We’ve seen a lot of progress in Colorado specifically out of all the states which have taken action to recreationally legalize marijuana. As in any new market, prices are bound to take an upturn and downturn at some point, right?
Turns out that this year alone there has been a significant drop in the price of an 1/8 of marijuana. If you didn’t expect it so soon, here’s a quick look at everything that has been going on.
Prices Compared: 2014 VS 2015
In early 2014 the price of an 1/8 of an ounce in Colorado could run you anywhere between $50-75 each. This price will of course vary depending on the grade of the bud supplied. The higher the potency, the higher the price tag. An ounce at the time would run $300-400.
This year, early 2015 started to show a rather large decrease and the most recent going prices for 1/8 of an ounce ranges from $30-45 dollars, depending on the bud purchased. Currently, an ounce is being sold for $250-300.
The price drop was mostly impacted by the fact that there are now more places cultivating the marijuana. In the beginning of the industry, only those who were already cultivating medical marijuana were able to supply the dispensaries – now there are many more places growing, which makes the plant more accessible and therefore costs went down.
How the Price Drop Affects Industry Revenue
Though you would think that a decrease in price would inevitably lead to a decrease in revenues, you will find yourself far off on this hypothesis. Surprisingly, even with the steep decline in price, their revenues are continuing to increase when comparing sales to the same month last year.
According to a survey done by Convergex sales grew by 153% in January, 164% in February, 126% in March and 98% in April. The highest revenue increase as in the peak of tourist season, though at this rate, it is expected that revenues will have increased by around 50% by the end of 2015.
Will the Prices Spike Again?
As a growing industry there are bound to be price drops and spikes over the next couple of years until things fall into a natural rhythm. Colorado’s main focus at the beginning of the process as simply to provide a stable market, supply and regulation system that would be effective.
No that they have this system set in place and the industry is flourishing they are finally being able to determine a proper price point for the popular plant. There is no doubt in my mind that prices will increase once again, though they may not (and hopefully will not) be as high as they were starting out. The truth is, only time will tell on this one.