Today, you can search Google for “weed delivery Los Angeles” and it will give you plenty of quality, tested cannabis at very low prices. This is in contrast to last year, which saw prices skyrocket in response to drought-induced seasonal shortages and more pandemic demand. To make room for this coming harvest, pot shops are slashing prices and filling budget flower shelves. Illegal weed is proving pricier.
Changing Supply and Demand
While consumers are currently smiling, farmers are crying. Prices are dropping because, after three years of legal cannabis sales, California is growing more than ever before. At the same time, legal outlets are not as numerous as once they were during the medical marijuana period. As of August 30, 2021, the California Department of Cannabis Control reports 7,297 active licenses for cannabis farms.
In contrast, because licensing for retail stores remains hampered by slow growth laws and local control, the state has only approved 1,130 retail and marijuana delivery licenses. Spokesperson for the Humboldt County Growers’ Association, Ross Gordon, estimates roughly 1,700 acres of weed currently growing for the legal market. However, stores are only selling around 1,100 acres of it.
Legal supply now exceeds consumer demand by a very large margin. After three years of uncertainty in the legal industry, moments of famine and plenty, suppliers are noting buds piling up everywhere. This trend began after last year’s harvest and shows only signs of piles growing ever larger. Both indoor and outdoor facilities are growing pounds of bud. More pounds than they can use. A veritable oversupply.
Because of this abundance, target prices are alluding pot farmers. They are selling their weed for less to sell it. Older buds from last season are unsellable now. Big suppliers buy weed from farms and sell them to outlets. They are now concerned. These bud piles are creating instability in the market, fluctuating prices wildly. There simply are not enough stores to sell the excess product.
In the beginning, the system made it very hard for growers to enter the legal market. So difficult that there was a shortage of bud, which caused prices to soar over the last two years. Now, the market has supply, but not enough retail stores to sell it. This is because many jurisdictions banned retail, and authorities are slow in responding to license applications.
For those supplying the cannabis market, profits are getting slim. Despite efforts by the state to fix retail licensing, these same new outlets are only joining the same markets. This thins share of the market pie, instead of expanding overall industry to accommodate supply. As more bud enters the same-size market, prices will continue to drop. While this is good news for consumers, it can devastate industry.
Role of Illegal Markets
As piles of weed grow ever bigger, there are other problems for legal suppliers to face. Illegal weed is entering the legal marketplace, which already has buds in excess. Instead of legal weed leaving the system, cheap, unlicensed weed is entering it. Oregon is growing plenty of marijuana and calling it hemp. Oklahoma is doing the same. This lowers prices for everybody, leaving only consumers happy.
When illegal products enter the market cheaply, these concerns become very worrisome. It reduces demand for legal products too, creating a serious glut in legal industry. Buying cheap, illegal products is due to the extremely high taxes placed on legal bud. Regulations are also insane, driving this trend deeper. Most players in the industry end up straddling both legal and illicit markets.
Permanent Changes to Cannabis Economics
Pot prices are receding, once grossly distorted by prohibition. Cannabis economics are changing. A decade ago, researchers were predicting that legal cannabis would be around 90 percent cheaper than prohibition prices. Oregon validated those forecasts when prices there dropped as low as $6 per eighth back in 2019. The question then is how quickly will prices drop, and when exactly will it happen?
Certainly, such time appears approaching. Illegal weed was always cheaper than overtaxed legal buds. Prices on the East Coast were always higher than on the West. Currently, 19 states have legal cannabis laws. Over 30 states permit medical use. Hemp is now legal at the federal level. Today, legal weed costs as much as illegal weed, with prices recently equalized. Tax is the same, but profits are not.
Fixing the problem of oversupply in California’s legal market requires licensing new stores. In new cities. It also needs lower taxes for growers, in line with shrinking, industry-wide profit margins. The market needs stability, and to sustain itself properly, more jurisdictions should open themselves for retail. Tax should reflect a flat, weight-based rate. Currently, cannabis taxes are leaving growers destitute.
The Way Forward
It is important for consumers to help farmers out. While nobody wants to pay higher prices for weed, it would be nice if consumers met supply. The answer is in using more. A simple search for “weed delivery near me” would show welcome support. As legal prices fall, not all farmers will survive. Some will have to specialize. Innovation in products, new exotic strains might just be the future of cannabis farming.
For consumers, the weed market has never been friendlier. Shelves are comfortably stocked. Bursting at the seams. New products are entering the fray on a regular basis and competition is boosting customer service, as well. Nearly all stores now offer marijuana delivery, with products now better priced than ever before and likely to drop even further. Times are exciting indeed.