Much of the U.S. cannabis wholesale market has been crashing this year, and that trend doesn’t appear to be reversing, according to the latest Cannabis Benchmarks report from Friday.
The U.S. Cannabis Spot Index reported that wholesale prices reached a new low for 2022 of $955 per pound, down from $1,310 per pound a year ago. The index was also down 4.4% for the week from $999 per pound.
Still, wholesale prices run the gamut in various U.S. state markets. The cheapest was California, where a pound on average was only selling for $660, while the most expensive was Illinois, with an average price per pound of $3,510.
The projection into 2023 contains a slight bump, with prices expected to rise to $1,025 per pound by June.
That small rebound, however, probably won’t last, said New Leaf Data Services CEO Jonathan Rubin, who oversees the weekly Benchmarks report.
“The generic macro trend that is most concerning when we look across all of the markets … is the cost of doing business is going up while wholesale and retail prices are going down,” Rubin said.
When asked for some big-picture takeaways for the industry from what he’s seeing in national wholesale numbers, Rubin said the cannabis trade is in for a rough ride.
“We’re going to continue to have distressed assets, and despite the fact that prices are going down because of competition, they’re still higher than the legacy market. And regulators are not moving quickly enough to address that reality,” Rubin said.
Rubin predicted continuing price compression in markets such as Illinois, Massachusetts, Michigan, and Oklahoma, as consumers continue shopping with price sensitivity in mind and unlicensed operators continue supplying the underground market with untaxed cannabis.
“We have seen a complete collapse of prices in California, Oregon, Oklahoma, and prices are looking to bottom out in other markets. This is part of a normal commodity cycle, with any new commodity,” Rubin said.
“Having said that, once we see the bottom of each individual state, we’re still going to see two more bottoms,” Rubin added – one after the U.S. federally legalizes cannabis and interstate commerce creates a true legal national marketplace, and then again once the global marijuana trade takes off and forces even more price compression.