The Cannabis Future Is Coming…
In 1996, California opted in to legalize cannabis for medical purposes. 21 years later we have a booming industry, several legal states for recreational purposes and nearly half of the US. Now has some sort of access to marijuana, whether for medicine or just for fun.
As a result, we have seen the rise of multi-million dollar businesses within the industry despite all the regulatory hurdles placed to stifle progress. With nearly 50 million regular cannabis users in the US, the industry is set to grow even further. In fact, Colorado last year surpassed the $1 billion marker in sales and other states are quickly catching up. Welcome to the cannabis future !
However, with all this progress, we must be aware of the changes within the industry. For instance, when Washington legalized marijuana for recreational purposes, a gram would set you back $25 USD. To be fair, Washington has a lot of “additional taxes” which inflated prices and motivated what is known as a “Grey Market”. People would much rather purchase weed from friends or growers they knew than go to a dispensary. This didn’t stop the legal weed industry in Washington to grow, but it was significantly slower than the progress seen in Colorado.
However, if we look at the price per gram in Washington five years post legalization, we will see it now averages between $6-$10 per gram. Obviously, the prices were going to drop as demand rose and production rose, however what we’ve seen over the past year or so was a significant drop in price per gram. The Question we must ask ourselves is; “Why?”
Why Prices Are Dropping So Rapidly
There are three main reasons why the price per gram and the price per pound has dropped so significantly over the past year or two. The first has to deal with the normalization of cannabis commerce. People are now less fearful of purchasing in a dispensary. In turn, we have seen an uptick in relation to purchases from legal retailers meaning that demand for the product has increased. As a response, growers and suppliers increased their production.
This trend continued until there was more product than demand and if you know anything about basic economics, if there is more supply than demand, prices drop. Cannabis does have a “Shelf life” meaning that you need to get rid of your stock before it goes “bad”. Obviously, with extracts the shelf-life is longer, but it also does have an expiration date. I once smoked some wax I forgot about for a year, which tasted like ass doused in a puddle of more ass.
Thus, In Order To Sell The Surplus Of Cannabis, Dispensaries Drop Prices To Encourage Consumers To Purchase More Frequently.
The second reason for the sudden drop in prices relates to an increase of dispensaries. Competition tends to drive down prices as well. As more dispensaries pop-up, the competition for the end consumer rises. And in turn dispensaries stay competitive by dropping their prices lower than the competition. Selling a gram for a dollar less than your competition can definitely increase the amount of weed you sell per month. Once more, “Economics!”
The third reason why prices dropped so significantly was due to “big players” flooding the market with cheap weed. Smaller “Mom and Pop” pot shops are finding it hard to compete to bigger more corporate type entities. There are people who have seen the monetary potential of selling weed, and they are investing millions of dollars to get a slice of the proverbial pie. Where smaller grow ops are supplying to many people, these bigger corporate grows are poised at creating quantity. For artisanal growers, this isn’t a problem since they specialize in certain strains and still have a niche market. However for everyone else considering going into the “weed selling game”, this could very well end you before you even begin.
Time To Diversify
Now, for many people who are interested in getting into the legal pot market, this might sound like bad news. You were hoping to bank on selling weed, however the initial phase of the “green rush” is pretty much over. Similar to those who went looking for gold back in the day, if you didn’t get the good spots, making it a success was far more difficult than those who pioneered the market.
However, this doesn’t mean that you don’t stand a chance in the legal weed market. I feel that cannabis enthusiasts have developed tunnel-vision in relation to the cannabis market and hopefully this article will allow you to see a bigger picture forming.
Sure, selling weed in a dispensary or growing for a dispensary has become more “cut throat” in terms of competition, but the weed industry is ginormous. The trick in ‘making it’ in the marijuana industry in the future will not be to compete with the ‘big fish’ in the market, but to create a niche market for yourself.
What Does That Mean?
You don’t have to ‘sell pot’ to sell pot. I know that sounds irrational but stay with me for a second. Diversifying your market and creating a niche market is where the next big wave of cannabis commerce will occur.
For instance, if you were to open up a “Cannabis-infused ice cream shop” or even a Cannabis Café, you aren’t necessarily selling ‘just weed’. You’re creating a new option for the end consumer to enjoy. Someone that has already purchased weed from a dispensary will not say ‘no’ to eating a Sativa Sundae at their local cannabis café. Similar to how you still have a drink in a restaurant even if you have a six pack at home.
People want options, and that has been lacking in the cannabis industry. In Colorado, they started to expand on these issues with cannabis resorts, tours and even concerts. Weed is now simply becoming the “middle man” to the service or gimmick being sold. And this is exactly what needs to happen.
In fact, instead of trying to sell weed, you could create a new product with weed in it. That part of the cannabis industry has seen significant growth because dispensaries would buy a hot product to create diversity for their clients. In other words, cannabis is becoming like every other market on the planet and it’s time that cannabis enthusiasts expand their vision of the industry as a whole. It’s time we embrace the market and change the game entirely.
All In All…
If you’re interested in the cannabis industry, I suggest you start looking at ‘what people need’ and what the current industry isn’t supplying. We already have cannabis infused drinks, food and so forth. But now it’s time we start thinking about venues, services etc. Hell, if someone is going to come to my house to give me a cannabis infused massage… I’d dish out the cash to make it happen. I hope this article helped inspire all cannabis-entrepreneurs to create the next big thing for the industry.