Wholesale marijuana prices on upswing in more mature recreational markets, reports indicate

Wholesale cannabis prices appear on the rise in longstanding adult-use cannabis markets Colorado, Oregon and Washington state, according to two recent reports and insight from growers.

The upward-trending prices seem to be increasing because of:

  • Stronger demand and weaker supply beyond the typical summer economic dynamics.
  • More growers going out of business.
  • Farmers pivoting to hemp.
  • Cultivators sitting on product hoping for a more favorable market.

Seaport Global, an investment bank with offices in New York and New Orleans, recently released an analysis that shows wholesale marijuana prices going up since mid-April in the three states that first legalized recreational cannabis: Colorado, Washington and Oregon.

According to the report, wholesale marijuana prices have risen by:

 

  • 100% in Oregon.
  • 46% in Washington.
  • 17% in Colorado.

Compare those numbers with a national average increase of 1.2% for wholesale cannabis in other state markets, which the report notes.

Meanwhile, a separate report, by Palo Alto, California-based software company Confident Cannabis, focused solely on the Oregon wholesale adult-use cannabis market and backed up the Seaport Global findings.

It also shows an upward trend for cannabis prices in the state.

According to Confident Cannabis, current wholesale prices for recreational flower range per pound:

  • Indoor of average quality: $1,000-$1,500.
  • Indoor of top shelf quality: $1,500-$2,000.
  • Outdoor and greenhouse: $700-$900.
  • Trim: $25-$150.

Confident Cannabis gathered the pricing data by facilitating trades since October 2018 through its online wholesale cannabis marketplace, helping about 300 vendors make deals, said Brad Bogus, vice president for marketing and growth for the company.

“The prices are huge,” Bogus said. “They’re way bigger than they used to be.”

Not just a summer trend

While supply typically dips in the summer before the fall harvest and demand ticks upward, the Seaport Global report posits that seasonality doesn’t adequately explain the surge in prices.

“In Oregon, there have been reports that quality from the 2018 crop was low, leading to higher 2019 pricing as a result,” the report noted.

“Additionally, a related shift towards higher-cost indoor product exacerbates the situation.”

The report also suggests that Oregon growers are stockpiling supply, presumably to wait for better prices, as well as reducing production or switching to hemp.

Hot and dry weather in Washington state and Oregon could contribute to lower yields and higher costs for growers as they’re forced to irrigate more of the crop, according to the report.

Other possible contributing factors, according to Seaport Global: increased appetite for low-dose and microdose infused products adding to demand, as well as diversion to the illicit market.

Bogus said it’s become difficult for buyers to source wholesale flower in the $500-$800-per-pound range.

He said he’s also hearing that some growers are getting as much as $2,800 a pound for premium flower.

Bogus attributes the rise in prices to some cultivators going out of business, growers pivoting to hemp and cannabis growers who limited production.

“No one’s going to compete at $250-$300 pounds,” he said.

Bogus also pointed out that some news reports from the past year may have exaggerated the oversupply problem in Oregon – in particular, those that said Oregon had a cannabis supply that could last 6½ years.

“The hysteria around a fundamentally misunderstood data point has probably led to a reduction in supply because of businesses choosing to stop growing cannabis,” he added.

Growing prices

Though he admits Oregon has been oversupplied in the past, Portland-based grower Shane McKee also took issue with the 6½-years-of-supply storyline, noting it doesn’t support the upward trend in pricing he’s experiencing.

According to McKee, he’s now selling wholesale flower for more than $2,000 a pound and has buyers lined up before his next harvest comes out. He said he hasn’t seen prices this good since 2016.

Here’s what McKee is seeing in wholesale prices per pound in the Oregon market as compared to last summer:

  • Indoor-grown flower: $1,800-$2,4000 (up from $1,000-$1,500 last year).
  • B-buds, or midgrade flower: $500-$600 (up from $300-$350).
  • Trim: $250 (up from $100).

He also doesn’t believe the increase in prices is simply a seasonal trend.

“I’ve been getting good money on big orders,” McKee said. “It wasn’t just a normal summer deal.”

He said that while he also believes that many of his fellow Oregon growers have turned to hemp, he also attributes the dip in supply to farmers going out of business.

“You’re losing bad operators,” McKee said.

The liquidity is good enough now that he doesn’t have to pay a wholesaler 15% of the sale to help him move product.

