Marijuana Business Factbook 2019

189 © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Financial & Operational Data: Wholesale Cultivators | Chapter 3 MJBIZDAILY.COM Between January 2018 and January 2019, the wholesale price of flower allocated for retail sale in Colorado fell 38% to $781 per pound. By July 2019, prices had rebounded to July 2018 levels ― but were still down 33% from January 2018 levels. In October 2019, prices came up even further to $999 per pound of flower for retail sale, still down 21% from the January 2018 high but up 28% since January 2019. While prices are up $240 per pound or 32% from a record low during the fall harvest in October 2018, what is not apparent through this data is that quality requirements for retail flower have increased as price has decreased. Currently, only extremely high-quality flower ― in terms of potency, cannabinoid and terpene profile, production methods and physical appearance ― will be purchased by retailers for sale in dispensaries. With the market flooded with product, retailers and consumers can afford to be selective when choosing flower ― and cultivators who wish to remain in the market for retail flower will need to produce consistent, high-quality product to meet consumer demand and fend off market competition. Some growers can afford to take a gamble to get flower on the shelf at retail, miss and have to sell it to processors for significantly less ― sometimes less than it costs to produce. In Colorado, the wholesale price per pound of flower allocated for extraction declined 32% between January 2018 and October 2019 to $254. Although this price is up $54 per pound or 27% from a January 2019 low, cultivators would have difficulty selling at this price point without taking a loss ― even if they were focused on serving the extraction market. Cultivators who voluntarily make the shift to growing for the extracts market are seeking forward contract opportunities with processors, providing them with a guaranteed buyer after harvest. In addition to reducing production, price and market risk, these contracts often have a stipulation that allows the cultivator to earn a price premium above the contracted amount if their flower comes in at a higher quality or potency than agreed upon. Some cultivators have diversified by continuing to grow high-end flower for the retail market while producing other strains for the extract market.