Wholesale marijuana prices are dropping according to a new analysis from The Economist. The wholesale marijuana price for a pound of cannabis in Colorado has plunged from a peak of $2,000 in January 2015 to just $1,300 a pound today. Lower prices for dried cannabis are likely to mean lower margins, unless the cost per gram to produce marijuana has fallen by more than 35% over that same period.
Why the 35% drop in wholesale marijuana prices on a per-pound basis? The Economist attributes an expansion of supply and an increase in competition as a result of Sessions’ mostly being all talk and no action. There’s also some seasonality to this pricing, with peak pot prices observed during the ski season, when tourism picks up in the state.
Colorado extended a moratorium on growing licenses issued last year, which allowed those who’d already acquired a license to maintain control. This is especially true given that these grow licenses had no limits on the number of plants that could be cultivated on a grow farm. Additionally, nothing stopped big business from gobbling up as many licenses as they could afford in Colorado. The result is that just a few larger players wound up with a majority stake of the Colorado grow market.
The Average Market Rate (AMR) for a pound of wholesale marijuana in Colorado’s recreational market has hit an all-time low, pushed down by the continuous flow of new cultivation facilities coming online, increased efficiency among existing growers and a rising number of outdoor grow operations.
Excerpt from Madison.com original article written by Sean Williams
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