Marijuana prices have plunged to a 2016 low, and the drop has started to change the industry. For producers, there is one light at the end of the tunnel. Medical marijuana prices continue to be priced above that grown for recreational use.
The marijuana market will grow quickly as more states make use legal. In an analysis of 25 states that already allow the use of medical marijuana, 24/7 Wall St. found 14 which are likely to decide in favor of legalizing recreational marijuana as well: Arizona, California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New York, Rhode Island and Vermont. 24/7 Wall St. looked at the 11 states least likely to legalize marijuana as well.
On balance, new laws should increase demand, and perhaps drive prices higher. In the meantime, Cannabis Benchmarks found that:
The U.S. Spot Index fell to a new year-to-date low of $1,540 per pound this week, $70 below the previous low of $1,610 reached on August 5th. After settling last week at its highest price since July 22nd, rates for outdoor-grown flower fell 13% week-over-week to $1,116 per pound. Rates for outdoor-grown flower fell in California, Oregon, and Washington. Greenhouse product prices have risen 15% over the course of the past two weeks.
To some extent, the nation’s largest state by population is to blame:
The spread between medical and recreational prices shrank significantly this week, with deals for product designated as medical settling at rates $197 higher than those for recreational. This difference is significantly less than the over $500 spread observed last week, as well as the $264 difference documented on September 23rd. The decline in rates for medical product was driven largely by falling prices in California, which this week saw the first significant rush of supply from this year’s fall harvest. As California’s legal market is to this point exclusively medical, pricing in that state will have an outsized impact on our nationwide assessment of this metric.
Cannabis Benchmarks did not predict any uptick, so suppliers may have a long year.