Cannabis prices going down!! Believe me i know ;)steemCreated with Sketch.

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The heyday for marijuana cultivators in California is on borrowed time.

The Golden State’s licensed recreational cannabis market begins in January, and some industry watchers expect the average price of wholesale cannabis to pass the red line of $500 a pound.

The price likely won’t drop immediately because the initial wholesale supply will be limited.

And that will keep the price up, for a couple of reasons:

The state is issuing temporary permits for companies, and only temporary license holders can do business with other temporary license holders, creating a limited market.
Businesses need both state and local licensing approval, and only 25-30% of the state’s municipalities have agreed to allow cannabis commerce.
In other words, the initial limitations could keep the supply down and wholesale cannabis prices propped up for the short term.But industry watchers in the state don’t expect that situation to last.

The number of California municipalities willing to approve cannabis businesses should increase over time as temporary moratoriums are lifted and more communities see that the sky isn’t going to fall. And that will add more and more wholesale cannabis supply.

“Definitely, the price is going to go down,” said Zeta Ceti, owner of Green Rush Consulting in Oakland. “You’re going to see that heavy competition where it’s a race to the bottom. That’s just inevitable.”

The history of wholesale prices in other states with regulated markets bears that out.

According to Cannabis Benchmarks, a Connecticut-based, independent price-reporting agency that uses a volume-weighted average to determine prices:

In Colorado, the oldest regulated adult-use market in the United States, the wholesale price of a pound of marijuana has dropped from $2,000 in January 2015 to $1,115 in November 2017.
Oregon’s price for a pound of marijuana in November 2017 was $1,777 – with a low of $500 and a high of $2,600.
Using the same metrics and dates, Washington state’s price for a pound of flower was $1,312.
Spot prices for a pound of wholesale cannabis in November 2017 in California were $1,318, with a low price of $500 and a high of $2,500.
Initial prices

Prices are expected to hold steady through the first months of Golden State’s rec launch, said Kristin Nevedal, a board member of the Humboldt County-based California Cannabis Industry Association.

“I don’t think there’s going to be a glut of supply to warrant a sharp fall,” she said.

Nick Caston – chief strategic officer of Pacific Expeditors Consulting Services and a board member of the California Cannabis Industry Association’s Sonoma County chapter – agrees that prices will stay level, to a point.

He notes that for the first six months of 2018 – during California’s regulatory transition period – cannabis grown for the medical market can be sold as adult use and vice versa.

So that should keep the supply steady, Caston said.

But once the regulations are firmed up in July, the supply stream will be split into two – either medical or recreational.

Once that happens, Caston expects a spike in prices from a lack of supply.

At that point, Caston predicts prices will run around $900-$1,400 for a wholesale pound of average quality marijuana, with premium cannabis selling for $2,000 a pound.

After the initial spike Caston expects in July, he is watching for a steady decline over the next 18 months. The ultimate dip will probably occur in about three years, he said.

How low will it go?

Is California going to hit the $500-an-average-pound wholesale mark?

“Absolutely, but I don’t think any time soon,” Nevedal said, adding she’s certain that wholesalers will be selling lower-quality flower and cannabis for extraction for $500 a pound or less.

Caston said he’s already heard of cultivators having trouble offloading this year’s crop at $400-$500 a pound wholesale.

A lot of retailers aren’t buying because they’re uncertain how the regulated market will shake out or have already stocked up out of the same uncertainty.

Ceti has seen some cultivators avoid the price drop by demanding higher prices based on quality, brand and relationships with retailers.

“At the end of the day, it’s about how they create a brand,” Ceti said. “Because certain brands command higher prices than others, even though the product is the same.”

Cost of doing business

It’s not just wholesale price that should concern cultivators. They also must consider their input costs.

Input costs include license fees, the staff time required to develop a licensing application and the cost of track-and-trace compliance.

For example, in the METRC traceability system, each plant is required to be tagged with an ID tag that costs 80 cents.

The California Department of Food and Agriculture – which licenses cultivators – released an economic impact analysis in January 2017 on the effects of the cultivation regulations.

“Their estimation is that the cost of compliance will be around $560 a pound,” Caston said.

Caston estimated cultivators’ costs to grow a pound at roughly $200 now, before California’s regulations take effect. He characterized the cost of compliance in the fully regulated market as “enormous.”

Dale Gierenger, director of California NORML, pointed out that the testing requirements for cultivators will roll out over the course of the year and add more costs to growers.

“You’re definitely going to see an increase in the retail price,” said Gierenger, who’s unsure how it will affect growers directly.

Ceti envisions licensed business owners looking elsewhere to make money.

“It’s going to get really tight for the grower,” Ceti said.

“People are going to say, ‘This is too crazy. I can make more money on the black market.'”

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This was well written. I live in an entirely different world in Ohio, where people are still trying to decided whether or not to be okay with Marijuana in general. This was foreign material for me but I enjoyed reading it nonetheless.

What system do they have in place if any to prevent people in counties that have been turning a blind eye for over 20 years(the Willits-Ukiah area in Mendo for example) from setting up shop, growing the majority of their produce on land in those counties, and only paying taxes/licensing fees on some tiny front in the Bay Area?

The way the laws were set up in Oregon, there definitely was a rush. Our prices plummeted about 10 years ago. $600/lb wholesale has been common up here for a very long time. The influx of out of state money has left us with no housing for anyone, and a ton of local people who are now homeless because their rents got raised and they got evicted so that their apartments could be rented to Californians moving up here to work in the cannabis industry.

Then you have the homeless camps full of out of staters who think that you can just show up here with no money and walk into the industry. I live here and don’t make enough to buy my way into the inside of “the industry.”

Mostly what they need are people with certain skills(chemistry and botany,) and then there are a bunch of retail jobs. But I live in a college town. So we have no shortage of pretty Californians to take those jobs.

Yep this is why i sold my business...

A wholesale Grow and extraction Company.. we made wax and shatter mainly

Very nice! I love me some wax. I just woke up and took 2 dabs lol. But yeah, I can totally understand why you had to shut down.

The way things have gotten in Oregon, we have companies still trying to sell stuff like live resin for $80+/g, but it’s mostly sitting on the shelf.

Because we also have places looking at the bigger picture, that realize that 60+ weed shops can’t survive in a city of 200,000, who are either taking losses or more or less selling at cost for around $30/g, because they know it means they’ll outlast the places that have overpriced product sitting.

I’ve seen how things work. I check quite a few stores menus a few times per week, and if something sits for a few weeks, they start dropping the price in about $10 increments(on stuff that started at $80-90 after tax) every week until someone buys it.

But it’s probably for the best. There have been times when I’ve taken too much advantage of sales, and by the time I’ve gotten around to opening something, it’s not the same as it was the day I bought it. Terpene depredation can even happen in a vacuum sealed bag.

Yeah its a trickey business, we would make bomb ass golden shatter, pounds of it. Then ppl would say is doesn't break nicely and not like glass.. LOL.

I used to think that kind of consistency was ideal too. Until I realized it’s damn near impossible to work with, either with a tool or by hand without little chunks flying fucking everywhere. So now I prefer something a little more snap n pull.

I supercharge most of my dabs with 99% THCA isolate crystal though, and it does seem to stick best to the glass consistency. But fuck I hate the little chips flying everywhere...

And yeah. People think they know everything. If it’s blonde an snappy it must be better than something darker and less snappy. Wrong. The darker run could be live resin and the thin layer of snappiness could come from a trim run. It’s all about knowing the source.

I find this market info interesting and informative.

Thanks , cool glasses on your kid. I have 3 boys, THEY ARE A BIT OF A HAND FULL. LOL

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