Chart: Colorado wholesale marijuana prices tumble in 2016
By Eli McVey
Wholesale prices of medical and recreational cannabis fell precipitously in Colorado last year, highlighting the difficulties faced by cultivators looking to maintain theirprofit marginsin one of the nations most mature marijuana markets.
The average asking price for a pound of marijuana dropped by 38% in the recreational market and 24% in the medical market in 2016, according to data provided by Cannabase, a Colorado-based online wholesale platform where many of the states growers and retailers buy and sell cannabis.
Medical cannabis eclipsed recreational marijuana last year in terms of average wholesale prices and even saw some month-over-month spikes along the way. But average asking prices for medical cannabis ended the year on a sharply negative trend.
On the recreational side, asking prices largely dipped throughout 2016.
Although the numbers signify how much companies asked to pay for wholesale marijuana as opposed to what they actually ended up shelling out, the dataprovides a window into where the Colorado wholesale market stands in general. Cannabase claims that roughly 70% of all licensed cannabis businesses in the state cultivators, retailers, edibles makers, etc. do business through its site, giving it a broad reach in the industry.
The falling wholesale prices are telling of the increasingly competitive nature in the cultivation segment of Colorados marijuana industry as new players rush in. They also give growers in newer markets an idea of what might happen in the long run as their industries mature.
According to data from the Colorado Department of Revenue, there were 514 licensed cultivators in the recreational market in January 2016, but by December, that number shot up to 625, a 22% increase.
The number of cultivators in the medical market also increased in 2016, but by a relatively modest 5.3%, hitting 791 in December versus 751 in January.
Erik Romero, director of data and finance at Cannabase, said the influx of new entrants to the market is not the only factor driving wholesale cannabis prices lower.
Weve been seeing a lot of cultivators who are opting for ...
