Wholesale Cannabis Prices Sky-High in Colorado, Dampening Fears of Crash

colorado marijuana

By John Schroyer

In early 2015, a number of Colorado’s longtime marijuana industry insiders predicted an impending price crash for wholesale cannabis.

But the crash failed to materialize this summer as feared. In fact, the opposite trend is playing out: prices have skyrocketed in recent months.

In October, the online marijuana wholesale marketplace Cannabase saw recreational product being moved for as much as $3,000 per pound at one point. That’s up from a maximum price point of $2,200 per pound in January and February, Cannabase CEO Jennifer Beck said, and an average sale of about $1,900 early this year.

“To see product sell out in a matter of hours for $2,800 a pound is unbelievable,” Beck said in October. “Even eight weeks ago, we were seeing bidding wars.”

Cecelia Gilboy, a longtime wholesale operation based in Boulder, said she’s seen the exact same trend. She chalks it up mainly to a new microbial testing requirement that went into effect Oct. 9 for recreational cannabis.

“The day that that went into effect, I was at a client’s warehouse in Denver, and we both started getting calls,” Gilboy said. “Over the course of a few hours, we saw prices jump from $2,600 to even $3,000 a pound.”

The microbial testing rules are so strict that Gilboy heard secondhand from growers that 70% of the wholesale rec product in the state was knocked out of the market because it couldn’t meet the new requirements.

Retailers that rely primarily – or completely – on wholesale cannabis instead of growing their own could therefore be desperate for inventory.

But the supply and pricing issues really began well before the new testing requirements took effect in October, and the medical side of the market has experienced supply issues too.

There was a medical cannabis shortage in Colorado Springs – one of the state’s largest MMJ markets – over the summer, Beck said. Faced with that challenge, a lot of dispensaries in the region bought up most of the wholesale product that was available at the time.

When the standard “dry season” of August to October hit in Denver, there was even less product available than usual.

“In July, we had record high consumer sales,” Beck pointed out. Since then, she said, prices on average have increased 35% for recreational cannabis and 33% for medical.

Beck and Gilboy said it looks as though prices may be on the verge of stabilizing in the near future and dropping back down to a more normal level, but it’s still hard to predict how it will all play out.

Don’t rule out a price crash just yet, said Luke Ramirez, the owner of Pete’s Premium Cultivation and a recreational/medical cannabis store in Denver.

“The price crash is still coming. There are cultivation warehouses and greenhouses being built as we speak,” Ramirez said.

He forecast that over the next 10 months to a year, prices will drop slowly but steadily as more wholesale growers get up and running and can pass the new microbial testing standards.

“It’s not going to happen overnight,” Ramirez said. “It’s not going to be a panic button per se. It’s just going to be, every single month, the price is going to go down a little bit.”

He expects top-quality flower at some point next year to drop back down to $1,700-$1,800 per pound, and lower-quality flower to be priced at $1,400-$1,500.

If that happens, the fallout could vary.

It may mean that larger wholesalers that have the ability to produce on a larger scale will be able to undercut smaller boutique growers on price and take control of the market.

But there are still a lot of vertically integrated retailers that have their own grows, said Tim Cullen, co-owner of the retail chain Colorado Harvest Company.

He does expect there will be a downturn in wholesale prices, but how that may play out and what it might mean for businesses will probably depend on what’s really in demand.

For example, Cullen said the quality of cannabis grown outdoors near Pueblo that has already hit the market is “pretty mediocre.”

“It’s not going to rock the market,” he said.

If that continues to be the case with a lot of new wholesale growers, there will likely be a further evolution of the dynamic among Colorado’s growers, retailers and consumers.

John Schroyer can be reached at [email protected]

14 comments on “Wholesale Cannabis Prices Sky-High in Colorado, Dampening Fears of Crash
  1. bongstar420 on

    The microbe tests are insubstantial.

    I readily tested 500-2500CFU under very sensitive testing. Now with more realistic testing protocols, I am getting 0-500CFU average.

  2. Seth Tyrssen on

    Hey, I’m glad to see everyone making a profit, but I’ll tell ya straight out: 3 grand per pound is INSANE. This is sheer greed, and there’s no excuse for it. Yeah, I know we’ll never see eighty bucks per pound again (as was the case during the Vietnam war, when I was buying) but this is NUTS. Growers and retailers, let’s get back on track of serving the people — not ripping ’em off.

  3. Nate on

    That’s a mindblowing turn of events for CO… I feel for the business owners as this has to be rough on a lot of them, however [per this article] 70% of the cannabis may be unsafe for consumption, in which case, this was probably a good move!

    On another thought, I wonder if the presence of phytotoxins is at an unsafe level for solvent extracts made from these crops, or if that would be an alternative to having to destroy so much potentially-processed-to-be-safe product.

  4. Hastings RH on

    True top shelf will not go down -cost of doing business right is very expensive. The mega grow top shelf may fool a lot of people but there’s a large percentage that want real quality not what some wanna be says is top shelf

  5. Black Dog Acres on

    Hundreds of growers in Wa state went out of business the first year and this will be the year of blood in the streets. Most of us can’t meet our expenses, such as $10k insurance, license fees, testing, expensive gouge-price packaging, we are gouged at every corner and many of us sell flower wholesale for $1-$2.50 g PACKAGED to retailers, who mark up 500% +. At this rate it will only take another year of hanging by a thread for the $15 million dollar operations to out survive us, control the market and jack up prices truly sky high.
    Wa has insufficient retail stores with about 8 growers to every retail store…..not what was promised by the state. It will be a long time before there is stability in Washington…it’s chaos & brutal.

    • Janet king on

      That’s because the legislators in Wa are completely corrupt. They know what they can drag out and what they can’t. When voters wanted hard booze in grocery stores it took less than a year to implement because it had big booze backing it. It has been almost 18 years since voters said yes to mmj but no big money backing it so they will continue to lie and tell the media mmj is unregulated, which it isn’t, and close down good dispensaries, which in the initiative, was called access points for patients all because they want their completely unreasonable cut. Very soon in Wa there will only be millionaires in the biz and only rec for medicine. The legislators had no problem giving themselves a 15% pay raise though in less than a week, and defy the voters by digging a tunnel in Seattle. Dillholes

  6. CO 420 Websites on

    Ultimately this is good to help balance quality in the market. Like craft beer, the ones producing the most varieties and the highest quality are going to rise to the top, and the bargain-basement vendors will get swept away.

  7. Billy Budz on

    We grow organic, pesticide free cannabis outdoors in Southern Colorado and recently tested 9 strains from our 2015 harvest. All strains were over 25% THC with only one lower at 21%. Outdoor is the future. It’s just that very few growers have the experience yet.

  8. Mark on

    Legalization is going to backfire …. Weed is cheaper from the black market … The market that was grey produced $1200-1800 a lb weed ….. The only market that marijuana is that expensive in , is the legal marijuana market … We can produce 8-10 lbs of 20%+ marijuana for about $200 in expenses and some skill … Not now … With the new fees taxes and permits required it will now cost much more per pound … Regulated and taxed weed = screw the end user .. I feel for all of the REAL medical marijuana users that can’t produce their own …

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