Washington Cannabis Stores Bursting With Inventory

After an initial shortfall of recreational cannabis in Washington State, some retail stores now have so much inventory that they’re turning down growers.

Chalk it up to a huge spike in supply as licensed cultivation businesses – particularly outdoor growers – complete their first major harvests.

The supply pipeline is so strong now that one store owner in Vancouver told a local newspaper that he will “never run out of product again.”

The entrance of more growers into the market has led to a noticeable drop in prices at the wholesale and retail levels. Some stores, for instance, have been able to lower prices on certain strains to less than $20 a gram vs. $38 a week ago.

Washington’s new recreational market struggled after launching in July amid a severe shortage of cannabis, leading to accusations of price gouging.

13 comments on “Washington Cannabis Stores Bursting With Inventory
  1. Dee on

    Even at $15-20 a gram it is still highway robbery for something that should sell for $5 a gram at most for the best and $1 for crap. I’m sure the fees and other costs are making it more expensive but they obviously need more retail competition to get the prices down more. If supply is truly that high then there is a lot of product sitting around simply because they don’t have the market to sell it in yet. Plus it is harvest season!

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  2. Mark R on

    Dee, your commentary on pricing does not conform with the true costs of a quality indoor grow. We have been busily crunching numbers for the anticipated passage of Amendment 2 for MMJ in Florida. Our numbers indicate a base cost of around $600 per pound. This would require a wholesale price of $1800 – $2000 per pound to amortize R&D and start-up costs and to remain profitable.

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  3. Suzy on

    Mark, you are absolutely correct. Dee’s pricing comment is incredibly off, and does not seem to take into account the massive taxes (25% in between producer/processor/retail) that we are currently working with here in Washington. I can’t fathom attempting to run a facility up to the standards we have been given, especially anything scientific, with prices as low as Dee seems to want. I am a licensing tier 2 indoor producer and CO2 processor that is currently building an entirely new building in the face of an industry with not that much cemented protocol- not only are the expenses great, but paying salaries, environmental lawyers, biochemists, chemical and mechanical engineers, and making sure we build green really adds up.

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  4. georgia hedrick on

    $2000 a lb would be $125/ounce, yes? That is affordable and a helluva lot cheaper than the $193 I have to pay as a COPAY for my seizure meds.

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  5. Piper Green on

    just swapping cartels….tax and regulate retail, leave cottage and culture alone…why should anyone pay when we could all be growing our own, tell the government to do the R & D or they are fired…they tax us like they are actually doing us a favor.

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  6. John Parks on

    Pricing is where it has to be right now. Certainly it will correct once there are 100 stores up to 334 stores open. However, does the recreational user market really only buy a gram or two at a time? Maybe for fun or sampling. But the real recreational user doesn’t, and won’t, buy at a recreational store until prices are halved at least. Why should they? They just say, “that’s nice that the store is open”, and then go get it their ounce where they’ve always got it.

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  7. Zed on

    Yeah Dee probably has never grow indoor and doesn’t know what power and top shelf nutes cost. Then there’s your time invested…

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  8. DJ on

    Ill be happy to get reimbursed for my floor sweepings at 5 a gram as long as Dee pays my power and Canna bill for her organic medicine. If not I still say 1800 to 2000 barely cuts it. As growers I guess we should all just be privileged to grow for nothing or take a loss for free love and peace and all that hippie $hit.

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  9. 2nd Smoker on

    While share some of Dee’s sentiments the reality is recreational weed will cost more due to taxes, which is something the black, nor the grey, market has never had to deal with.

    Good to hear inventory is up. Now, if I just could keep up with all the creative names growers are putting on product then life would be good.

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  10. Erik T on

    Price gouging is an issue currently. Per Mark Klieman’s BOTEC white paper; a producer/processor should expect 9$ per gram of average quality cannabis at wholesale to retail, while retailers should expect $4 per gram in gross revenue per. Each of these two levels (producer/processors combined tax rate of 25%/retailer tax rate of 25%) would equate to an overall rate of 38% combined per gram. With that said, price gouging is occurring at the retail level using BOTEC’s affirmations of what pricing should dictate (on average). Retailers are currently basing their margin at 8-15$ per gram (dependent on quality). Does a retailer deserve this high of margin…?
    Mark R’s figures are correct for average outdoor cost to manufacture average quality cannabis. However, average indoor quality cannabis (dependent on cost per kW hour/nutrients/substrate/etc) runs in the region of $4 per gram to produce. This is a huge issue within this new industry. With no controls in place to reign in on retail greed and fingers being pointed at growers for price point costs at retail (by retailers) (I have seen it myself in person)… The affirmed price points used as a guideline for this industry need to be readdressed at the State level here in Washington. Free markets will eventually dictate pricing close to the BOTEC’s numbers if the industry does not fail in short order due to current price gouging.
    I have met with several retailers since their licensure regarding these topics. I am enamored from what I have heard regarding their margin requirements. One retailer told me he has to purchase lbs. at $2500 per to make the numbers work for him. So, I took a look at his numbers! He expects to profit $5000 per pound ($11.16 per gram) while paying for quality indoor cannabis at $2500 per pound ($5.58 per gram). If that is not price gouging, I do not know what is. Currently, smart producer/processors are basically splitting the total of end sale pricing per gram with retailers they do business with. Therein, at $25 per gram, the prod./proc. makes $12.50 per gram as does the retailer. As you can see, price gouging is occurring on both sides of non-vertically integrated marketplace.

    The price point should be as follows:
    $3500 per lb. wholesale ($7.81 per gram) to retail, then $1800 per lb. at retail ($4.01 per gram), for a total of $5300 per lb. to the end consumer. This equates to $331.25 per oz., $165 per 1/2 oz., and so forth (down to a per gram purchase price of $11-15 roughly/eight ounce for $40) for average quality indoor cannabis.

    In this scenario, the producer/processor will see decreased revenue numbers compared to BOTEC’s analysis of how this market ought to operate regarding pricing/revenue. With that said, if those are the numbers that will bring cannabis out of the dark and into the light… so be it. There needs to be a shift in consumer opinion and spending that is correctly based on the facts of pricing and taxation.

    We know that there is a huge demand for cannabis in this State. We also know that people are greedy and generally expect much more for something that it is worth. There will be plenty of profits in the long run (and for some, the short…). This is exactly why Klieman told the board that they ought to step up to the plate and run the retail end of this industry. I have no problem cutting into my margin to make this industry flourish, I have not seen the reciprocate be even mentioned on the retailers end however.

    TôK Inc. http://www.tokinc.org

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  11. bongstar420 on

    Its outdoor. That’s predictable. I tell people all the time. Low and mids will be cheap, very cheap. It will get to the point where people will trade a pound of mids for an oz of top shelf.

    People who sell in’s for cheap are being very nice. They shouldn’t be. People do not respect good growers anywhere near where they should. Not enough people are growing their own without an expert rigged set up.

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  12. David on

    Washington’s retail stores are tourist stores. locals purchase from our so much lower priced clean and excellently operated medical marijuana dispensaries.

    Reply

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