As 2017 draws to an end, trends continue to exhibit a decline in the prices of Marijuana. This means that buying Marijuana in Colorado is even cheaper now. A new report analyzing marijuana’s U.S. spot price index states the same.
The first half of the year witnessed a huge 18.6 percent drop in the price across the nation. The prices in Colorado, however, fell by as much as 40 percent, says the “2017 Mid-Year Wholesale Market Report.” This report is issued by Cannabis Benchmarks, an independent reporting agency based in Denver that tracks spot prices of commodities like gold and oil, in the U.S.
H2: Relative Stability Ensures Buying Marijuana in Colorado to Be Consistent
However, it doesn’t mean that marijuana business in Colorado is going down. The overall decline still shows much improvement from last year that marked massive fluctuation in prices. This is a great sign after 2016 volatility in prices and this year’s political instability. The difference range between the highest and the lowest was $150 during the first six month of 2017. Thus is so much improvement as compared to the range that reached $300 in first 6 months of 2016.
The wholesale prices of marijuana in the years 2015 and 2016 indicate that the buying marijuana in Colorado will become cheaper by through November as the final fall harvest floods the market. Adam Koh, the author of the report stated “We still do expect to see a seasonal price depression nationally that comes with the harvest”.
What this Means for Marijuana Business in Colorado
The prices may have been plummeting in all the five states (where marijuana is legalized) including Colorado, the demand stays intact. The reason behind this could be business boom. The competition has increased because of increased players in the market, thus leading to overproduction. This, in turn, has spurred theses very businesses to become more cost-effective in their operation so as to sustain and maybe, thrive down the line.
The prices also vary highly from state to state because of different regulations that control the trade in each state. This is why the first half of 2017 marked Alaska as the highest price seller ($4,190 per pound) and Colorado, the lowest ($1,280 per pound).
Right now, per pound price of cannabis in Colorado has tumbled down to $1,181 (from $1,994 in 2017). Cannabis Benchmarks opines that the reason for such a steep fall could be the “liberal approach to licensing and production,” on part of the state. It has simply led to a surplus of marijuana business in Colorado.
What’s Happening around Colorado
Washington on the other hand has seen 2017 as the year of the rise. Washington’s monthly spot index prices have risen by 8 percent approx. as compared to last quarter of 2016. It now stands at $1,387 per pound. According to Koh, it’s perhaps California’s forthcoming legalization of marijuana that is causing such great uncertainty in pricing. The licensed market however, is likely to see only a small number of commercial cannabis transactions in 2018.
And, there is Nevada in the line, whose “unique regulatory circumstances” curbed the rise in wholesale prices of cannabis in the first half of this year.
Apart from this, the cash only regulation also pulls the business down to an extent. The report says that “In such a landscape, the significant amount of cash required to settle a deal greater than 20 pounds is often not at hand.”