Wholesale cannabis prices stabilized or rebounded in some key markets through the summer, but cultivators should brace for renewed downward pressure as the fall harvest boosts inventories through the end of the year, experts say.
Chalk it up to simple supply-and-demand dynamics.
“Over the course of this month, you start to see a huge buildup of inventory across the industry,” Ben Burstein, strategist at New York-based wholesale cannabis platform LeafLink, told MJBizDaily in an interview.
“You start to get huge surpluses of excess product, and at these times, especially around the harvest season, it causes big price declines.”
Data collected in 13 states by the LeafLink platform shows that after months of record-breaking lows, wholesale marijuana flower prices have stabilized in a few key, older markets such as California and Michigan.
Producers in the states, who have long struggled with low prices, will benefit, while retailers already face higher costs.
Stores were paying 29%-plus more in August year-over-year for wholesale cannabis flower in California because the amount of licensed square footage has dropped by more than 15%, Burstein said.
Prices in Michigan rebounded by 19% since the end of 2022 and were up by more than 4% compared to a year ago as the number of marijuana retail outlets expanded and authorities cracked down on illicit sales.
Flower prices in Oklahoma and Oregon, which have reported some of the lowest wholesale cannabis prices in the United States, increased by more than 7% and 5%, respectively, versus a year ago.
Overall prices in the 13 states tracked across LeafLink’s platform were up by 4% year-over-year in August 2023 and 15% compared to the end of 2022.
But price compression amid a glut of inventory continues to be a challenge for wholesalers in most states.
Connecticut-based wholesale marijuana data and analysis company Cannabis Benchmarks wrote in a recent blog post that prices have hit a “historic low,” with the spot index reaching only $936 per pound – a 7.3% decline from September 2022.
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