“I’m getting calls from multiple wholesalers that literally can’t find weed,” he said.

“Before, everybody and their brother was calling the wholesalers and saying, ‘Hey, can you help me sell my weed?’”

In Colorado, Joshua Haupt, master grower and chief revenue officer with Medicine Man Technologies in Denver, said prices for wholesale recreational cannabis were going up each week throughout the summer.

Right now, he’s seeing $1,400 a pound for indoor-grown flower, up from $700-$750 this time last year, and $150-$200 a pound for trim, compared with $50 a pound in summer of 2018.

“There’s such a lack of it in the state,” he added.

“It’s wonderful. It’s been four years since I’ve had this feeling.”

Bart Schaneman can be reached at [email protected]

11 comments on “Wholesale marijuana prices on upswing in more mature recreational markets, reports indicate
  1. dave on

    You are wrong. National supply is down in California forcing black market people into the regulated market. Lots of Cali illegal grows are in transition and the Feds are busting people left and right. massive supply disruption in Cali is the reason.

    Reply
  2. Rusty Slade on

    Trim at $250/lb is unsustainable. No way trim goes for $250

    Right now I am getting legal trim for $140 including taxes in CA (taxes are $44/lb)

    Lb flower goes for around $800. . Indoor and green house goes from around $1200 to $1500 all types.

    Reply
    • Jim Smith on

      Again, not CA bro. Try reading the article. You guys in Cali are so self absorbed, you thinks it’s all about your market. These are the stats for established states like ours and these stats and reasons are spot on. Wait your turn, you’ll have your own stats in 4-5 years big boi.

      Reply
    • lebrongainz on

      Whats unsustainable is thinking that $1200 to $1500 dollars a lb for indoor flower is sustainable. Especially something clean that can pass test results.

      Reply
      • Ryan on

        supply and demand….could it be that an equilibrium is being sorted out here. These markets are young and dynamic. In January the OLCC stated there was a 6.5 year supply of MJ and the sky was falling, less than 6 months later prices are going back up….market forces are tough to predict with any degree of accuracy. If you know where its headed than cash in

        Reply
  3. Larry on

    These figures and anecdotes simply aren’t true when discussing legal vs black market marijuana. Talking about a medical only state where any marijuana held, even briefly by a non carded person is black market weed. Patients buy bargain basement weed at a medical dispensary then sell it to non carded persons at the old street price. These dispensaries fast track the pot meaning it is harvested before the buds get dense it looks to be put on the sales shelf a few weeks premature. They do not take the time to properly cure the harvest. It smells like a haystack. There is a lot of poverty and many collect welfare in my area which severely limits their discretionary spending. You’re not going to make money selling weed by going to a recreational state after a better product. I don’t know if their Medicaid pays for any of this but obviously we cannot accept it. Most of these folks are going after meth and not buying any weed. After they are done binging they are broke and it appears in some kind of remorseful state. They say they are quitting ciggarettes, you may see a bookmarked bible out plus they don’t even want to talk to you. There is no money in weed in some places in the US.

    Reply
  4. JtAlmond on

    There is no black market weed sales competing with the legalized, regulated, and taxed medical marijuana in my state. Illegal pot in my state is a non carded person holding however briefly an otherwise legal product. Black market sellers buy bargain basement dispensary pot and try to sell it at former street prices. The dispensary pot is fast tracked. That is it is harvested prematurely before the bud fills out. They do not cure the dried pot properly and it smells like hay not pot. These locals are mostly on welfare and they do not have much for discretionary spending. I don’t know if their Medicaid pays for that. Most if these folks go for meth and shun weed when they are done binging. You won’t make any money traveling to a recreational state and picking up quality dope for sale but you will save money by avoiding giving any money over to the legalized, regulated, and taxed state system.

    Reply
  5. John doe on

    Lets not forget the entire state of Colorado just got raided earlier in May this year (247 indoor grows in 8 different counties over 3 days time), it was one of the largest round up of black market indoor pot busts in USA history if not the largest, & also multiple huge outdoor busts both in NorCal & in SoCal a couple months later, along with many smaller but decent size bust is enough to have effected the price.. & also let’s not forget all the huge wildfires that destroyed many of the grows in Oregon & especially the emerald triangle the year before ..

    Question: When supply dips, but demand remains the same, what do you think then happens to price?

    Reply

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