Cannabis wholesale price compression appears to have finally hit the California retail market, with at least one shop offering a $60 ounce of marijuana for sale this month.
According to New Frontier Data’s chief knowledge officer, Amanda Reiman, who lives in California’s famed Emerald Triangle, a local store called Cannavine in Ukiah recently had one such deal for customers.
Although the shop did not respond to repeated requests for comment, Reiman told Green Market Report she saw the price firsthand recently during a visit.
“That is the lowest I’ve seen,” Reiman said, though she predicted that more such prices will likely be appearing at stores in California as competition and price compression both continue as industry-wide trends.
Reiman, a longtime industry insider, said it was worth noting that the deal was for a strain that was harvested over a year ago and was likely a clearance price.
But the same store also has advertised online ounces of cannabis for as low as $78 per ounce for Origin Craft Cannabis’ Funky Charms and Gelonade strains, alongside eighths of flower ranging in price from $23 to $60.
Several other industry sources said on social media they’ve seen even cheaper ounces in San Francisco, Los Angeles, and San Diego.
“Question I have is are these prices sustainable or a function of the overgrown market, Sean Kiernan, CEO of Weed for Warriors, posited on Twitter.
$50 ounce smalls at dispensary we just did an event out this AM in San Diego. Question I have is are these prices sustainable or a function of the overgrown market. Time will tell.
— Sean Kiernan (@SeanKiernan_WFW) January 24, 2023
Reiman said according to New Frontier Data’s information, the range of prices statewide for ounces of marijuana flower since Dec. 9 is $708 on the upper end and $18 on the low end. (She added it’s not clear what the quality or situation was for the $18 ounce, since the firm’s data comes straight from point-of-sale systems at stores without added context aside from the sheer price).
The average price per gram, she added, is $18.13, with 83% of the flower sold in California is sold in eighths, not ounces.
But the reality, Reiman said, is it’s a sign that the industry is slowly becoming a parallel of the agriculture industry, with cannabis becoming more of a commodity.
“Overall, yes, we’re going to see prices continue to drop,” she said. “Cannabis is starting to resemble agriculture, and that there’s a seasonality to it, an ebb and flow of pricing.”
Reiman noted that one major factor right now – particularly in Northern California – is that the outdoor harvest was just completed a few months ago, which means the region is awash in fresh cannabis, and many farmers and retailers are trying to unload old inventory.
There’s also still a lot of “discrimination” in pricing against sungrown flower over cannabis that was grown indoors, Reiman said. Rural shops – like Cannavine – often can’t get as much for solid product as stores in major metro areas like Los Angeles or San Francisco.
Still, Reiman said she expects various economic forces to push brands into lowering their prices over time, whether it’s to remain competitive or to get whatever price possible, because the alternative is to sell it illegally or destroy it. And once interstate commerce becomes a reality – whether through federal legalization or compacts between states – that will affect pricing even more.
She said the market – from a consumer standpoint – is beginning to resemble the wine business.
“If I go to the store, you’ve got Two Buck Chuck and then you have the super expensive wine, and you’ll see a price point variety around that,” Reiman said. “We’re seeing this agriculture model, but taking on the variability of wine prices.”