political or economic landscape can therefore have a magnified effect, drastically altering the costs associated with pot sales overnight.
In general, however, prices are expected to dip over time as states continue to standardize their rules and best practices concerning weed.
"The drop in wholesale pricing has naturally had implications on the retail market as well," Vander Veer said, noting that her customers in Colorado "are the real winners and can commonly purchase an eighth of marijuana for around $20, compared to $35 this time last year and $54 on Jan. 1, 2014." Yet in Oregon, which legalized recreational weed in 2015, experts predicted – and then observed – a few spikes in marijuana prices.
The initial bump, according to the paper "After the Gold Rush: California, Cannabis and the Election," published by the data firm Cannabis Benchmarks, came "as dispensaries accelerated buying to meet increased demand from recreational consumers." Nearly a year later, there was another price hike due to "a significant new compliance regime requiring each 10-pound lot [of marijuana] to be tested for potency, microbial contamination and pesticide residues by a licensed, accredited laboratory." Likewise, new packaging and labeling requirements increased costs for cultivators.
California may be in for those same regulatory price fluctuations as the state prepares to welcome recreational weed in 2018. As Jonathan Rubin, CEO of Cannabis Benchmarks, told LA Weekly, there's additional bureaucratic compliance, licensing and testing to consider there. And given 80% of U.S. weed comes straight from the Golden State, any changes there could send ripples through the national market.
Still, Rubin saw the potential for a "boom-bust cycle," since the weed market could soon be oversaturated with entrepreneurs looking to profit off the weed rush, which means more competition between growers and retailers and falling prices for consumers.
Marijuana prices: What the future might hold
The overall upshot here is that you're going to pay different prices for weed depending on where you are, where in the legalization process the state government finds itself and what kind of quality you're looking for. Like all intoxicating substances, marijuana is subject to a host of taxes and regulations, but its illegality at the federal level means there are striking inconsistencies in how they are applied, as well as a steady churn of new standards to implement. If prices are ever going to flatten or stabilize nationally, it won't be anytime soon.
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: How Much Does Weed Cost? Prices Keep Changing But Here's The Range For Legal Pot
Author: Miles Klee
Contact: info@mic.com
Photo Credit: Robert F. Bukaty
Website: Mic
This wasn't entirely unexpected. While Forbes called 2016's 30% spike in marijuana sales (a whoppin $6.7 billion) a bigger, faster industry explosion than we saw in the dot-com era, weed policy experts, retailers and growers have long known that legalization also cuts costs.
"We anticipated that the price of marijuana would drop substantially once the adult-use vertical-integration requirements were removed in Colorado in late 2014," said Sally Vander Veer in an email. Vander Veer is president of Medicine Man, a major marijuana cultivation dispensary in the state. "We saw hundreds of cultivators move into the cannabis space, and once their crops were ready, [we] saw a steady and rapid decline in the wholesale price per pound of marijuana."
After all, cannabis is just a plant, and the circumstances that made it worth up to $5,000 per pound under prohibition – namely, the risk of arrest, covert business operations, lack of standard regulations, etc. – simply don't exist in a legal weed economy, whether it's being grown for recreational purposes or medicinal needs.
Factor in the potential savings of growing the stuff on a mass scale instead of in your basement and the price drops even further. According to the Washington Post, "wholesale prices in Colorado tumbled 24.5% over the past year to $1,471 per pound" as the pot industry took off in the state.
Here's what that means for you.
What do those marijuana prices look like for consumers?
Potheads shouldn't necessarily expect to pay less and less for their drug of choice over the coming months. Weed itself may indeed drop in value, leading to more pressures and competition among producers. But well-branded retailers can keep their markups more or less the same, relying on customers who are willing to spend a bit more on high-quality product.
What might the price range look like in states where it's legal vs. ones where it's illegal? First we'll look at black market prices across the country according to the site Price of Weed, which crowdsources user input to create a broad index. In this map, a green dollar sign means you'll pay up to $300 for an ounce of high quality weed on the street, a yellow dollar sign means $300 to $400 for the same amount and a red dollar sign means more than $400. If you're buying in eighths, that translates to under $40 per eighth, closer to $50, and up to $60, respectively. If you're just buying grams, that would be about $10, $15 and up to $20 or more, depending on the dealer's markup.
As you can see, street weed is generally cheaper in and around states on the West Coast, where it's largely already legal and widely grown, as well as in Florida, Michigan and Maine. The first two have continued to open up the market for medicinal marijuana, while Maine fully legalized weed through a November 2016 ballot measure, making things more competitive for illegal dealers. Meanwhile, the Midwest and mid-Atlantic (especially Washington, D.C., where legalized weed runs up against strict federal influence) are paying significantly more for their black market weed.
Then there are the dispensary prices to consider. For these numbers we'll turn to MJCharts, whose "indexes are derived firsthand from legal sales only, sourced from current public advertisements." The following graph shows the average advertised price for a gram across more than a dozen major legal weed hubs, including Denver, Los Angeles, San Francisco, Detroit, Seattle, Phoenix and Portland, Oregon. (Note that Michigan and Arizona only permit the sale of medicinal marijuana. The same goes for California, where weed will not be sold for recreational use until 2018.)
