For newly recreational states like California and Michigan, there’s a lot to learn from the now 7 year old industry. If you haven’t heard, both Colorado and Washington (which were first to legalize back in 2012) have seen drastic changes in the wholesale marketplace this year. Wholesale cannabis prices have risen 2x of what they were last year in some categories, yet retail prices haven’t followed suite.
How is this going to effect the cannabis market in Croptober and 2020?
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The wholesale cannabis markets are going bonkers right now in WA & CO. Lets look at the numbers;
For both states the trend is clear, prices are rising. In Colorado, the graph only shows the tip of the ice burg. These numbers came from the states ‘Median Market Prices’ published quarterly online, but from our marketplace data the honest price for good indoor flower is nearly double the ‘median price’. Why have prices gone up?
Like many issues, there’s many answers. One of the unforeseen forces in this years market was the legalization of hemp in 2019. Dozens of farms in both Colorado and Washington have let their licenses expire while switching to industrial hemp. Less supply = higher prices.
For a more detailed analysis, check out our recent blog post breaking down the Shortage in Washington State.
RETAILERS ARE SLOW TO ADJUST
If wholesale prices are skyrocketing, you’d expect retailers to be paying more too. From what we hear, this has not been the case.
After talking to multiple farms in Washington it sounds like the retail prices are well behind the wholesale trend. Farmers are rising their retail prices, but stores are still reluctant to change what they’ve paid in the past.
Take a look at the chart below where I laid out a hypothetical situation where retail prices hold fairly steady and wholesale prices rise;