With so many marijuana growers flooding the market, marijuana prices will continue to fall in 2022. The state of California is the largest legal cannabis producer, but the number of stores in the state is still relatively small compared to the days of medical marijuana. According to the California Department of Cannabis Control, there are currently 7,297 active cannabis farm licenses and 1,130 retail stores. Retail stores are still subject to local regulations and slow growth laws.
The legalization of cannabis in California is taking a toll on the wholesale market. In the state, prices for outdoor-farmed flower have dropped 60% since mid-June. Despite this downward pricing pressure, not all sectors of the cultivation industry in California are suffering equally. Indoor growers are faring better, with wholesale prices down only 10% to 20%. Industry insiders expect downward pricing pressure to continue for months and years to come.
The cost of an eighth of marijuana flower has dropped from $90 in January to $50 in January 2022. Eighths were only $40 or $45 last January. Increasing competition has also resulted in lower prices. Consumers have been taking advantage of this trend. Sales of recreational marijuana in Michigan alone reached $124 million in January. And the state’s legal marijuana market is expected to reach $67 million in January 2022. Marijuana businesses in Michigan are already flourishing, but they’ll be unlikely to create upward price pressure.
While some investors are cheering the legalization of recreational marijuana, other marijuana business owners are not so optimistic. Many legal growers spent thousands of dollars in compliance with regulations and don’t want to risk their businesses official website by selling illegally. A good example is Michael Getlin, owner of a 15,000-square-foot marijuana farm in Oregon City. He has been receiving cold calls from out-of-state customers, offering up to two times the Oregon market price.
Growing laws have made marijuana legal in several states, but the price has dropped dramatically. Despite legalization, the high tax rate and acreage cap have squeezed the margins of black market growers. Meanwhile, some smaller growers are betting that consumers will pay more for quality marijuana. Currently, low-quality marijuana sells wholesale for $300 a pound, while higher-quality pot costs $1,800 per pound. So the price gap between low-quality and high-quality marijuana is narrowing.
As more growers flood the recreational market, prices are expected to continue to fall. The only relief is interstate commerce. The new regulations that govern medical marijuana sales will go into effect in 2022. The new regulations will also make wholesale prices more competitive. As a result, prices may drop even further. And despite the fact that marijuana is legal in Oregon, the industry will continue to face a glut of pot and a race to the bottom.
Some growers in Oklahoma have seen their prices plummet, with dispensaries opening as many as five times the cost of land. That’s why out-of-towners are offering four to eight times the value of the land to the farmers. amsterdam weed seeds And in many cases, they are paying in cash. And if the market isn’t flooded with pot, out-of-towners will simply buy the land and take it. But despite all the benefits of legalizing marijuana, there are risks involved.
Although the wholesale market is starting to open up in California, the price per pound of top-grade flower is still about half that of last year. It peaked in August 2020 at over $1,250 per pound. This represents a 65% drop from its peak of $700/pound in January 2018. And the price per gram of top-grade flower will be at a four-digit level.
The new law is meant to allow more people of color to enter the pot business. Unfortunately, the industry is still overwhelmingly white. Black and Latino people have a higher rate of arrests for possession of pot than whites. However, the Washington state census shows that nearly two-thirds of the population is white, and 85% of all marijuana processing and retail businesses are white.
Unlike the legal market, the illegal market will remain. Some people may even try to get a job in a dispensary once they open. Others, like Tommy, aren’t so sure. For now, he believes that the underground will never die. And he believes that marijuana is just as good as the legal version. So, what are the biggest barriers to legal marijuana?