Marijuana has significantly declined in price over the last few years and it’s becoming a large problem. Although cheap weed seems like a good thing for the average consumer, it leads to large problems throughout the legal industry.
Cannabis prices have dropped to all time lows with the national average retail price of a gram coming in at a measly $9.43. A few short months earlier, a gram of the substance cost only $10.83. This is the steepest fall of price for cannabis seen in the US market. Wholesale prices are also declining significantly, with the average price for a pound down nearly 51% since 2020.
These price drops are largely to blame from the growth of the cannabis market seen throughout the COVID pandemic. Some states saw “peak weed” during these last few years, signifying a steady decline in the amount of weed consumed by the average person within the states. These sharp margins for profits in the legal industry are forcing dispensaries to compete with the illegal black market. Lower prices means less profit which in turn means less pay to workers and less growth. The legal market is slowing significantly due to the low price of cannabis. On top of the cheap prices for weed, the growth of cannabis users in the states has been stagnant. With relatively the same or less people consuming weed. This mix of low prices and fewer consumers are driving dispensaries to their limits financially.
The cause of this mass decline in cannabis price can be blamed on the large wave of cannabis producers who have hopped on the bandwagon over the last few years. Everyone is growing, no one is smoking, resulting in the situation we are currently seeing. Experts expect supply and demand to level out within the next few years.
Read the whole Bloomberg article here.