Oregon marijuana prices have hit their lowest point in the history of the state’s legal market, at $4 a gram for average recreational customers.
That’s down 16% from last year, according to an annual report from the Oregon Liquor and Cannabis Commission delivered to the state legislature last month, Oregonlive.com reported.
The OLCC report cited “historically low wholesale and retail prices” for the industry, and said that from Dec. 2020 to Dec. 2022, wholesale prices are down 60% while retail prices are down 25%.
“The Oregon recreational marijuana market is in arguably the weakest economic position it has been in since the inception of the program in 2016,” the report reads on the very first page, and says the state has experienced a “see-saw pattern of oversupply and market correction” for years.
The pricing downturn has led to a wide swath of cannabis businesses falling behind on their bills, Oregonlive.com reported, and insiders point back to marijuana oversupply as the fundamental issue.
According to the OLCC report, demand was just 63% of the state’s supply of legal cannabis last year. Sales fell by more than 17%, the first-ever annual decline.
And regulators have warned that there’s still an abundant oversupply of cannabis from years past that has stockpiled because demand skyrocketed in 2020 during the lockdown months of the COVID-19 pandemic. That led producers to grow more cannabis in 2021 and 2022 than the state could consume, and now the market is weathering the aftereffects, the OLCC reported.
“Following the banner sales year of 2020, OLCC producers entered 2021 exuberant and feeling optimistic about the future of the market,” the report reads. “However, the fading of demand as 2021 progressed, exacerbated by a record outdoor harvest in October 2021, set off a slide in prices that put the entirety of the supply chain under pressure in 2022.”
That’s put many companies in a precarious position for 2023, the OLCC reported.
“These low consumer prices force businesses to operate under low margins and extreme pressure. The narrowness of those margins, and the ability for Oregon cannabis businesses to operate under them, remains to be seen as we enter 2023,” the agency wrote.
However, the Oregon market was in free-fall prior to the COVID-19 sales bump in 2020. Retail prices per gram had trended down to the same roughly $4 per gram mark in April 2019, before starting to rebound to a high point of about $5.50 per gram in 2020, before sliding downward again, the OLCC report noted.