After nearly a two-year stretch of deflation, marijuana prices in Colorado are showing the first signs of life since October 2021, according to the Colorado Department of Revenue. The retail price for a pound, which had plummeted from a peak of $1,731 in January 2021 to a historic low of $649 by April 2023, has risen to $703 in June 2023.
The price hike is a break from the two-year trend of slumping cannabis prices, which hovered around half of the rates seen before 2022. Still, total marijuana sales in Colorado hit a five-year low, Fox 31 KDVR reported, with monthly figures consistently falling between $125 million and $140 million since last winter.
Colorado, along with other legacy cannabis markets, has been grappling with challenges posed by an oversaturated supply and new emerging markets. The market has appeared to be undergoing a correction for a bit, as businesses deal with falling wholesale flower prices and market congestion, following a boom during the initial phase of the COVID-19 pandemic.
Consumer behavior started to change in the second half of 2021 as pandemic restrictions eased. A report from Headset showed that from June 2019 through 2022, Colorado’s growth in sales was the slowest among all markets, despite increases in basket volume and size.
The challenging market conditions have forced smaller operators into consolidation due to a lack of capital-raise activity across the industry. Despite the sobering reality, the firm had anticipated that year-over-year comparisons should sting less by 2023 as the market continues to adjust.
Cannabis taxes and fees collected in Colorado have fallen 21% compared to the same period last year as dispensaries close and layoffs persist. Alongside this, cannabis flower prices have dropped by 47%, from $1,300 per pound last year to $700 per pound in July.
Prices for flower products in Colorado, after remaining stable at around $5 per gram through 2020, have been on a rapid slide since the summer of 2021, reaching record lows by the end of last year.
However, with the market displaying signs of stabilizing, those dynamics could change in the coming months.