prices Archives - Green Market Report

Debra BorchardtDebra BorchardtMarch 11, 2020
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4min8000

In the bad old days before legalization, cannabis consumers would buy from dealers and there was no price bargaining. The dealer gave you the price and the amount and you took it, no questions asked. At the beginning of legalization, consumers were just so jazzed to be able to buy weed in a store that they didn’t care how much they paid for it. Fast forward to a maturing retail sector and discounts are the name of the game.

Bargains Are Rising

A new report from the cannabis analytics firm Headset found that stiff competition for purchases in dispensaries has led to lower prices. “The raw dollar amount of discounts has climbed very steadily since the legalization wave began, indicating that they’re an integral part of the industry,” read the report. The study found that each year, purchase discounts are growing.

In 2014, the data showed that the average discount at a dispensary was 4.6%. In 2019, that doubled to 9.3% and in 2020 it is at 9.7% and on track to reach 10% by year’s end. Headset believes that at some point a ceiling will be reached, but as more states legalize cannabis, more discounts are sure to follow driving down prices and driving up discounts.

Holiday Promotions

The holidays are the biggest times for discounts. April 20 had the largest jump in discounts at approximately 30% and sales jumped 24%. This was the biggest response to holiday promotions. Green Wednesday, Thanksgiving and Black Friday all experienced big promotions which averaged around 28%, but the sales only rose 1.9%. Thanksgiving week shoppers mostly got a 20% discount. Liz Connors, Director of Analytics from Headset said that sales volumes didn’t increase during the Thanksgiving holiday as a result of the higher discounts. She did note that dispensaries offered much higher discounts this year for Black Friday sales than they did last year.

Hey Big Spender

Bigger spenders get bigger breaks. The review of data showed that people who spent more tended to buy more discounted products. Shoppers spending $20 or less, tended to buy items that had less of a discount. On average these small spenders paid full price for almost 70% of their purchases. The big spenders coughing up over $120 on their shopping trip only paid full price for about 17-27% of their items.

Products with a higher average price tended to have smaller discounts. Edibles tend to have an average price of $16.56 and the lowest discount at 7.9%. “Edible consumers don’t seem motivated by discounts,” suggested Connors. “Otherwise the dispensaries would offer more discounts.” Similarly, concentrates, which have an average price of near $19 had the highest discount at 12.8%. Connors thinks that these shoppers tend to consume more cannabis than others and so promotions appeal to this value shopper.

Overall, average item prices for cannabis have stayed fairly level. Connors pointed out that price patterns have emerged. “New states start high and then drop as the state matures,” she said. “We’re seeing it happen faster and faster as new markets open.” She also said that more value brands popping up in dispensaries. On the other hand, more premium brands coming to the market as well. So the overall effect has been that prices on average have stayed fairly even.


Jack SmithJack SmithAugust 3, 2018
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5min8980

Despite initial fears that Colorado’s regulated marijuana market might only fulfill part of the demand from consumers, a new study shows those fears are overblown.

The study, produced by The Colorado Department of Revenue (DOR)’s Marijuana Enforcement Division, shows that in 2017, the regulated market was able to meet both resident and visitor demand for cannabis. That compares to 2014, when only 65 percent of consumption came from the regulated market. The new data shows that consumers are moving from marijuana flower, towards concentrates, which highlights a competitive market.

“This update improves upon the original 2014 market study methods and uses official market data to provide an updated insight to and assessment of Colorado’s regulated marijuana markets through 2017,” said Mike Hartman, DOR executive director in a statement provided to Green Market Report.

Hartman added: “This report gives me comfort that the licensed, regulated commercial marketplace is working well and is part of the state’s continuous effort to monitor a comprehensive marijuana regulatory framework, improve transparency and use data to inform the public about Colorado’s marketplace.”

In 2017, 340.7 metric tons of flower were regulated in the state. 301.7 metric tons went towards sales to consumer, while 34 metric tons went towards inventory and the remaining 6 were for residual marijuana.

The Colorado market continues to be a competitive and diverse area for consumers, with no one company dominating the market. The DOR report actually noted that the 10 largest operators in the state saw a decline in market share, coming in at 23.1 percent in 2017, down from 25.4 percent in 2016 and 26.6 percent in 2015.

Prices are also coming down, as the market remains extraordinarily competitive. Marijuana flower prices have “declined slowly,” according to the DOR, while the price of a standard serving of THC has “declined more rapidly.”

Though pricing trends are largely coming down, there are still some variances in different parts of the state. In mountain and border towns, consumers will pay between $8.30 and $11.75 per gram for flower, compared to $5.79 per gram for the average.

