Chart: Colorado wholesale marijuana prices tumble in 2016

By Eli McVey

Wholesale prices of medical and recreational cannabis fell precipitously in Colorado last year, highlighting the difficulties faced by cultivators looking to maintain their profit margins in one of the nation’s most mature marijuana markets.

The average asking price for a pound of marijuana dropped by 38% in the recreational market and 24% in the medical market in 2016, according to data provided by Cannabase, a Colorado-based online wholesale platform where many of the state’s growers and retailers buy and sell cannabis.

Medical cannabis eclipsed recreational marijuana last year in terms of average wholesale prices and even saw some month-over-month spikes along the way. But average asking prices for medical cannabis ended the year on a sharply negative trend.

On the recreational side, asking prices largely dipped throughout 2016.

Although the numbers signify how much companies asked to pay for wholesale marijuana as opposed to what they actually ended up shelling out, the data provides a window into where the Colorado wholesale market stands in general. Cannabase claims that roughly 70% of all licensed cannabis businesses in the state – cultivators, retailers, edibles makers, etc. – do business through its site, giving it a broad reach in the industry.

The falling wholesale prices are telling of the increasingly competitive nature in the cultivation segment of Colorado’s marijuana industry as new players rush in. They also give growers in newer markets an idea of what might happen in the long run as their industries mature.

According to data from the Colorado Department of Revenue, there were 514 licensed cultivators in the recreational market in January 2016, but by December, that number shot up to 625, a 22% increase.

The number of cultivators in the medical market also increased in 2016, but by a relatively modest 5.3%, hitting 791 in December versus 751 in January.

Erik Romero, director of data and finance at Cannabase, said the influx of new entrants to the market is not the only factor driving wholesale cannabis prices lower.

“We’ve been seeing a lot of cultivators who are opting for more commercial-scale operations, and traditional agricultural methods are beginning to permeate the industry, which leads to players coming in that can yield an abundant amount of consistent, high-quality product,” he said.

Some of the price dips seen in the latter part of the year can be chalked up to the cyclical nature of the outdoor market – large amounts of flower are typically harvested and brought to market starting in September.

But Romero suggests the ensuing recovery has not been nearly as robust since these larger, more sophisticated commercial-scale operations came online.

Romero doesn’t know if this necessarily means cultivators will start going out of business, but they are seeing more and more consolidation in the market as smaller operators have a tough time competing with larger companies that hold multiple licenses.

“Previously, turning a profit was almost a given,” Romero said, “but not so much anymore.”

Eli McVey can be reached at [email protected]

9 comments on “Chart: Colorado wholesale marijuana prices tumble in 2016
  1. Jeff Levy on

    If any legal shop in Colorado sold pot that actually got people high, they’d be lined up around the block. Unfortunately, all the legal pot in Colorado is LOW GRADE GARBAGE!!!!!

    • George Bianchini on

      Sounds like jeff has an excellent opportunity to acquire market share and have people line up around the block to buy cannabis from him. I wonder why nobody else thought about that? Those that can DO, those that can’t COMPLAIN!!!

  2. Victoria Smith on

    Tis a privilege to live in Colorado.

    Jeff Levy – don’t know where you’re buying, but Denver has the dankest. Are you sure you live here? Most of us say, “bud” or “flower” or “weed” or “green”, not “pot”. When someone uses that word and says legal shops in CO sell worthless crap, I just have to wonder if you live here.

    • kathleen chippi on

      Well I’ve been here 30 years and consuming for more than 30 and I say pot and I agree with Jeff–the pot being sold is crap (ask someone who has grown for more than 5 years about quality buds because you don’t see them in the shops)….my friend who owns a state licensed shop told me just last week–he will not grow is his ‘dank’ anymore but will instead buy it wholesale because the consumers want cheap pot and they do not care about quality, so he isn’t going to put in the time and energy. Oh and the state lab tester was at meetings and on TV last year saying 80-90% of what he had tested from your state licensed stores had PESTICIDES on it…so yeah you might be feeling ‘higher’ but it’s not THC or ‘dank’, it’s poison. When you start puking blood let us know and we will pray for you.

  3. Nick bartow on

    Up here in Alaska we are looking at btw $20 & $25 a gram (I am not sure on how accurate I am on those numbers) and that is crazy. $10 a gram or less would be great.

  4. ryan on

    Alot of the smarter growers know the black market is still where its at because of how unrealistic it is to follow the rules. You cant smoke at work, you cant even legally give a friend a gram of weed as an owner, and you only get 1/4 the sale price as you have to sell to a monopolized distribution system. The biggest problem in colorado and why the quality in rec is sooo low is because of monopolization. The state gov has not stopped the tide for years now where the biggest players are trying to corner the dispensary side of the market and flood it with very inexpensie bud. As one of my friends who worked at a big producer said, “there is no love in that grow”. They pay all the employees the minimum, machine trim high yeilders which are strains no one wants then try to flood it to the market based on vollume.

    If Colorado wanted better quality weed they wouldnt let 5 big players take 1/3 the dispense licenses and do unlimited sized grows which break alot of the rules the rest of us have to follow. Id rather have 1000 smaller competitors who make good stuff than 5 competitors who buy the only stores allowed in the state and restrict acess for the rest of the producers.

    In the current system the biggest losers are the growers who focus on quality, they have allowed the denver monopolists to fill moratoriums across the state and no one from the government seems to notice that it is impossible for a smaller guy without 5 mil in the bank to even get a storefront or get his product to a storefront for a reasonabe price.

  5. bbarakti on

    @Ryan- you seem to think that the state actually cares about the quality of the product on the market. That’s not how regulators operate. They only care about the barest minimum standards of safety and ease/ cheapness of regulation. It’s a hell of a lot easier to regulate 5 super big grows backed by millions of dollars, who have CPA’s doing all the books and regulatory compliance officers who “speak the lingo of regulators”. That’s much easier to regulate and navigate from a government perspective.

    It’s the way our entire economy works, look around. Wal Mart isn’t as big as it is because they have such great products…

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