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Report: Colorado, Oregon Marijuana Prices Plummet by 50 Percent

Colorado, Oregon Pot Prices Plummet
SALE Gordon Joly

Economics

Report: Colorado, Oregon Marijuana Prices Plummet by 50 Percent

Good news for consumers, not so much for producers.

When Jim Parco opened Mesa Organics, a recreational cannabis retail outlet in Pueblo, Colorado, in January 2016, an ounce of marijuana ran about $300.

Now, Parco recently told KRDO, the shop — one of about 30 in a city of 100,000 people — is “selling $60 ounces all day long.”

And Parco’s experience is being repeated across the state. In Colorado, since 2015, marijuana prices on average have dropped by 50 percent, according to a new study released last week.

Prices have also dropped by half in Oregon, according to the study, but for different reasons.

In Oregon, which legalized recreational marijuana in 2014, two years after Colorado, producers are flooding the market with cannabis, much of which is going unsold — with the rest sold at discount prices.

In Colorado, officials say that producers are putting a Goldilocks “just-right” amount of cannabis out for sale — though, as Parco observed, the price drop is still hurting marijuana producers more than anyone else on the supply chain.

Researchers from the University of Colorado at Boulder’s business school and analysts from a New Frontier Data, a Denver consulting firm, used state data to track prices.

Both states require all cannabis entering the market to be tagged and monitoring in a “track-and-trace” system.

In other states like Oregon, consumers are also seeing much lower asking prices at the retail level in large part because of epic oversupply, with far more cultivators growing far more cannabis for which there is demand.

Though the steep drop in prices since Colorado’s era of recreational marijuana sales began in January 2014 also reflects readily available marijuana on the market, state officials say that the study proves Colorado cannabis producers aren’t quite overdoing it like they are in Oregon.

There were 32 metric tons of marijuana left over in Colorado’s track-and-trace system at the end of 2017, according to the study. In Oregon earlier this year, there was 1 million unsold pounds of cannabis in its inventory.

“What the report demonstrates to us is that our licensed operators are operating responsibly,” Mike Hartman, executive director of the Colorado Department of Revenue, which oversees marijuana regulation, told the Associated Press in an interview. “They’re not overproducing the amount of product they’re putting in the marketplace. They are operating to maximize product but also emphasizing public health and safety.”

In Colorado, the price of a pound of cannabis at wholesale has dipped from $2,400 to about $500, according to Mesa Organics’ Parco. Despite this, Parco, who is also a professor of economics at Colorado College, says that his dispensary is profitable.

This is in part thanks to a moratorium on new retail outlets in Pueblo.

“Had they not put it into effect and we had more people come into the market, at some point flower would sell so inexpensively that no one could make any money,” he told KRDO.

His suppliers, however, are having a difficult time.

“Farmers are always the ones taking it in the shorts,” he said.

TELL US, have you experienced a price drop in cannabis?

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