The price of recreational cannabis products has fallen in Massachusetts.
The price of recreational cannabis in Massachusetts has never been lower. Businesses in the burgeoning industry expect prices to keep dropping because they have been decreasing for more than a year. The lowering of prices has some worried about the ramifications for small businesses and the employees that make it all run.
The state of the industry at a crossroads is offered by examining the reasons for the decrease in cannabis prices.
It's cheaper than before.
The average price for a gram of Cannabis dropped to $7.76 in October, an all-time low, according to the most recent data from the state.
The average price for a gram went up in November. The average price for a gram of flowers in September was $9.17. In September, the average price was the lowest it had ever been. In August, the average price was.
When recreational cannabis sales began, prices stayed fairly constant. The average price for a gram of flower in April 2020 was $9.74, which was a decrease from the previous year. The prices went back up to around 14 for a gram. Between September and October of this year, prices dropped the most.
Revenue from recreational cannabis sales is going down. The amount of marijuana sold in Massachusetts in November was the lowest since February. The sales numbers peaked in July. There was a decrease in sales revenue between October and November.
The state is experiencing an oversupply of cannabis as a result of an increase in licenses to cultivate.
Joseph Lekach, CEO of cannabis company Apothca, said there was an extreme oversupply of cannabis products.
The licensing process in Massachusetts was very slow when the industry was in its infancy. Staffing shortages and other factors led to a backup of applications. There were only a few cannabis producers in the state, which caused prices to stay high. Marijuana can't be shipped across state lines because of differences between federal and state laws.
It takes a long time and a lot of money to build a cultivation facility. It takes a lot of time to grow the crop.
The quality of cannabis products could decrease as businesses navigate a new reality.
Pollock said that dozens of new facilities have opened and are trying to sell to the market. The current imbalance between supply and demand was caused by this.
The last year has been quite drastic. He said that cannabis prices on the wholesale market could go down by 50% in one year for people who are only on the cultivation side of the business.
The Theory has four locations in Maine and three in Massachusetts. Pollock said he is looking at options in New York and New Jersey as the company expands.
The theory has a small facility in Massachusetts that sells to some wholesale partners. Most of the product sold in a dispensary is created by the company.
Pollock Theory prices its own product as a high-end brand and those prices have remained stable. Lower-quality products have become considerably cheaper.
A sword with two edges.
The quality of cannabis products could decrease as businesses navigate a new reality. It wasn't good three years ago and a year and a half ago. It was unbalanced to both the high and low sides. From a customer's perspective, this is good. A lot of manufacturers and growers will cut costs in order to survive. An inferior product will come out. The sword is a double-edged one.
Lekach has a lot of other concerns. Apothecary has retail stores in Massachusetts and Oregon. Smaller outfits may be in trouble.
We don't know where the bottom will be. A lot of companies are suffering because of this. A lot of companies are going to go out of business in the next few years.
According to the Boston Business Journal, The Source, a Northampton dispensary, will be the first cannabis store in the state to close permanently. Leadership at The Source didn't say why they closed.
Major Bloom is smaller than Theory. It doesn't have a cultivation cannabis facility. The team at Major Bloom knew that the price drop would come and planned for it as they opened their store in a low-income area.
When we opened up our retail doors, part of our model was to be economical. Youngblood said that the market should be more affordable for people because it is not a drastic change. This was going to happen. All other markets have it.
Both Lekach and Pollock expected prices to go down, but were surprised at how quickly they went down.
Lekach said that he is worried about the consequences of these trends on workers, and has heard people talk about the likelihood of layoffs. He said that Apothca has avoided those measures so far.
Pollock said that there is no limit on licenses at the state level and that speculative investments in the industry could lead to a greater oversupply of products.
Oregon should be looked to for guidance by officials and business leaders. New cannabis licenses were put on hold to deal with oversupply issues.
Lekach was in favor of a moratorium.
He said that they would have to figure out how social equity and economic empowerment fit in those lines, but for regular cannabis licenses, he wouldn't issue anything for a while.
The flow of cannabis into the illegal market may need to be stopped. Pollock said that when financial pressure is brought on by these issues, they could be pressured to sell in the unregulated market.
Youngblood said he has heard of an abundance of marijuana in the unregulated market and that prices for illegal marijuana are sometimes higher than in the dispensary.
Major Bloom states that it is for the working person. Youngblood is optimistic about the future of his company and the cannabis industry in Massachusetts. Youngblood said he is happy that the average consumer can benefit from cheaper prices.
It's best for the cannabis consumer. He doesn't think a pre-roll should be more than $20. The way it should be is because consumers are benefiting from it. We do it to serve people. That can get lost.
Keywords: average price,Prices, cannabis,Pollock