Freedom World News

Marijuana prices are plummeting because big businesses are flooding the market

Marijuana prices are plummeting because big businesses are flooding the market

Marijuana prices are plummeting because big businesses are flooding the market
February 14
20:37 2017

Marijuana prices are plummeting because big businesses are flooding the market

 

Despite a rapidly growing market, the wholesale price of marijuana has been plummeting

For example, in Washington State, the price of a gram of marijuana has gone from $25 at the beginning of legalization to about $6 today

Big businesses have been blamed for the crash by growing more marijuana than the market demands

This is pushing out smaller marijuana businesses which can’t keep up with the production

It’s also hurting the states which aren’t taking in as much tax revenue

By Ashley Collman For Dailymail.com

Published: 09:16 EST, 13 February 2017 |

By the end of this year, the majority of states will have legalized marijuana, leading to one of the fastest growing businesses in the U.S.

But wholesale prices for the drug are plummeting, which is bad for small businesses and the states that were among the first to legalize cannabis in the first place.

In the past year, wholesale prices for marijuana fell 60 percent in 2016, from $2,500 to just $1,000 today, CannaSaver.com CEO Brian Shapiro told Forbes.

Experts say that the rapidly declining cost of marijuana is due to big businesses entering the market, which are growing more marijuana than there’s a demand for -even with such a fast-growing customer base.

Experts say that there are two ways businesses can compete in this new market: By developing new growing technologies or producing more.

But both of these measures are hard for small businesses to pull off. That’s because the federal government still recognizes marijuana as an illegal drug and therefore pot businesses can’t deal in traditional banks to get loans or set up checking accounts.

Big business don’t have this problem, and it’s possible that they are purposefully flooding the market to push out smaller businesses. If they are successful, then they could raise the cost again by pulling back on production.

The falling cost of marijuana is also a problem for the states which paved the way towards legalization.

States like Colorado and Washington state collect tax revenue based on total sales. With lower prices, that means lower sales, and less tax revenue to take.

Other states saw this problem and wrote their legislation regarding pot accordingly.

For example, in California, the amount of tax revenue collected is pegged to the volume of pot sold not the price.

For investors, this rapidly changing market is both a good and a bad thing.

It’s bad, because lower profit margins lead to less returns.

But it’s also good because investors will have a better idea of where to invest their money if the market is consolidated to just a handful of major players.

Read More

Related Articles

0 Comments

No Comments Yet!

There are no comments at the moment, do you want to add one?

Write a comment

Write a Comment