THE UPS AND DOWNS OF THE CANNABIS MARKET
If you’ve noticed as I have the price increases every year after the months following the yearly celebration of 420, where all marijuana lovers alike come together and partake in the many ways to celebrate such an amazing day.
You were probably wondering as I was why do the prices of budget marijuana strains, and also AAA quality cannabis strains seem to always rise in price and stay this way throughout the summer months until the price eventually lowers back down around later into the fall.
I decided to ask a grower and dispensary owner about there thoughts on what is happening to cause these price fluctuations as there is no data available explaining what is and why these changes happen, but it believe I got some great insight to explain what things are happening in the cannabis industry to cause these changes.
WHY DO PRICES FOR LOW-MID GRADE CANNABIS RISE IN THE MONTHS OF MID JUN-EARLY OCTOBER?
After doing some research and not finding any information on what is causing these price fluctuations I decided to contact a grower/dispensary owner and ask if they could lay out what is causing these prices changes in the market place for low-mid grade cannabis that I’ve been seeing all around.
They have stated that there is multiple reasons for these seasonal fluctuations, And also that this year has been very shaky for the wholesale cannabis market due to the closed reopened borders earlier this year due to covid-19.
“One thing is for certain from the answers I’ve received, the majority of Canadian cannabis gets exported to other countries. Canada only keeps a small percentage of what they produce. I know a lot of people think that all our weed is either sold from MOMs or from the dispensaries but that’s not true.
During the months of Jan-April, the export lines were shut down by Canada due to Covid-19. So the exporters weren’t able to ship out cannabis. This led to a huge supply of cannabis in Canada. It also led to the lowest price cannabis I’ve ever witnessed. Pounds of AA were going for $400. Pounds of AAA were going for $600-700.
Also in End of April, Canada reopened the shipping lines. Boom, the prices of cannabis went from 400-700lb to 1100-1600lb within 1 month. I assume that the US was starving because they don’t produce enough marijuana. So apparently from what I heard, the US was buying EVERYTHING cannabis. They took shake, they took seedy weed, they took mids and the high end stuff. Everything was getting sold to the US buyer.
At the current state, it’s not been as crazy and the prices have definitely stabilized. I can’t predict whether prices will be going up or down in the short term. But it will definitely go down when the outdoor/ greenhouse cannabis comes into the marketplace.
Now during regular times without Covid-19. The US can produce a lot of outdoor/greenhouse marijuana because it doesn’t get too humid and the temperatures are pretty good. Canada can only do outdoor/ greenhouse during summer months. US can do it all year round but there are many places in the states that gets too hot to grow during summer because the humidity levels are too high.This would be the main reason for the regular fluctuation.
WHY DO PRICES FOR LOW-MID GRADE CANNABIS LOWER IN THE MONTHS OF LATE OCTOBER-EARLY JUNE?
As we learned earlier in the previous topic of why are the prices rising there is no real one answer for this question and also no data or information on exactly what is happening with the cannabis market throughout these months to cause the prices to fluctuate.
Thankfully I was able to get some answers on why the prices have increased from a very helpful grower/ dispensary owner that has helped me gain some more knowledge to the what is happening and the factors in play as well some insight on the fluctuations that are causing the prices to lower during the months of late October -early June for low-mid grade cannabis.
As stated before Canada only keeps a small portion of the marijuana it produces and the majority of it is shipped to the United States and other countries for sale and consumption. This is one of the biggest reasons for price fluctuations as mentioned before due to the fact that a lot of marijuana wholesale buyers from the United States will come to Canada during the summer months and purchase the full stocks and marijuana crops that cannabis growers have grown.
The buyer will then take the full crops of cannabis for export to the United States and other countries for sale. In the months following harvest season there is less demand for wholesale cannabis from U.S buyers as the market also begins to flourish with outdoor and greenhouse grown cannabis in the United States. Thus leaving a large supply of low-mid grade cannabis for sale on the market in cannabis during the months following harvest.
Just like produce in the market, marijuana costs are heavily impacted by the season. During harvesting seasons (which vary by the plant) supply increases. With a supply increase comes lower prices for the wholesaler, which are eventually passed down to the consumer.
In the Northern hemisphere, marijuana that is grown outdoors is typically harvested between September and November, cannabis prices tend to drop during the months following harvesting after the cannabis has been trimmed, dried cured, and is ready for sale.
You will notice this is why the cannabis market is always flooded after the months October-June with lower- mid grade cannabis that has been harvested outdoors and in green houses, and is resulting in prices to lower back down for the consumer as wholesale prices lower also.
So when the wholesale market prices are low, the retail market follows. MOMs will be able to lower their prices for all grades. $99 strains will be easier to find and there will be more selection of low-medium grade strains.
Medium quality strains that were priced at a higher price point will become lower, around these months of year in the cannabis market. it will take about 1-3 weeks for pricing to stabilize until you see the prices drop on the retail side.