In the majority of adult-use markets, wholesale prices for marijuana drop after awhile
In the majority of adult-use markets, wholesale prices for marijuana drop after the market has been open for several months. This can be contributed to a variety of factors, including the loss of novelty and growers finally being able to catch up with the market demand. However, Nevada has not seen the same drop as other states despite adult recreational use being legal since July 1, 2017. Does this mean that markets in other states could take some pointers from Nevada? Not quite. The situation in Nevada is unique to the state and can be attributed to a few key factors.
Nevada Has No Outdoor Grows
Growing outdoors is illegal in Nevada. This severely restricts the amount of product that growers are able to cultivate at one time. While greenhouse grows are permitted, as long as they are properly secured, most growers must expand their facilities slowly as their income grows. The end result is a supply that is pretty much steady, avoiding the oversaturated markets driving down prices in other states.
Tourism Is a Major Factor
Las Vegas sees more than 40 million tourists every year. Unlike destinations in other states with legal adult recreational use, Las Vegas tends to attract tourists who are specifically looking to indulge during their trip. Not only does this increase the number of sales, but tourists are often willing to spend more when they purchase. The end result is an average of one million dollars a day in revenue throughout the state.
High-Quality Cannabis Is in Demand
When talking about wholesale prices, it is important to understand that there is a pretty wide range. On the lower end, you could spend $1,800 for a pound of flower. On the higher end, $3,500 or more.
Quality is determined by the THC content, terpene profile, and the general popularity of the given strain. The biggest factor is the THC content. While there is certainly a market for the more budget-friendly strains, in Nevada, buyers tend to gravitate more towards high-quality products. No doubt this is in part due to tourists looking to splurge during their visit.
Still, Prices Are Expected to Fall
While the Nevada market is considered a mature one by industry standards, it has yet to reach the one-year mark. As such, it is understandable that the supply has not reached the point yet where prices will begin to drop. However, it is expected to reach that point soon. Retailers are no longer running out of product as they were in the beginning, a clear signal that wholesale prices should start falling.
According to some cannabusiness owners, certain products have already seen a steep drop in prices. Certain cannabis trim for oils, for example, ranges from $400 to $700 a pound at the moment, but as recently as December, trim was going for $1,800 a pound. However, some business owners report no drop in trim prices, indicating that some trim is selling for more than $2,000 per pound. With that said, retail prices are not expected to see a significant drop from their current range, which is about $250-$350 per ounce.