Over the past year, Colorado cannabis retail prices have been following market trends in Washington and Oregon, where a noted and widely publicized supply glut is putting pressure on dispensary managers to cut prices. As wholesale flower prices tumble, so too do the prices that customers see in the store.
In Colorado, the average price for an ounce of flower has dipped from $156 last April to $149 in April 2018. In the May/June edition of Cannabis Dispensary, we cast a spotlight on this trend. As Nevada prices rise, for example, cannabis businesses in Washington and Oregon—and now, Colorado—are confronting falling prices in every direction.
Wholesale prices are hovering around $1,100 per pound for adult-use cannabis in the U.S., according to Cannabis Benchmarks, which translates to about $70 per ounce. (For indoor-grown cannabis only, flower is fetching slightly higher wholesale prices around $1,500 per pound.)
"Dispensaries don't pass it along to their consumers...—that's where people don't understand," Pamela Reach of vertically integrated R.D. Industries told Cannabis Dispensary. "People [who] go to the dispensary [aren't] seeing a huge price decrease. ... The dispensaries are making the money and the wholesalers are losing money, and then you have a whole group of people that were just wholesalers, just grows—they're really hurting."
That downward pressure is only just now bleeding into retail prices, where ounces of flower are tumbling in price in Washington, Oregon and Colorado.
On the other hand, prices have historically been kept in check by the natural undulations of the market. With the exception of the summer months in 2017, every month has brought at least a slight decrease in retail prices in Colorado.
“I think it’s a natural occurrence,” Reach said. “I think it probably is a little bit lower than normal, but I think things are—when you have these markets and the prices start off high, it’s an ebb and flow. It’s always going to be an ebb and flow.”
Reach attributes the price decline to two factors—the introduction of outdoor harvests into the market in September and October and growers investing more in automation in their facilities. “You’re bringing your total pound price down when you start doing automation,” she said. “We did automation when we built the building in the first place, so our pound prices are always really low compared to everyone else’s. … We don’t pay people to water plants. … It runs with nine people in the back.”
Pricing in Colorado could be closer to evening out because it is a more established market than Washington and Oregon, Reach added. “I think it’s probably going to be another two years before anything really steadies out, but I could be wrong,” she said. “I’m not surprised by it, and I think … people can really withstand it, they just have to have a good business plan to do it.”
Top photo courtesy of Adobe Stock