Will California See a Drop in Cannabis Prices Like Other Legal Markets?

As the bountiful fall harvest of sungrown outdoor cannabis completes its dry and cure process and is prepared to be sent out to dispensaries across the state of Oregon, nobody really has an answer for what will happen to the 825,000 pounds of aging wholesale weed from the prior harvest that is still sitting unsold in the state’s tracking system.

This glut of pot sitting stagnant in the belly of the beast has accelerated an already declining wholesale market for outdoor cannabis crops with Oregon seeing ounces of bud selling recently for as low as $30…

The crazy thing is, it will likely go even lower as this fresh harvest will command shelf space forcing deals to move the older product.

Many of the sharpest minds in the state have been lobbying for the right to export their obviously abundant product across state lines to other markets that have a need for incredibly inexpensive cannabis.


Geek Farms in Oregon is still cultivating top shelf craft cannabis that commands a more realistic market value. Pictured here is their famed Dr. Who

In Nevada, for example, the average wholesale price for one gram of cannabis is $4.00 which sounds low but is actually the highest of the 10 recreationally legal states. Oregon, on the other hand, clocks in at an average of just $1.33 per gram, wholesale.

So Nevada’s market would probably be very interested in importing sungrown weed from Oregon, even if it’s from two harvests ago, to fill their mid and bottom shelves with. It’s somewhere between hard and impossible to grow marijuana outdoors in the desert, and the added costs and space restriction on greenhouse or indoor grown cannabis explains why their average price per gram is higher than more agriculturally diverse regions.

With the federal government keeping a very watchful eye on weed these days, but refusing to budge from their ignorant stance on it, the idea of interstate cannabis commerce is probably still a bit of a pipe dream. In the meantime, there is no foreseeable reason to expect the race to the bottom to end anytime soon in Oregon’s marijuana market.

WHAT ABOUT CALI?

As California stumbles into its own brand of adult use recreational legalization of cannabis, many are wondering if it will suffer the same fate as its neighbor to the north when it comes to price instability on the wholesale side of the market.

Growing weed outdoors is absolutely going to play a major role in the future of legal cannabis. When it comes to making various forms of extracts, edibles, topicals, and more, the ability for massive harvests of weed that may lack jar appeal, but are still packed with the essential cannabinoids and terpenes that make marijuana the miracle that it is will be a hot commodity.

Some outdoor sungrown cannabis will blow your mind with not only jar appeal, but with incredibly intense strength, aroma, flavor, and effects.

So far, if anything, the average Californian cannabis consumer is complaining that prices in the legal market are too high compared to what they are used to getting from the medical marijuana market or from the streets.

This is mainly due to the skyhigh costs associated with entering and operating in the fledgling Cali industry, and also due to the high stacks of taxes attached to legal weed transactions these days – as high as 30-35% in some cases!

But what is happening in Oregon is not an anomaly, it’s really the natural progression in most agricultural industries, so there is a very real possibility that California will follow the same arc.

For one thing, the “$50 eighth” is a false standard born in the era of hardcore prohibition against weed, and especially against those who had the guts to grow it or deal it. That very real risk that came with every buzz of the pager or every odd meetup got tacked onto the consumer’s end and those archaic pricepoints were born.

These days, that risk is mitigated (not eliminated, Feds will still get you if you’re slippin’) by regulation and licensing with state authorities.

Yes, there are high costs associated with that as well, and yes the lion’s share of those costs will be passed on to the consumer. But overall it has proven to lead to substantial reductions of prices in every other legal weed market so far, so it’s not likely that California will be an exception.

IS THIS A GOOD THING OR A BAD THING?

Well, that depends on who you ask, of course.

Consumers will see a wider variety of options and lower prices on dispensary menus. Those dispensaries will continue to enjoy steadily-dropping wholesale prices and will keep raking in profits based on fat margins on mids.

But in a place like Cali, where the fees and taxes associated with growing the plant are so unfairly high, margins continue to squeeze tighter and tighter. This encourages farms to cut corners and pump out proven yielders like Blue Dream and GDP instead of the connoisseur strains that we really want.

From another perspective though, those big buds from outdoor weed trees are perfect for distillate, edibles, topicals, full spectrum oil, and so much more. If the main ingredient is cheaper, then those high demand products should get cheaper as well.

Leafly.com predicts that low-grade weed will one day be the equivalent of a ketchup packet at a fast food spot, where pre-rolls of boof bud will be given out by the handful to paying customers just to get rid of the mounting piles of harvested buds.

They also point out a trend that we are very aware of here at Optimal Genetics. While well-grown craft cannabis will always have a place in the market and in our own stash, cannabis concentrates have already begun to climb the ranks of popularity among users.

With nearly $3 billion in legal, recorded cannabis concentrate sales in the U.S this year alone, that number is expected to boom to $8.4 billion by 2022.

That massive spike in demand will need a massive supply.

The process of cannabinoid extraction, short path distillation, acquiring safe and healthy to use vape cartridges, then filling them correctly is outside the scope of 99.9% of cannabis users and so products like high quality, branded, lab tested vape carts continue to rise in demand and continue to earn a profitable margin.

Hopefully, those margins are shared across the supply chain so that the inglorious job of growing high-quality cannabis remains lucrative enough to keep people interested in doing it.

At Optimal Genetics we strive to always source the highest quality cannabis flower from sustainable sources to provide our end user with the ultimate blend of value and uncompromised quality.
Post by Jack Riordan

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