MJCharts only captures trends over the past 30 days, so what looks like a precipitous drop in price mid-month is more like a gentle fluctuation: The overall gram price fell just $1 in January, from $12.20 to about $11.20, which puts it on par with the black-market price in those same regions of the U.S.
Over that same period, though, the gram price rose in some of the areas indexed. Salem, Oregon, for example, saw a mild bump from $9.80 to $10.20 – still a dollar below the average, but indicative of how each state and city are susceptible to their own microeconomic conditions.
For at least the past year, however, legal marijuana has held to one constant: It's barely (if at all) more expensive than the street weed sold in the same place. And even if it does climb back above that going rate, what's an extra buck or two for quality control and the assurance that you won't be arrested for buying your pot?
Besides, dispensaries offer a much wider range of prices, depending on special promotions and overstock: MJCharts also lists a number of grams that were advertised for as little as $4 a pop. On the other side of the spectrum, the premium bud can go for $25 per gram, and to a true connoisseur, it may be worth every penny. Stores have even been known to throw in a free gram or two if you've already spent over a certain amount on your haul. In the long run, then, legal weed can be a lot cheaper – or at least more bang for your buck.
Why weed prices drop
Prices "will go down as efficiencies in production increase," Ron Throgmartin said in an email. Throgmartin is CEO of Diego Pellicer, a brand with premium marijuana boutiques in both Seattle and Denver. "[W]hen I first entered the industry, everyone was flocking towards the 'production' model, for its short-profit appeal," meaning they saw that supply had yet to catch up with demand, creating the opportunity to grow tons of pot and thereby snatch up customers.
But marijuana "is just another commodity," Throgmartin said, and "there will always be pressure to produce it faster and cheaper, usually at the cost of quality." Instead, he's focused on the boutique retail experience, which he believes is a better long-term bet. "Anyone can grow marijuana; building brand and retail recognition is a little more challenging." he said. "However, as many brand/retailers have proven over the years, once you build customer confidence/loyalty, you've secured consistent present/future revenue stream."
Meanwhile, the growers who scale up drastically to attain "the financial capability to reinvest into their infrastructure," Throgmartin said, will create new efficiencies but deliver "average" weed, since their focus will be on cultivating as much marijuana as possible. They do this rather than the sometimes costly and time-consuming process of developing and experimenting with new strains or growing conditions, which tends to drive quality upward.
Why weed prices keep changing – and why the range is so large
Basically, the laws that apply to marijuana are different everywhere, and legislators keep rewriting them. Enforcement of these laws is just as fluid. In this volatile climate, you'll never have a true baseline for prices, let alone a stable infrastructure for shipping, packaging and retailing. Unforeseen shifts in the political or economic landscape can therefore have a magnified effect, drastically altering the costs associated with pot sales overnight.
In general, however, prices are expected to dip over time as states continue to standardize their rules and best practices concerning weed.
"The drop in wholesale pricing has naturally had implications on the retail market as well," Vander Veer said, noting that her customers in Colorado "are the real winners and can commonly purchase an eighth of marijuana for around $20, compared to $35 this time last year and $54 on Jan. 1, 2014." Yet in Oregon, which legalized recreational weed in 2015, experts predicted – and then observed – a few spikes in marijuana prices.
The initial bump, according to the paper "After the Gold Rush: California, Cannabis and the Election," published by the data firm Cannabis Benchmarks, came "as dispensaries accelerated buying to meet increased demand from recreational consumers." Nearly a year later, there was another price hike due to "a significant new compliance regime requiring each 10-pound lot [of marijuana] to be tested for potency, microbial contamination and pesticide residues by a licensed, accredited laboratory." Likewise, new packaging and labeling requirements increased costs for cultivators.
California may be in for those same regulatory price fluctuations as the state prepares to welcome recreational weed in 2018. As Jonathan Rubin, CEO of Cannabis Benchmarks, told LA Weekly, there's additional bureaucratic compliance, licensing and testing to consider there. And given 80% of U.S. weed comes straight from the Golden State, any changes there could send ripples through the national market.
Still, Rubin saw the potential for a "boom-bust cycle," since the weed market could soon be oversaturated with entrepreneurs looking to profit off the weed rush, which means more competition between growers and retailers and falling prices for consumers.
Marijuana prices: What the future might hold
The overall upshot here is that you're going to pay different prices for weed depending on where you are, where in the legalization process the state government finds itself and what kind of quality you're looking for. Like all intoxicating substances, marijuana is subject to a host of taxes and regulations, but its illegality at the federal level means there are striking inconsistencies in how they are applied, as well as a steady churn of new standards to implement. If prices are ever going to flatten or stabilize nationally, it won't be anytime soon.
News Moderator: Katelyn Baker 420 MAGAZINE ®
Full Article: How Much Does Weed Cost? Prices Keep Changing But Here's The Range For Legal Pot
Author: Miles Klee
Contact: info@mic.com
Photo Credit: Robert F. Bukaty
Website: Mic
