Executive Briefings

Buzz Kill for Pot Farmers: Lower Prices

After decades of dodging law enforcement and fighting for legalization, U.S. marijuana growers face a new challenge: low prices.

Buzz Kill for Pot Farmers: Lower Prices

From Washington to Colorado, wholesale cannabis prices have tumbled as dozens of states legalized the drug for recreational and medicinal uses, seeding a boom in marijuana production.

The market is still tiny compared with the U.S. tobacco industry’s $119bn in annual retail sales, but the nascent cannabis business has grown to more than $6bn a year at retail, according to data from Euromonitor International Ltd. and Cowen & Co..

For marijuana smokers, the price drop is sweet news. Recreational users and those prescribed cannabis for health reasons have seen prices decline as wholesale prices have fallen, though some retailers have pocketed part of the difference, according to New Leaf Data Services LLC, which researches the U.S. cannabis market.

At Hashtag Cannabis, a Seattle-based retailer running two dispensaries, co-owner Jerina Pillert said wholesale price declines show up on the plastic vials holding green-and-tan nuggets of “Super Silver Lemon Haze” marijuana produced by Longview, Wash.-based Bondi Farms. A gram sells for about $10 currently, down by a third from the $15 a gram it fetched in September 2015, she said.

But for growers — ranging from high-tech warehouse operations to back-country pot farmers gone legit — the price drop has been painful.

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From Washington to Colorado, wholesale cannabis prices have tumbled as dozens of states legalized the drug for recreational and medicinal uses, seeding a boom in marijuana production.

The market is still tiny compared with the U.S. tobacco industry’s $119bn in annual retail sales, but the nascent cannabis business has grown to more than $6bn a year at retail, according to data from Euromonitor International Ltd. and Cowen & Co..

For marijuana smokers, the price drop is sweet news. Recreational users and those prescribed cannabis for health reasons have seen prices decline as wholesale prices have fallen, though some retailers have pocketed part of the difference, according to New Leaf Data Services LLC, which researches the U.S. cannabis market.

At Hashtag Cannabis, a Seattle-based retailer running two dispensaries, co-owner Jerina Pillert said wholesale price declines show up on the plastic vials holding green-and-tan nuggets of “Super Silver Lemon Haze” marijuana produced by Longview, Wash.-based Bondi Farms. A gram sells for about $10 currently, down by a third from the $15 a gram it fetched in September 2015, she said.

But for growers — ranging from high-tech warehouse operations to back-country pot farmers gone legit — the price drop has been painful.

Read Full Article

Buzz Kill for Pot Farmers: Lower Prices