Stabilization and Rebound in U.S. Wholesale Cannabis Market

LOS ANGELES– The U.S. cannabis wholesale market has shown signs of stabilization this year, following a significant decline in 2022, and has even experienced a modest rebound since last year, according to a recent report from Cannabis Benchmarks. Wholesale prices, although decreasing by 3.1% to $1,020 for the week ending on July 14, have risen compared to December figures when they hit a low of $955, as previously reported by Benchmarks.

The spot index report highlights that wholesale prices have declined “in four of the last five weeks after staging a successful rally from March until the first week in June.” This downward trend emerged as legacy states such as California, Oregon, and Colorado initiated sell-offs in early to mid-June. Notably, Washington State’s spot price has remained relatively stable, trading sideways rather than experiencing a significant decline.

For different cultivation methods, wholesale prices vary. The average price per pound for indoor-grown flower stands at $1,327, greenhouse-grown cannabis at $718, and outdoor-grown cannabis at $479.

Looking ahead, Benchmarks anticipates a surge in wholesale prices in August, with the average price per pound of flower expected to reach $1,075, reflecting a 5.4% increase. However, the report predicts a gradual decrease throughout the remainder of the year, settling around $1,010 at the beginning of 2024.

According to the report, the most expensive wholesale cannabis can be found in Washington, D.C., where there are only a limited number of licensed producers, and commercial adult use cannabis activity is still illegal. Conversely, Oregon has the least expensive wholesale prices, with reports indicating an oversupplied market in a state described as a “wreck” and “in crisis.”

The ongoing trend of falling wholesale prices is likely to persist in the cannabis industry. Jonathan Rubin, CEO of New Leaf Data Services, explained in a December interview with the Green Market Report that federal U.S. cannabis legalization, which may occur within the year pending the speed of the Biden administration’s rescheduling review, will give rise to a truly national marketplace, subsequently exerting downward pressure on prices. Rubin, overseeing the Cannabis Benchmarks report, further predicted that prices would plummet once a global cannabis trade network comes into play.

While the recent stabilization and rebound in the U.S. wholesale cannabis market offer some encouragement to industry participants, the impending challenges of potential federal legalization and the emergence of a global cannabis trade underscore the need for adaptability and strategic planning in the evolving landscape.