Declining Flower Prices Could Destroy the Pot Business Forever

By: Buz Deliere | December 19, 2022

Cannabis industry leaders are facing a new challenge as prices for cannabis flower plummet, disrupting the market equilibrium. With competition from the black market, forcing legal retailers to keep costs down, producers and sellers alike must grapple with how to balance supply and demand in an environment where profitability is becoming increasingly difficult to achieve.

In Oklahoma, the cannabis market is an incredibly competitive one. With a high number of growers and dispensaries in the state – over 7000 active grow licenses and 2500 dispensary locations respectively – competition has driven prices to rock bottom levels, as retailers relentlessly strive for customer loyalty with unbeatable deals.

In a webinar held last week, Rick Maturo, the director of insights and intelligence for cannabis-data firm BDSA said “The industry today is facing a number of headwinds. The most existential is pricing.”

In 2022, marijuana prices made history—dropping to the lowest they had ever been. According to BDSA data, retail prices fell 13% across all markets in one year; wholesale declined even further with Colorado's average per pound price plunging 51%, and Oregon's 36%.

After an unprecedented surge of demand during Covid-19 lockdowns, the legal marijuana industry is now facing a challenging glut in supply.

This oversupply has contributed to price declines that are further exasperated by competition from flourishing black markets. According to Matt Maturo, this could be problematic for cannabis businesses if not quickly addressed.

Although some states with longer histories of legalized recreational marijuana may be reaching what analysts are now dubbing "peak weed," others are continuing to experience rapid growth in the industry.

According to BDSA, annual compound rate growth from 2022-2026 is expectedly much higher for New Jersey and Missouri (both newly implementing laws) at 35% and 37%, respectively compared to 1%-2% projected in Colorado & Oregon.

In some regions, lower prices have failed to boost demand. This has made deals and promotions less effective with sales in markets across Colorado and Florida declining drastically since last year according to Rob Maturo - an industry expert who believes this trend of decreased sales will continue throughout the next year.