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Knowledge & Insights

Wholesale Flower Price Update Q1 2022 – Cannabis Benchmarks


GreenGrowth CPAs has partnered with Cannabis Benchmarks to once again provide updates on wholesale flower prices and market conditions in states across the country. Cannabis Benchmarks is an independent Price Reporting Agency that has been providing unbiased wholesale price assessments and analysis of legal cannabis markets since 2015. 

National Wholesale Cannabis Price Index in Decline

Current prices and market conditions in numerous states observed in Q1 2022 are completely unprecedented. Overall, the U.S. Spot Index – the aggregate national price of wholesale flower for the 18 state markets covered by Cannabis Benchmarks – continued its downtrend in the opening quarter of 2022, with falling prices in both more mature markets in the West and younger markets, mostly east of the Mississippi River, contributing to pull down the national price. 

As of mid-March, the U.S. Spot Index was averaging $1,237 per pound for Q1 2022. Down 9% from the prior quarter and down 18% from the same period the year before. In the opening week of March, the U.S. Spot dropped as low as $1,177 per pound, the lowest weekly price documented in almost three years, since May 2019.  

Across the country, the reasons for falling wholesale prices are remarkably similar: 

  • Softening demand leading to plateauing or even declining legal cannabis sales. Especially, as consumers feel the pinch of inflation and the cessation of government support provided previously during the Covid-19 pandemic.
  • Increasing production, though the regional dynamics are somewhat different.

State-by-State Updates

Let’s begin with some of the more mature markets in the West. After seeing record-setting sales in summer 2020, which in some cases extended into the first half of 2021, demand is cooling from the West Coast to Colorado. Meanwhile, existing cultivators scaled up production in response to the pandemic sales boom, which, along with notably large outdoor harvests in both 2020 and 2021, has led to severe oversupply and falling wholesale prices.

California Market

The California Spot Index has averaged a bit under $900 per pound so far in Q1 2022, reaching historic lows for the Golden State. Q1 2022’s average price is down 16% from Q4 2021 and down 34% year-on-year. Newer cultivators coming online brought large amounts of supply to market beginning in summer 2021, just as sales were beginning to slacken. California’s market is particularly difficult for growers due to the state’s cultivation tax, which is a flat tax by weight, so it does not change as prices fall. 

Oregon Market

Oregon’s Spot Index has also averaged slightly under $900 per pound in the current quarter, down 19% from the prior period and down 26% from a year ago. State data shows that 2021’s outdoor harvest volume increased about 55% compared to 2020, which was the state’s largest outdoor crop prior to last year. Meanwhile, legal cannabis sales in the state dropped to just under $80 million in February, down over $30 million from when monthly sales reached their peak in April 2021. 

Colorado Market

Colorado has not seen price erosion as dramatic as that observed on the West Coast, with the state’s Spot Index averaging about $1,025 per pound so far in the first quarter of 2022. Still, the current price is down about 20% from the same quarter a year ago. Market participants in Colorado reported a robust outdoor harvest in the fall of 2021 and January 2022 sales were down almost 20% year-on-year. It seems likely that 2022 could be the first year in the history of Colorado’s legal cannabis market to see annual sales decline.  

As mentioned above, some younger adult use markets are also seeing increasing supply push down wholesale prices to varying degrees. This is due to both new growers entering in some markets and existing operators ramping up production capacity. Additionally, more larger-volume transactions for lower prices have been reported in some markets by members of the Cannabis Benchmarks Price Contributor Network. Demand is still expanding in many of the following states, but growth has slowed beginning in the second half of 2021. The combination has led to some dramatic downturns in wholesale flower prices, but prices in the following states remain higher than in the western markets.

Arizona Market

Arizona began adult use sales in late January 2021, which resulted in the state’s Spot price rising in the first half of last year. Cultivators in Arizona do not have limits on how much they can produce and as of Q1 2022 it appears that supply has caught up with demand – and then some. Arizona’s Spot Index is averaging just over $1,500 per pound as of mid-March, down 20% from the prior quarter. On a weekly basis, the average wholesale flower price observed in Arizona was a bit over $1,200 per pound as we near the end of the current quarter, down from a peak of over $2,050 per pound in April 2021. 

Combined adult use and medical cannabis sales were $115 million in January 2022, the lowest total since February 2021, which was the first full month of the adult use market being open. 

Massachusetts Market

Massachusetts’ Spot Index has dropped by about $1,000 per pound from mid-December 2021 to mid-March 2022 and is averaging just over $2,950 per pound in the current quarter. Monthly adult use sales reached almost $118 million in February, up almost 50% from a year ago, but down from over $127 million in December 2021. State data also shows that the number of plants harvested monthly has also increased by almost 45% year-on-year. 

Michigan Market

Michigan is another state seeing historically low wholesale flower prices, which have fallen over $800 in the last three months to settle around $1,225 per pound as of this writing. The state’s Spot Index is averaging just over $1,600 per pound in the current quarter, down 40% from Q1 2021, when the state opened up adult use licensing to all applicants, rather than just those holding medical cannabis licenses. Since then, the number of licensed cultivators has risen dramatically, while the market also saw its first sizable outdoor harvest in the fall of 2021. 

Total sales have been trending downward since peaking at $171 million in July 2021; they came in at just under $155 million in February 2022. Demand in the adult use market continues to grow, though it has plateaued somewhat since July, but not enough to offset declining sales in the medical sector.   

Looking Ahead

Cannabis Benchmarks expects wholesale flower prices to continue to see downward pressure into Q2, due in large part to last year’s large outdoor harvests in western states continuing to weigh on the market, while growers in states to the east continue to get up and running and expand. Late spring and summer are typically periods of stronger sales, but it remains to be seen if demand will bounce back enough to push price upward after recent slumps. 

New adult use markets in New Jersey and New Mexico are expected to begin sales soon, which will lead to higher prices in those states. However, both markets are likely to be relatively small initially, and so will have little effect on the overall national price.

Use Your Resources

To learn more reach out to our team of financial experts at GreenGrowth CPAs. You can also reach out to our partners at Cannabis Benchmarks for more information on wholesale cannabis flower prices. At GreenGrowth CPAs, we are here to help your cannabis venture through any level of the accounting, tax filing, or business cycle. 

We employ several financial programs to assist the company with its fiscal responsibilities, including tax planning and compliance, outsourced CFO support, audit preparation, tax controversy support, and much more.

For recommendations and assistance with tax planning and accounting services, schedule a free consultation or contact us at 1-800-674-9050.

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