Croptober Not Feeling So Celebratory

Croptober facing scary price declines.

National cannabis wholesale prices continued their multi-month plunge at the end of September, likely not a good sign for outdoor marijuana farmers heading into harvest season known in the industry as ‘Croptober’.

According to Cannabis Benchmarks, for the week that ended Sept. 30, the company’s spot index decreased 2.2% down to $966 per pound of cannabis flower, down from over $1,050 per pound two months ago.

And that has been happening as production continues to ramp up in many states, a likely sign that a wider shakeout in more mature markets is on the way, Cannabis Benchmarks reported.

The prices as of Sept. 30 were “a new all-time low on net losses of $25 per pound across legacy states,” the company said on its website.

It noted that a Colorado cannabis industry insider said that there should have been a “cannabis business shakeout” following the “brutal sell-off” in 2017 and 2018 following immense price compression, but “instead, the pandemic sales surge saved untold numbers of cannabis businesses in legacy states.”

“Now, however, the post-pandemic fallout may prove to be the final straw in some legacy state markets,” Cannabis Benchmarks reported. “New businesses will have to predicate business plans based on lower prices and profit margins.”

“States that implement license moratoriums may save most cannabis businesses for a time, but as more states come online in the adult use space, competition will heat up across state borders and price convergence will start occurring, even at the higher end of the market,” Cannabis Benchmarks reported.

The firm reported that Colorado indoor-grown flower for the first time had dropped below $900 per pound on average, while Arizona indoor flower is also now cheaper on the wholesale market than comparable flower in California.

Non-legacy markets are also showing signs of slowing down: While Nevada and New Mexico wholesale prices are still above their neighbors, Nevada’s wholesale market prices for indoor flower is down 17% this year, while New Mexico’s are down 23%, Cannabis Benchmarks found.

Cannabis Benchmarks also forecast that wholesale prices would continue dropping through the rest of 2022 to between $950 and $960 per pound, before rebounding slightly in the first quarter of 2023, up to $975 per pound in January and February and then $1,000 per pound in March.

John Schroyer

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