The average wholesale price of cannabis flower in the United States has started to decline, marking a potential shift in the market after a period of year-on-year price rises through the last quarter of 2023 and into the early part of 2024, according to a report by Cannabis Benchmarks.
The trend suggests that prices could fall below the levels recorded at the same time last year, spelling a new phase of economic uncertainty for producers and investors in the nascent sector.
In the early months of 2023, the spot price for cannabis neared what was then considered a near-historic low of $950 per pound. Now, the downturn in prices is largely due to reductions in the cost of greenhouse and outdoor-grown cannabis, which suggest a market adjustment following the autumn harvest, traditionally leading to a drop in prices.
This year, the adjustment began in mid-December, later than usual.
According to recent data, the price for greenhouse-grown cannabis has decreased by 9.6% from its Dec. 15, 2023, peak of $758 per pound. Similarly, the price for outdoor-grown cannabis has fallen by 12.6% from its recent high.
In contrast, the price for indoor-grown cannabis, after rising from mid-September 2023, reached a peak in mid-January 2024 of $1,446 per pound. Since then, it has seen a decrease of approximately 6.8% over the last two weeks.
Historically, a decline in prices for sun-grown cannabis often signals a forthcoming decrease in prices for indoor-grown cannabis and, consequently, the overall U.S. spot market. That pattern appears to be repeating, Cannabis Benchmarks confirmed.
And despite an increase in demand in some markets, such as Massachusetts in 2023, wholesale prices have remained low in the latter half of the year, a situation reflective of other established markets.
“The lack of a pronounced seasonal wholesale price drop in many markets in (the fourth quarter), combined with persistent retail price erosion, led to widespread contraction in retail markups on cannabis flower to close 2023,” the firm wrote in its latest weekly report.
“While December sales were up overall across many state markets, to record-setting levels in some cases, data indicates that retailers generally did not do as well from a financial perspective compared to a quarter earlier.”
Overall, the average wholesale price for cannabis in the U.S. went up by 11% in 2023, ending the year at $1,077 per pound. Over the entire year, the average price was $1,019 per pound, which is the lowest annual average since the firm started keeping track of these prices.
The way cannabis is grown plays a big role in determining its wholesale price, too. On average, cannabis grown indoors costs $1,324 per pound. Cannabis grown in greenhouses costs $688 per pound, and cannabis grown outdoors in the sun costs $454 per pound.
The firm pointed out that while strong prices for indoor-grown flower have previously supported the U.S. spot market, the continuation of current trends could see the national wholesale flower price nearing or even falling below the $950 per pound mark seen in early 2023.
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