When the budget was released a couple of weeks ago, it got me thinking, has the price of cannabis increased with inflation? From my knowledge, the price of cannabis in Ireland on the black market has always remained steady over the years and seemed to be immune to regular inflation pressures. I wondered does this apply to regulated cannabis markets also. We have seen the prices of every item on the supermarket shelves increase, and petrol and diesel prices skyrocketing. But I have not heard any complaints from cannabis consumers in legal states. My question was answered last week when Leafly released their report “Leafly Cannabis Harvest Report 2022”.
The cost of wholesale cannabis has fallen, and availability has increased amid pricing competition between legal cannabis businesses and against sales from the black market. The largest legal cannabis market in the nation, California, with a record-breaking $1 billion in sales over the previous year, provides compelling proof. According to a study published on Tuesday by Leafly, California has experienced cannabis prices as low as $100 a pound, a significant discount from the state's average price of $786 for an untrimmed, dry pound. Now consumers are paying $20 per 3.5 grams as the norm.
This may not be good news for large cannabis companies. While sales may increase, the static price of cannabis may make it difficult for a business to cover its operating costs. While cannabis companies in legal states fight for a share of the market while meeting regulatory compliance and paying taxes, there is a danger that any increase in the price of cannabis could have the knock-on effect of allowing the black market to undercut them. To combat this, the U.S Cannabis Council last week launched their “Buy Legal” campaign to encourage consumers to purchase cannabis from regulated and legal sources.
The Leafly reports show us that the wholesale value of the market was an estimated $5 Billion, making cannabis the sixth largest cash crop in the US. The report further states that after California, Colorado benefited the most from legal wholesale cannabis to the tune of $687 million, Michigan $551 Million, and Oregon $500 Million. There are currently 15 states that allow adult-use cannabis, resulting in 13,297 farms and tens of thousands of full-time workers.
“The story in 2022 is all about rising production and falling prices. As the legal harvest continued to ramp up in legal states, the average price of cannabis fell over the past twelve months.”