Cannabis Prices Dropping?

It’s good news for consumers in the short-term, but might put small growers out of business, leaving kush fiends with fewer options.

If there’s one thing to take away from Economics 101, it’s the fundamental rules of supply and demand. When the supply exceeds the demand, prices tumble, which is exactly what’s happening right now in the legal weed market.

According to Forbes, the prices for marijuana in the states where it’s legal have fallen precipitously. In 2015, wholesale pot plummeted from $2,500 a pound to only $1,000 in 2016. In Colorado, prices went from $8 a gram for marijuana flower (what the rest of us call “bud”) in mid 2016 to a current price of $6. The drop was more dramatic in Washington, where prices decreased from $25 a gram to just $6.

Experts believe this is a result of heavy investment in the marijuana business, which is causing pot production to exceed demand as big-money speculators try to cash in on the emerging market. In the short-term, this market saturation means that prices at the dispensary will be down. But as it becomes more difficult for small growers to turn a profit, they may go out of business, possibly leaving kush fiends with fewer options.

A crowded market might not be the worst thing for consumers, though. When there is a lot of product vying for tokers’ attentions, brands are forced to differentiate and go beyond coming up with cute strain names like “Steve McGarrett’s Hair” or “God’s Vagina 2.0.” Some strains will likely rely on celebrity endorsements, like Willie Nelson’s Willie’s Reserve or Snoop Dogg’s Leafs by Snoop. Others will go the Whole Foods route, making organic and pesticide-free bud available at a premium. Some may just try to make their pot stronger.

Still, there are parts of the marijuana market that are holding steady, particularly edibles, concentrated oils, and concentrates made for vapes. There’s also the high-end weed market with its $200 blunts that shows no sign of slowing down.

Of course, this is only a concern to those in the eight states where recreational marijuana is currently legal. While the legal weed market is worth about $6.9 billion a year, 87 percent of all marijuana purchases are still made on the black market, which is estimated to be worth, annually, about $46 billion. Some might argue that we’re currently living in the Golden Age of Illegal Weed, where dealers are still seeing large profit margins.

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