Wholesale cannabis prices beating expectations for 2024

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Wholesale marijuana prices are still declining in some state-regulated markets, although they have performed better than expected overall during the past year, according to data shared by LeafLink and Cannabis Benchmarks.

As of March 2024, wholesale flower prices were up nearly 5% year-over-year across the 13 state markets tracked by New York-based wholesale cannabis platform LeafLink.

The U.S. Cannabis Spot Index decreased by 8% in 2023 and rose by 1% to $1,024 per pound in April 2024 compared to the previous year, according to Cannabis Benchmarks, which shared data from 21 states.

Cannabis Benchmarks, a research and analysis company, is a division of Stamford, Connecticut-based New Leaf Data Services.

“I see prices stabilizing,” New Leaf Data CEO Jonathan Rubin said in an interview with MJBizDaily.

“I see prices over the next 12 to 18 months staying at this kind of lower plateau.”

Ben Burstein, LeafLink’s senior corporate development officer, told MJBizDaily that while prices likely will continue to decline, new markets will bring massive growth, creating an estimated $58 billion market by 2030.

“As we look to the rest of ’24, and ’25, the growth story is pretty simple,” Burstein said.

He added that six state-regulated marijuana markets – Illinois, Maryland, Minnesota, New Jersey, New York and Ohio – “are going to contribute more than 60% of total retail sales” across the United States over the next two years.

Mixed bag for flower prices

In the meantime, marijuana cultivators and producers in many state markets still are grappling with price pressure, competition from the illicit market and high taxes.

Only three state markets experienced wholesale cannabis flower price increases in 2023: Alaska (7%), Missouri (20%) and Oregon (6%), according to LeafLink.

Overall, average wholesale flower prices dropped by 8.1% in 2023; by comparison, prices decreased nearly 42% in 2022.

In 2023, according to Leaflink's Wholesale Cannabis Pricing Guide:

  • Average cartridge prices per gram decreased by 11.8%, from $20.42 to $18.02.
  • Average concentrates prices decreased by 11.5%, from $12.52 to $11.08.
  • Average edibles and ingestibles prices decreased by 4.8% over the course of the year, and prices for pre-rolls decreased by just 0.12%, a leveling off from the 12% average price decrease in 2022.

Prices down in California, Arizona

California continues to be a challenging market for marijuana operators, but the state’s supply-and-demand dynamics are gradually rightsizing, with wholesale flower prices decreasing by more than 10% between March 2023 and March 2024, according to LeafLink.

Meanwhile, Cannabis Benchmarks' data shows prices in California have dropped by 7% so far in 2024. Last year, they dropped 5%.

“Compared to the volatility and declines of previous years, prices have remained under pressure through much of 2023 and into 2024,” said Brian Dewey, vice president of revenue at California-based wholesale marketplace Nabis.

That’s because of bulk price volatility and competition from the illicit market, which doesn’t pay taxes, Dewey said.

“Capacity is starting to exit the market,” he said. “It just takes a really long time for that to happen.”

The number of active cannabis business licenses in California has decreased by more than 28% over the past year, according to CRB Monitor, a Nashville, Tennessee-based marijuana intelligence firm.

Arizona also is grappling with low wholesale flower prices, which have dropped by more than 24% year-over-year to $1,104 per pound, according to LeafLink.

The state has a limited number of licensees but unlimited capacity.

Cannabis Benchmarks reports that prices for wholesale flower in Arizona fell by 35% in 2023 and 4% so far in 2024 year-over-year.

That’s putting pressure on operators to expand retail - in some cases, larger companies are using predatory tactics to obtain licenses reserved for social equity applicants.

Wholesale cannabis prices have declined by 10% year-over-year in New Mexico thus far in 2024, according to Cannabis Benchmarks.

That can be attributed in part to more production driven in part by outdoor grows, Rubin said.

Prices up in Michigan, Oregon, Oklahoma

Wholesale cannabis flower prices rebounded by more than 13% year-over-year in Michigan, where LeafLink tracks more than 98% of wholesale transactions.

Cannabis Benchmarks also tracked a price rebound, where prices fell by 52% in 2022 and by just 7% so far in 2024.

The second-largest U.S. cannabis market next to California experienced huge growth in 2022 in terms of licensees, which led to collapsed wholesale prices.

Now, companies are rightsizing their yields to match demand, Burstein said.

Wholesale flower prices have shown signs of stabilizing in oversupplied markets such as Oregon and Oklahoma, where prices rebounded in 2023 by 0.2% and 5.9%, respectively, according to LeafLink.

Conversely, prices in Oklahoma dropped another 10%, according to Cannabis Benchmarks.

"The state is plagued by overproduction, and at least a portion of legal, licensed owners are purposefully growing more than they need for the local market to supply other markets," Rubin said.

Moratoriums on new licenses will continue to help rightsize those markets, according to LeafLink’s Burstein.

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New markets, high prices

Maryland’s wholesale cannabis prices skyrocketed by more than 125% over the past year, according to LeafLink, driven in large part by operators taking advantage of the new adult-use market, where there was not enough supply to meet retail demand.

With hundreds of stores planned to open in Maryland - as well as retail growth expected in Illinois, New Jersey, New York and Ohio - Burstein said he expects retail sales to grow across the industry by 60%.

But wholesale prices will continue to decline in those markets as they mature, meaning cultivators will need to produce more for less in order to stay in business, Burstein said.

“As markets mature, prices are just going to continue going down, just like every other agricultural product in the world.”

Kate Robertson can be reached at kate.robertson@mjbizdaily.com.

Andrew Long can be reached at andrew.long@mjbizdaily.com.