Increased competition has led to a decline in marijuana prices and per-customer spending, according to a survey of Colorado cannabis businesses.
Customers are spending about $50 per visit, half of what they were a year earlier, according to a survey by Convergex, a New York-based brokerage that services institutional investors. Flower now sells for $250 to $300 an ounce, on average, down from about $300 to $400 last year.
Increased competition as more recreational shops and dispensaries open is leading to the drop in prices, the company said, adding that the decline is a “function of a maturing market as dispensaries try to find the market’s equilibrium price.”
Convergex’s survey also found that companies are increasing marketing, including the use of magazine ads, online directories and raffles for sporting-event tickets. Rallies and concerts drive business as customers stock up on marijuana, and 4/20 – as always – is a big event. Concentrates are popular among 20-somethings as they are “cleaner” than smoking flower, the survey said.
Another sign of the industry’s maturity: sales trends now mimic those of traditional retailers. Sales increase during holidays, decline after New Year’s Day, and speed up again when people receive their tax refunds, usually in April.