In yet another turn in Washington State’s tumultuous cannabis market, experts are now saying there is a state-wide cannabis surplus. Data supplied by the Washington State Liquor and Cannabis Board indicated that from July 2014 to November 2015, licensed producers grew approximately 16,000 more pounds of cannabis than retail stores sold. Which means there is a whole lot of unsold cannabis sitting on retail shelves. So what does that mean for the emerging cannabis market in Washington State?
Experts are predicting that prices will drop significantly due to the cannabis surplus. With so much extra product, it is easy to surmise that retailers will begin to sell at clearance prices, driving down the overall price point of cannabis.
But is that really the case? And if so, how did this predicament come about? CULTURE talked to the president of producer/processor Plan C Farms, Brandon Caffrey, about what he thinks caused the cannabis surplus, and how he thinks it will have an effect on local businesses.
On what caused the surplus in Washington State:
“There are a couple of things. One, originally the state wanted to have 400 retail stores, and with all the local moratoriums and local municipalities not allowing cannabis stores in their area definitely plays a part in the supply and demand curve. Also, the state didn’t really put a limit on how many producer/ processors could get into the business,” Caffrey told CULTURE.
“In addition to that, you’ve got the once a year outdoor dump of product on the market. So I think those are the main contributors.”
On how it will affect new processors like Plan C, coming into the market:
“It all comes down to two things. Number one, do you have a good plan in place? There are a lot of good growers who aren’t good business people, and a lot of good business people, who aren’t good growers. So you need both. Secondly, we have four different retailers we work with, and from what they tell me, if the quality is there for indoor, they are selling through their supply. There is a place for everyone in the market; outdoor, indoor and greenhouse. But for now, high-quality indoor is selling.”
Despite dire predictions from industry experts, producers in Washington have plenty to be optimistic about. At last count, well over one million dollars-worth of cannabis is sold each day in Washington, according to the WSLCB. And as Caffrey, who has an extensive business background, said, in any new industry, there are going to be people who try and fail to succeed. As supply and demand for cannabis in Washington State levels out, producers who grow quality product, and are business savvy, have the best chance of weathering the storm.