Washington Has Too Much Cannabis and Prices May Plummet

The state of Washington is facing a unique problem; they have too much cannabis, and it is driving the price to historic lows.

According to state records cannabis suppliers have produced an astounding 16,000 pounds more than has been sold at retailers from July 2014 to November 2015. MBD is predicting that prices might plummet, but they also warn that producers may sit on the best-quality cannabis until the prices normalize.

Scores of cultivation companies have gone out of business in large part because of the oversupply issue, said Christopher Macaluso, a longtime cultivator in California who co-founded Canna Group, which provides consulting to cultivators in Northwest states.

Producers are now sitting on a substantial amount of surplus inventory, and the future of many of them is in jeopardy. Some could try to unload low-quality inventory at fire-sale prices, flooding the market and exerting artificial downward pressure on the broader wholesale price.

While you might prosper in the short term, the surplus may lead to unknown problems in the future. The market is in its infancy, and an upheaval like this could spell doom for new retailers, and established companies alike.

“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,” Macaluso told MBD.

The supply and demand does appear to be leveling out. Estimates from Nov. 2014 stated there was 3.5 months’ of excess cannabis, while recent projections place it under 2 months. Prices have drooped to as little as $10 a gram in some cases. Colorado saw a similar situation when they legalized cannabis, but their prices appeared to stabilize in 2015.

Now might be a good time to take advantage of the record low prices before the demand catches back up with the supply. It’s likely you won’t see prices this low again.