Wholesale Marijuana Prices Are Plunging in the United States — Here’s Why

Article by Sean Williams, The Motley Fool

After briefly touching $2,100 per wholesale pound in September 2015 and June 2016, wholesale cannabis prices have been, more or less, on an 18-month downtrend through the end of 2017. In 2016, the Cannabis Benchmarks U.S. Spot Index showed an average price of $1,789 per wholesale pound.

You may not realize it, but the marijuana industry has come a long way in the United States in a relatively short period of time. In 1995, not a single state had approved the use of cannabis in any capacity and Gallup’s survey showed that only 25% of respondents favored the idea of legalizing weed nationally.

Fast forward to 2018, and we now have 29 states that have legalized marijuana in some capacity, including nine that have OK’d the sale of recreational pot, and Gallup’s latest poll (October 2017) found an all-time high 64% of respondents support legalization. That’s quite the about-face.

Despite the federal government retaining its Schedule I classification on the drug — meaning it’s wholly illegal, highly prone to abuse, and has no recognized medical benefits — the cannabis industry has thrived at the state level. For example, Colorado’s Department of Revenue tallied cannabis sales of $1.49 billion in 2017, up nearly 15% from the prior-year period and more than double what was reported in 2014, the very first year that recreational marijuana went on sale in the state.

Furthermore, Marijuana Business Daily‘s 2017 report, “Marijuana Business Factbook 2017,” calls for U.S. cannabis sales to catapult to $17 billion by 2021. This is a result of new states such as California and Oregon selling cannabis, organic growth in existing states such as Washington and Colorado, and the expectation of additional states legalizing the drug.

As the U.S. marijuana industry expands, pot prices tumble

But what’s been really interesting about the expansion of the U.S. legal cannabis industry at the state level is what’s happening to wholesale cannabis prices. According to Denver-based independent price-reporting agency Cannabis Benchmarks, which developed its own price-tracking model for marijuana in legalized states across the U.S., wholesale marijuana prices are plunging — and they show little sign of slowing down.

After briefly touching $2,100 per wholesale pound in September 2015 and June 2016, wholesale cannabis prices have been, more or less, on an 18-month downtrend through the end of 2017. In 2016, the Cannabis Benchmarks U.S. Spot Index showed an average price of $1,789 per wholesale pound.

Read the full article here.

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