- Wholesale prices per pound of flower down significantly out west, over 40% in some states
- Markets in mature recreation states over-supplied
- Is this in Michigan’s future?
The future is looking very bright for the cannabis community here in the great state of Michigan. It seems as though we are getting closer and closer to the legalization of recreational marijuana, and many are excited about the future. But what can we expect? Well for those invested in the cultivation side of the industry it might not be all sunshine and rainbows. A recent analysis of markets in states that began as medicinal-only and transitioned into a recreational market, where Michigan is headed, shows a much more difficult journey for cultivators.
The legalization of recreational marijuana in California has had a major impact on the wholesale market of cannabis flower throughout the state. According to a reputable source, the wholesale price of flower per pound dropped by about 20% over the last year. We see more of the same pattern in the more mature market of Colorado, with the wholesale prices of flower down 23%, compared to last years numbers. In what are probably the two most mature cultivation markets of Oregon and Washington state, wholesale prices are down a whopping 44% and 46%, respectively. Last year, the wholesale price range per pound of flower in Washington State was between $700 and $2200; it now ranges between $450 and $1600. Similarly, last year’s prices in Oregon were ranging between $800 and $2800; they now fluctuate between $500 and $1400 per pound of flower (depending on quality).
What is the cause for these extreme market fluctuations on the west side of the country? The short answer is oversupply, especially in the pacific northwest. With the number of licensed cultivators growing each month in already over-saturated markets, the supply is simply outgrowing the demand for product.
While the data may be very convincing, the market varies drastically between each state, so it is impossible to say how Michigan’s cannabis market will fare through the transition period on the horizon. If recreational marijuana does pass in Michigan, it is safe to expect some sort of rush to market, and supply will increase. That being said, determining the magnitude of how the market will be impacted is near impossible at this stage in the game.
The current market fluctuations out west is giving us a snapshot of our future, and it is looking more and more like a natural selection scenario: the strong outlasting the weak, ultimately swallowing up larger market shares. Will your business be able to weather the storm? Follow Bricks + Mortar Group as we bring you the latest industry news and the tips and tricks you need to stay one step ahead!