In 2017, flower comprised 61.8 percent of the market, while concentrate made up 27.3 percent, trim accounted for 5.9 percent, with infused edibles and infused non-edibles accounting for 4.9 percent and 0.3 percent, respectively.

Other highlights from the study include Colorado’s attitude towards using technology to make it easier to respond to ever-changing consumer needs, while also keeping up with regulations.

“Colorado is the first state to use inventory tracking data to understand market dynamics; the first to use flower equivalent measures; and the first to compare supply, demand, and consumption to monitor regulatory performance,” Adam Orens, Founding Partner of Marijuana Policy Group, said in a release accompanying the study.

Orens added that the findings are important to show that the cannabis market can be regulated effectively and is a sign of the “evolution of regulated cannabis markets – where governments are monitoring market data and adjusting policy accordingly.”


Peggi CloughPeggi CloughAugust 3, 2018
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4min26972

New data released by Flowhub finds the price of an eighth of cannabis in U.S. cities can vary by as much as 15 percent after taxes have been applied. Now that cannabis is being regulated by cities and states with complicated tax codes, consumers can pay 20 to 40 percent tax on their purchases.

The cities included in the data were Boston, Denver, Las Vegas, Los Angeles, Portland, San Diego, San Francisco and Seattle—the top eight major urban cannabis markets. In order to determine which city had the highest priced eighth of an ounce of flower, Flowhub started by assuming the price of each eight was $35 and then added on the taxes associated with that location. Prices do not reflect the actual cost of an eighth in those cities.

Most expensive was Seattle, with a cost of $51.49. Seattle was first place in price on the list because it also has the highest tax rate at 37 percent.

Second place Los Angeles came in at $48.48. The 35 percent taxes include excise, sales, and business-REC taxes. Taxes in California are calculated against the subtotal and applied taxes. For example, in San Francisco, the state sales tax is 8.5 percent of the subtotal plus the excise tax.

Interestingly, prices in the three California cities differ by quite a bit. Eighths in San Diego and San Francisco cost $45.54 and $43.67, respectively. That’s almost $5.00 less than the price in Los Angeles. San Diego taxes at 27.75 percent and San Francisco, 23.5 percent—a big difference from LA’s 35 percent.

Denver places the largest number of taxes on cannabis of any of the cities on the list. The 26.15 percent taxes include a state cannabis retail tax, state and municipal sales taxes, a Denver retail marijuana tax, an RTD tax, and a cultural tax. Still, with all these taxes, Denver was 5th in price, at $43.14.

Eighths in Boston and Portland are taxed at 20 percent and both have a cost of $42.00. Boston places excise, state sales and local municipal business taxes on cannabis, while Portland has two taxes: OLCC state and Portland city.

Las Vegas came in the lowest priced at $41.39. Taxes there run 18.25 percent and consist of a state recreational cannabis tax and sales tax.

Smaller dispensaries and entrepreneurs are fearful that high taxes will force them out of the market, so Flowhub has some advice for them. It includes understanding local laws, keeping detailed records, setting an order of operations for tax calculations and being upfront with consumers. They also suggest fighting for fairness by lobbying lawmakers for responsible regulations in the cannabis market.


William SumnerWilliam SumnerJune 6, 2018
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5min19222

Will the nationwide legalization of cannabis in the United States lead to falling cannabis prices? According to a recent report published by the financial services company Stifel Financial Corp., the answer is yes. Published on May 30, 2018, the report details various market pressures and predictions regarding how the legal cannabis market will over the next several years.

According to the report, there is a strong possibility for price compression in the cannabis market, particularly dried cannabis, for several reasons. The first reason is that the highly attractive economics of cannabis will lead to an influx of actors hoping to cash in on the industry, which will lead to oversupply; citing Canada as an example.

Set to legalize adult sales of cannabis this summer, Canada is set to face an oversupply in the coming years. Another report, issued by BMO Capital Markets, found that although the Canadian cannabis market only needs about 11 million square feet of grow space to support demand, the top three growers are already on their way to having approximately 8 million square feet themselves.

When you figure in all of the other cannabis cultivators in Canada, it is easy to see how the market could become saturated. Likewise, permissive licensing structures in the United States has led to an abundance of cannabis cultivators. The most significant barrier to entry as a cultivator is capital; and with deep-pocketed investors flooding the market, capital is readily available to those that seek it.

Additionally, lower prices will emerge as a necessity to encourage users to abandon the black market in favor of the legal cannabis market. Daily cannabis users, which are predicted to account for the majority of national cannabis sales, are sensitive to price. According to an analysis by the Canadian Parliamentary Budget Office, only 61% of daily users would be willing to pay a 20% premium for legal cannabis products compared to the illicit market.

