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Washington’s Competitive Pot Prices Dip Below $9 per gram

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Economics

Washington’s Competitive Pot Prices Dip Below $9 per gram

Relentless competition in Washington has driven down the price of cannabis, and patients are reaping the benefits. The price per gram in Washington state has been slashed in half in recent months, displaying that states with recreational marijuana are enjoying some of the cheapest cannabis on the market. According to a recent report conducted by BDS Analytics, the average price per gram in the state of Washington has dropped to $9 per gram.

Washington currently imposes a 37 percent tax at the point-of-sale. A new bill, HB 2347, would drop excise tax to 25 percent like Oregon.

“In the beginning, we were fighting to keep our shelves stocked,” said Andy Dhalai, owner of 420 Holiday. Since then, more retailer have flooded the market, dropping the cost of cannabis.

Dhalai’s collective absorbed the cost, passing the savings onto the consumer. Hollie Hilman, who manages Freedom Market in Longview, Washington, has lowered some of her strains to $7 per gram.

“I don’t think it can get much lower than that,” she said.

It’s hard to imagine a retail outlet making profit on cannabis that cheap. In just a year and a half, the price per gram in Washington has tumbled. Earlier this month, the average price per gram had dropped from $25 to $30 per gram to under $10.34 per gram, according to the Washington Liquor and Cannabis Board. That’s consistent with the Jan. 19 report from BDS Analytics.

According to alternative crowd-sourced data, high quality cannabis goes for $232.74 an ounce, medium quality goes for $188.21 an ounce and low quality goes for  $170.19 an ounce in the state of Washington.

What are the reasons behind the falling prices? Retailers have been flooding the market with more and more product, driving the wholesale price down. Competition is obviously high, but Washington is producing more marijuana than the state can consume. According to state data, licensed growers produced about 16,000 pounds more than retail stores sold from July 2014 to November 2015. The 16,000-pound surplus is enough to supply the entire state for 60 days.

In November of 2014, the Washington market had a 3.5-month surplus of cannabis.

“If I was sitting on a surplus beyond a month and a half, I’d need to take a look in the mirror and either get more in tune with producing a higher-quality product, or I’d be taking a more business or corporate savvy approach to how I was pricing my product, looking at this from a long term play rather than a short term here and now,” Christopher Macaluso, a cultivator who provides consulting, said. “A lot of people really got into this for the money, with sort of hungry eyes, and aren’t able to produce the results that consumers, let alone the retailers, are looking for.”

According to the report, sales were up a whopping 360 percent in December of 2015 compared to 2014. In fact, quarterly retail sales in Washington were up 1,007 percent for the third quarter, from July 1 to Sept. 30. Sales were also up 430 percent for the fourth quarter, from Oct. 1 to Dec. 31.

During the third quarter, consumers in Washington spent $72.7 million on flowers and $16.22 million on concentrates. Consumers also spent $10 million on edibles and $5.8 million on prerolls. Concentrate sales is the fastest growing area. The report also showed what strains people in Washington are buying. Hybrids were the most common preference. Also during the third quarter, 61 percent of sales were for hybrids, 23 percent were for indicas, and 16 percent were for sativas.

Analysts predict that Washington’s low prices will stabilize shortly. Take advantage of low retail prices now, while you have the chance.

Read the full BDS report here.

How much do you pay for marijuana? Tell us in the comments below. 

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