How much does cannabis cost?
Copy article link to clipboard.
Link copied to clipboard.
- Factors that determine the cost of cannabis
- Bottom line
As legalization has spread across the country, consumers have been seeking out all sorts of cannabis products for both medicinal and recreational purposes.
Market demand for cannabis is pretty consistent across the board. But what’s not as consistent? Pricing. There’s no one-size-fits-all approach to cannabis pricing. But there are several factors that come into play when determining the prices of different cannabis products.
There are several factors that come into play when determining the prices of different cannabis products. Photo by: Gina Coleman/Weedmaps
Factors that determine the cost of cannabis
The first consideration is where the cannabis is grown, manufactured, and sold.
“The regulatory framework in any state or community will determine the market and the price,” says Andrew DeAngelo, cannabis industry consultant and strategic advisor and co-founder of California-based dispensary Harborside.
Every state (and, in some cases, individual cities) has its own set of laws and regulations, all of which impact the way cannabis is grown, manufactured, and sold, impacting in turn how cannabis products are priced. Cannabis pricing from state-to-state can vary widely. For example, according to LeafLink’s Wholesale Cannabis Pricing Guide, the average wholesale price for a pound of flower is $3,260. But in Oregon it’s just $915.
“The variables that most impact cannabis pricing are licensing regulatory frameworks, and by extension, state and local tax rates levied on both businesses and consumers,” says Colin Earl, cannabis consultant and CEO of SISU Consulting. “For example, with markets that have under 30 total licensed cultivators, the low supply will drive pricing more so than potency [or] perceived quality. For markets such as Colorado and Oregon that have ‘open’ licensing frameworks, wholesale pricing will be primarily dictated by the current supply, whereas retail pricing can vary based on locality due to local retail licensing limits.”
Taxes can also drive up costs for cannabis producers, which ultimately drives up both wholesale and retail prices. “This is most aptly demonstrated in the California market, where steadily increasing cultivation and excise taxes have left most businesses in a precarious position,” says Earl.
The way cannabis is grown can also factor into how the final product is priced.
“Overall the pricing for flower will mostly be categorized by growing method. with indoor being the most expensive, outdoor being the cheapest, and greenhouse in between,” says Earl.
For cannabis that’s grown outdoors, prices can also vary throughout the year, particularly during harvest time.
Indoor and greenhouse flower can be consistently harvested year-round, so the pricing is relatively stable. Photo by: Gina Coleman/Weedmaps
“As indoor and greenhouse flower can be consistently harvested year-round, the pricing for those are relatively stable,” says Earl. “Outdoor flower is harvested once per year, which will generally lower prices around harvest time—depending on the microclimate from July-October.”
Not all cannabis is created equal. As such, not all cannabis products are going to be priced the same. Generally speaking, the higher the quality, the higher the price.
“Cannabis, each batch, each plant even. could turn out a little bit differently,” says DeAngelo. “So, after everything’s dried and cured, you go through a grading process of each batch and that grading process will determine the wholesale price for the batch generally.”
“There may be a large difference between the pricing of ‘low end’ and ‘top shelf’ flower to cater to multiple consumer segments,” says Earl. “Demand for specific genetics, cannabinoid, and terpene testing results. will greatly impact the price.”
There are a huge variety of cannabis products on the market and different products are priced in different ways.
As mentioned, flower is typically priced strictly on quality or demand.
When it comes to extracts the properties of the flower also play a large part in the pricing, “with a heavy emphasis on the cannabinoid and terpene testing results,” says Earl. “After that the specific method of extraction’s respective yield and demand will largely dictate wholesale and retail pricing.”
“Ethanol extraction is going to have a different cost than steam distillation, which is going to have a different cost than water extraction, which is going to have a different cost than extracting in plant fats and oils,” says DeAngelo. Labor- and time-intensive processes can drive up the price of the end product. The equipment needed for extraction can also drive up prices. For example, according to cannabusiness consulting firm Cannabusiness Plans, a high-quality CO2 extraction machine can cost up to $450,000.
With regards to manufactured products such as edibles, topicals, and beverages, the materials used in packaging can greatly range and affect the price. Photo by: Gina Coleman/Weedmaps
Packaging, which is standard for a variety of cannabis products, including edibles, topicals, and tinctures, can also have an impact on price. “Many state markets have mandated that cultivators, extractors, and product manufacturers utilize ‘child safe’ packaging, which establishes a consistent cost for all businesses,” says Earl. “With regards to manufactured products such as edibles, topicals, and beverages, the materials used in packaging can greatly range and affect the price.”
From a consumer standpoint, retail markups can also vary widely by product type. According to LeafLink’s Wholesale Cannabis Pricing Guide, the average price difference nationwide between wholesale and retail prices for edibles is 42%, but it’s 72% for flower.
There are so many variables involved in cannabis pricing that the real answer to the cost of cannabis is “it depends.” Cannabis prices will vary widely based on everything from where you’re buying weed to what kind of product your buying, and from the quality of the cannabis to the company’s overhead costs.
Cannabis prices will vary widely based on everything from where you’re buying weed to what kind of product your buying, and from the quality of the cannabis to the company’s overhead costs. Photo by: Gina Coleman/Weedmaps
And while cannabis pricing is, for the most part, out of consumer control, if you want to make sure you’re getting a good deal, the best thing you can do is research your local market, get a sense of retail pricing, and shop at a reputable dispensary that offers reasonable prices.How much does cannabis cost? Copy article link to clipboard. Link copied to clipboard. Contents Factors that determine the cost of cannabis Bottom line As legalization ]]>