For cannabis operators, this means having to make a choice between maximizing profitability or volume. Profit maximization would most likely occur through the creation of value-added cannabis products; such as extracts and edibles. Using Colorado, Washington, and Oregon as a model; the Stifel report predicts that the national market would initially favor volume over profitability.

Once again drawing from Colorado, the report predicts that a national cannabis industry would most likely see cannabis sell for a wholesale price of $2.00 per gram and a retail price for $3.50 per gram for medicinal and $5.50 for recreational. Dried cannabis would be hit the hardest, while value-added cannabis products would retain a slightly higher price. Currently, the Cannabis Wholesale Benchmarks has cannabis priced at $1,247 per pound for the spot index in June. Cannabis calculates 448 grams per pound putting the current price at $2.78 and so its forecasted drop would be roughly 28% from today’s prices.

In the BMO report the wholesale price of cannabis, at least in Canada, is predicted to be much higher. Wholesale prices for dried cannabis are predicted to hover around C$4.00, while oil/gel capsules would go for C$6.00 per gram, and value-added formats would sell for approximately C$15.00 per gram.

With regards to cannabis taxation, the Stifel report favors the Canadian tax model, which includes a 10% ad valorem tax with a C$1.00 minimum and the ability for provinces and localities to impose their own taxes. Using a similar 10% ad valorem tax, along with a 10% tax imposed by the states, and a 5% local tax; it is estimated that the United States could generate up to approximately $12 billion in cannabis taxes annually.


Peggi CloughPeggi CloughFebruary 28, 2018
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4min26151

The U.S. Cannabis Spot Index averaged $1,562 per pound in 2017, a 13 percent decrease from $1,789 per pound in 2016, according to Cannabis Benchmarks Annual Review & Outlook: 2017-2018 Edition.

The Index declined only 6 percent throughout 2017, opening at $1,532 and closing at $1,436, in contrast to the 20% decline seen in 2016.

Wholesale market for the cannabis flower was $5.7 billion in 2017. For reference, the wholesale wheat market was $7.8 billion. Volume grew by 22%, from 3 million pounds in 2016 to 3.7 million pounds in 2017.

Lowest prices for the year were again seen in November, with the national composite price down 11.6% in Q4 from Q3. Favorable weather conditions led to fall bumper crops, and the combination of outdoor and greenhouse flower hitting the market at the same time helped fuel this in 2017.

The lower level of spot price uncertainty led Cannabis Benchmarks to investigate the volatility of other agricultural commodities. They found that cannabis was in line with the others and that only one, wheat, increased. They believe cannabis volatility decreased in part because of fewer “regulatory and economic surprises.” This may also hold true for Colorado, Washington, and Oregon, although foreseen regulatory actions can greatly affect regional prices.

While it doesn’t have a huge impact on the market, greenhouse flower accounted for just under one-third of all volume traded in 2017, staying at the same volume as the second half of 2016. This is significant because it accounted for less than one-fourth of all volume in the first two quarters of 2016.

Warehouse flower contract prices appear to be trending downward. In 2017, 40% of individual transactions involving warehouse flower were greater than $2,000 per pound, down from 45% in 2016. When looking at flower selling for greater than $1,500 per pound, the numbers were even lower, 69% in 2017 as opposed to 80 percent in 2016.

The market also saw more agreements that were not involving product exchange, only financial exchange, such as futures, swaps, and options.

In the first half of the year, wholesale prices increased in California, but the bounteous fall crop proved to be too overwhelming to maintain the increase, and wholesale prices fell. Wildfires in the fall ravaged dozens of grow sites; however, they didn’t have an effect on supply statewide.

Colorado’s average Spot Index for 2017 was almost 30% below 2016’s Spot Index, continuing the downward trend that started in early 2016. The state has such an oversupply of cannabis that quality and other differentiating criteria have ceased to have much significance.

Wholesale prices in Oregon fell dramatically in 2017, less than 18 months after the state legalized sales to adults. A good growing season, lack of production limits and an increase in commercial growing knowledge were all factors in the decrease.

In the last weeks of 2017 and early into 2018, Washington’s wholesale prices were the lowest seen in any state, historically. This trend is being closely watched in 2018.

Cannabis Benchmarks is a division of New Leaf Data Services and provides wholesale price assessments in weekly, mid-year and annual reports. Their Annual Review & Outlook: 2017-2018 Edition offers wholesale market data, overview and analysis, and is available for purchase.



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