A new era of online cannabis delivery services was born back in 1996 when California legalized medical marijuana. Entrepreneurs were quick to seize the new…
Legal Weed Prices are Dropping, But California’s Recreational Sales Start Could Cause a Spike
The price of weed is dropping, as could be expected when there is increased legislation. Prohibition always leads to an increase in the price of any product, due to lack of supply as there is an increased risk or production. With the increased legislation will come more businesses along with regulatory assurance, which increases the supply of weed which then results in a reduction in price, unless the consumer demand rose higher than the supply. In California, some analysts have estimated that the state is currently producing as much as 8 times as much marijuana compared to the supply. Some contend this will lead to a reduction in the price of weed when the deadline hits on the 2nd of January, when recreational marijuana shops will be open for business. States including Colorado and Washington have seen gigantic cuts in the price of weed over the course of the past year and this could possibly be seen as an indicator of what is to happen to weed in California, but not before an initial spike in the price as recreational marijuana is initially legalized in 2018. There is too much hype and excitement as it gets introduced and demand is high.
A Possible Spike?
It is nearly impossible to predict what the price of weed will be come January the Second. The marijuana explosion in California has happened too fast for any sort of reasoned analysis on the price of weed. There are also no existing or historical markets to gauge any data on. And there are simply too many confounding variables and too much guesswork. Nobody can say how many people will actually startbuying recreational marijuana in January. Or how long they will keep buying for, as opposed to purchasing from the rather large marijuana black market. Federal intervention could have a huge impact on the price of marijuana if Attorney General Jeff Sessions finally decides to crack down in earnest on the industry. It is also difficult to say how much marijuana is in supply and what the demand actually is.
But most are of the opinion that January the Second will actually see a spike in the price of weed. On January the Second stricter requirements are going to come into place with regard to marijuana cultivation and distribution. Some have stipulated that only about 10 to 15% of current marijuana cultivators will be able to meet the new and more stringent requirements. These requirements ban the use of pesticides and promote organic growth as well as containingstrict growth controls and requirements. This will cost more due to the equipment and the growing process. These new regulations will most likely spike the price of weed as most of the weed currently being produced is not up to standard. And this is actually a brilliant maneuver by the legislators. There is quite simply too much toxic weed in California due to illegal growth operations by cartels. And only a small number of growers have indicated that they are actually willing to comply with the strict standards set in California. All in all, nobody really knows how marijuana in California will pan out. The size and scale of the expansion of the marijuana industry in California is unprecedented and ambitious.
According to Jonathan Rubin, CEO of New Leaf Data Services LLC:
“The first quarter of next year, prices will probably go up…What I think you’ll see is that the traditional winter price increase will be much bigger than it was this year. Because there’s going to be compliance costs and testing. I can almost guarantee bottlenecks in testing and permits.”
This most definitely stands to reason and the first quarter will almost certainly see high prices. With only a small number of growers prepared to be compliant with the standards in January, they are bound to make huge profits and can charge what they want. But the rest of the year could see drastic to very drastic reductions in the price of weed, as more growers get on board. But after the initial high has worn off, people may start to learn to grow their own or even still go to black market sellers if the price of marijuana is too high. And even if it takes some time, industry insiders expect California cannabis prices to drop eventually, even soon if the big businesses jumping on the state’s green rush can get their product to market by the second half of 2018. Rubin also pointed out the big growers would soon enter the market, and this would reduce the price of marijuana in California. In the meantime, Rubin and other insiders expect the weed from this year’s final fall harvest season to be sold at rock bottom prices, with cultivators trying to sell out fast enough to amass the heaps of capital necessary to comply withthe new recreational rules in 2018. The wholesale price of California’s outdoor MMJ has already fallen from $1,542 per pound in the first six months of last year to $1,133 in 2017.With the availability of recreational marijuana, medical marijuana was always going to take a hit. Small time organic growers can supply the best marijuana and you have the option of experimenting with different strains to suit personal needs.