DCWeedEvents helps analyze and dissect the different factors that impact cannabis prices from coast to coast. There are many factors at play here; region, taxes, quality, supply and demand, indoor vs. outdoor grows, and local competition to mention a few.
It is important that we understand local climates, natural disasters, and potential weather disruptions which may impact local harvests. The countries pricing is usually based on activity from the West coast, between California, Oregon, and Colorado. These markets have large impacts on nationwide pricing. While the cost of a pound of weed is something very few consumers will need to worry about in a literal way, its cost trickles down to the end products for consumers. So let’s take a look at how much a pound of weed is worth.
California – the largest producer of cannabis in the U.S. at more than 13 million pounds per year – saw a price drop of 12 percent in 2019. The price of a pound of wholesale California weed did drop in 2020 but only slightly, from $1,550 to $1,510. In Colorado, the cost of a pound of outdoor wholesale cannabis costs $1,327, and in Oregon, $1,470.
Typically, in order to get pound pricing in the legal market you will need to own a cannabis dispensary or processing operation.
The black market pricing is heavily influenced by supply and demand, as well as how connected a person is to the grower of the cannabis. Typically, purchasing directly from the grower, or processor, will get someone the best price. However, it can be difficult to get in touch with growers and understand who may be willing to work with you. Prices for outdoor flowers typically are $1500-2000 from California or Oregon, then $1800-2400 for light depreciated buds or greenhouse grows, and $2000-7000 for premium indoor buds.
There are a ton of factors that impact the price of cannabis. Starting with the grow environment, was it indoors (more costly) or outdoors (more affordable)? Was there a special buildout required to bring in power or electricity to help run the operation? The initial setup for a grow operation can be costly.
Taxes play a big role in the price fluctuations by state. Local and state taxes as well as excise taxes which varies per location also impacts the price. States can impose excise taxes similar to what is imposed on alcohol and tobacco. These tax rates can be as high as 37% as seen in Washington state.
The size of the operation can impact price. Many large multi-state operators and larger grows benefit from economies at scale where they are able to produce at a cheaper price because they get their bulk materials cheaper. This allows them to produce more buds at a lower price per pound which ultimately helps their bottom lines.
Whether or not the cannabis is coming from a legal licensed grow, or the black market may also impact the price of a pound. The black market will often get “taxed” or paying a slightly higher price to the person who gets you the cannabis. These middle men add their own unspecified amount to the cost of the pound depending on their connections and the quality of the product. Typically the longer you do business with someone in the scene, the better pricing you are able to get.
Typically, illicit cannabis markets have a higher price per pound than legal markets. The states where cannabis is not yet legal will have a higher cost of pounds due to the risk involved with holding and moving that much cannabis. States without any marijuana reform usually need their cannabis imported from legal states. The cannabis usually comes from California, Oregon, or Colorado. On the east coast, Maine and Massachusetts are also starting to gain popularity.
When cannabis is permitted in the state, there are still limiting restrictions such as banking, licensing, and amounts you can purchase. Most states limit the amount of cannabis someone can purchase in the legal market.
Taxes and Regulation
The biggest factor that impacts the pricing of cannabis is the tax rate, which taxes are applied and the local regulations. The US Government does not allow any tax deductions for cannabis businesses through Regulation 280e. Cannabis businesses cannot write off any marketing or sales business expenses that other businesses can in mostly any other industry. This means, a lot of this gets passed on to the end consumer. Different states have different tax implications as well as different tax rates. The tax rates and regulations are often decided by the local and state municipalities.
As cannabis normalizes, it is hoped that these taxes are reduced and these savings help get passed on to the end consumer to reduce the price of a pound of weed.
Nature and Natural Disasters
Oftentimes, and more recently, wildfires have been a major problem for the western states. When the massive wildfires engulf the forests and spread like crazy, they can impact the local agriculture around them. Some grows unfortunately are burned down by the natural disasters or fires. Others are damaged due to the falling ash or lack of proper natural resources or weather changes. Droughts can also impact outdoor growing. When there is a lack of adequate supply, the shocks of the market are reverberated at every level. You can never 100% predict when a natural disaster will strike and take out a grow.
There are an absolute influx of new growers in the market every single day. Whether the legal market or black market, there are always grows being constructed, new flowers and strains being grown, and more cannabis being chopped, cut and sold. Many new states are emphasizing home growing and placing legal havens around houses with up to 4-6 plants depending on the state. The increase in competition typically helps drive down the price of cannabis to the end consumer. However, there is typically a race to both sides of the market. While the majority of people try to compete for the best weed at the lowest prices, some growers have taken an opposite approach and tried for more limited exotic weed at a higher price per pound. These approaches will both impact the price of a pound of weed.
