Despite the inflation in today’s economy, higher-priced goods do not always equate to higher-priced cannabis. With the Consumer Price Index reaching almost +10% in the past year, consumers may expect a similar price hike on their favorite cannabis products. On the contrary, cannabis companies are experiencing price compression within many cannabis marketplaces. Many elements play into this downward price movement—some due to short-term circumstances such as flower gluts, and others due to longer-term market trends such as greater numbers of dispensaries coming online and competing with each other in close proximity.
A primary driver of price compression in the short term is a flower surplus in many states, particularly those with more mature markets. With the entrance of new growers and the pandemic spurring an increase in production to meet captive market demand, many of these states, such as Oregon and Washington, now see an abundance of inventory that puts downward pressure on wholesale pricing. This has trickled over to consumers, where we see flower eighths (3.5 grams) and 500-milligram vape cartridges nationally experiencing a price decline of about 5% this summer versus the summer of 2021. California, a legacy state, saw declines closer to 10% for both categories as the fall season hit, while Nevada, another legacy market, saw declines between 5% and 10%. Markets within states may see even steeper declines due to a variety of local factors.