Market Supply & Demand
The demand for cannabis is as strong as it’s ever been. With the coronavirus limiting some peoples social activities as well as social habits, the cannabis industry has seen an absolute boom. There has been a significant rise in people tendencies and habits which helps impact how much cannabis is consumed. The growers have a good understanding of the typical supply, as they are well networked with each other, stores, and brokers. The amount of cannabis available at one time will often dictate the pricing. People can see pricing fluctuations throughout the year depending on seasons, and how it is impacting the price to grow which ultimately impacts how much a pound of weed costs.
Supply and demand, is as important in determining the price of a pound of weed as it is in any industry.
Black & Grey Market Cannabis
The black market will never fully disappear. The higher costs of cannabis in the legal market from the pound all the way to the gram for the end consumer will ensure that the market lives on. Many states transition from a black market to a “legal grey” such as Washington, D.C. as the laws allow for recreational cannabis but do not provide a regulatory framework for sales or acquiring the product. A similar industry arose in Massachusetts, and Maine.
The black and grey market typically have a wide variety in pricing for the pound of weed. The pounds of weed sold in the black market typically are typically not including sales or excise taxes in the costs. Many of the growers and producers stick to cash transactions in order to mask many of their sales.
The black market growers and producers oftentimes do not have the same legal licenses as many of the regulated grows in their particular state, if it is even legal. The black market exists all throughout the country.
Many people have aspirations to go into the legal market but are waiting for the opportunity when it is both equitable, affordable, and open to them. The industry currently has higher barriers to entry due to the regulatory and legal licensing processes of each state.
The ultimate goal is for an inclusive legal system where the tax dollars goes back into the local communities to help people. It is imperative that cannabis crimes are no longer prosecuted and all current incarcerated individuals for non-violent marijuana crimes are released.
For now, there is no sign the black and grey markets will ever cease to exist. Many say they are stronger than ever.
Wholesale Cannabis Price History
The cannabis industry has been growing steadily since 2012. Profits have continued to rise and the legal market continues to grow. The different market participants impact the price of a pound of weed, which is a commodity in the legal market.
Oregon had an oversupply issue in 2018/2019 which led to a sharp decline in the price of legal cannabis. There were places where you could purchase weed for a dollar a gram. This would make the wholesale price of weed under $448. Washington saw a similar oversupply.
Cannabis Growers Turning to CBD/ Hemp
Many cannabis and weed farmers were not sure how much the price of a pound would fluctuate and heard great speculation about CBD/ Hemp. People were putting CBD into everything and creating new companies and brands. Many new companies and startups came and went in the CBD industry. Other cannabinoids such as CBG and CBN were isolated and explored. There is still ongoing testing as to the efficacy and benefits of the specific cannabinoids. Many people benefit from full spectrum blends which do not isolate any specific cannabinoid. This is known as the entourage effect.
The price of pound of CBD also fluctuated but is much cheaper than the price of a pound of weed. There were some bad actors in the cannabis industry who would try to sell quality CBD as THC flower. It can be difficult at times to distinguish just by looking at CBD or cannabis flower.
Unfortunately, many farmers entered the CBD and hemp market without a plan. They thought if they grew the crop the cash would come. Without an exit strategy, many people were left with product and no outtake partners. Another issue included a lack of adequate drying facilities which would inhibit a farmers ability to produce anything with their crops.
Pandemic made weed ‘essential’
One of the biggest surprises in the cannabis industry came during the COVID-19 pandemic. Early in the pandemic, cannabis was deemed “essential” which allowed the businesses to stay open when other businesses were instructed to close their doors. While many bars and social clubs closed temporarily, people turned to cannabis in all forms.
The cannabis industry experienced a great boom throughout the pandemic. Cannabis was in fact, “recession proof” as the industry flourished. The demand throughout the pandemic has been off of the charts. This creates a market flux in the price of a pound of weed.
Many of the adult use markets have seen record breaking sales, and we expect this trend to continue through the next few years as more states legalize.
Average Wholesale Pricing of Weed
A U.S. Spot Index for the Week Ending 09/24/2021 gives national averages:
• Median average wholesale price per pound of marijuana- $1496
• Average wholesale price per pound for recreational- $1722
• Average wholesale price per pound for medical- $1,800
• Average Wholesale price per pound rose slightly (rather than predicted decline)
• Average greenhouse ($1,328),
• Average Indoor ($2,000)
• Average Outdoor ($800)
The Price of Weed is Rising
The pandemic has shown to create another boom in the cannabis industry. We anticipate we will continue to see the price of cannabis rise. More states will legalize and create more demand for cannabis across the country. We anticipate seeing a rise internationally as well as more countries begin testing cannabis and the medical benefits.
We will continue to monitor the price of cannabis across the country. Check out our top delivery companies in DC for more information on where to get weed in dc.