Cannalytics Wholesale Marijuana Update (March 2016)

Still rattled from the high volatility we observed early this year, wholesale cannabis prices continued to fluctuate on the Cannabase Marketplace this March. Weighed down by elevated inventories, and inflated by continued regulatory uncertainty, asking prices continued to endure the push and pull of market forces.

Flower Volume Remains Strong

The record-breaking volume we observed over the last few months appears to be only the beginning of a sustained surge in wholesale product that has continued into spring. Though wholesale volume has retreated significantly from all-time highs in January, product continued to hit the market at an elevated pace in March. The nearly 700 lbs of new recreational flower posted last month sent rec prices tumbling an additional 7.4% to $1,708.57/lb, their lowest level in nearly a year. The continued pressure on recreational flower prices signaled a lasting and widespread supply glut in the rec market, a welcome sign for buyers.

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Sellers, on the other hand, are facing an uncommonly competitive environment on the Marketplace. Given the current oversupply, placing a premium on market demand is no longer viable as sellers must increasingly rely on product quality to justify asking prices. In this environment, lower quality product runs an increased risk of being crowded out of the market, making sellers more likely to resort to aggressive pricing strategies to keep harvests from building up. Outdoor flower has been hit especially hard by this trend, with the average listing price for outdoor-grown product falling to $1,000/lb this month.

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Despite the sturdy uptick in volume we observed this March, asking prices for medical flower increased by over 8% in a surprising turn. More than making up for price drops sustained the month prior, much of this price shift can be attributed to increased market uncertainty following an upturn in pesticide recalls, most of which have targeted medical supplies in the last month.

Market Prospects

With recalls expected to continue to strain the supply chain in coming weeks, coupled with a boost in consumer sales in the lead up to the 4/20 holiday, sellers can anticipate a rebound in wholesale prices in the near future. Though the recent downtrend in wholesale marijuana prices has put significant pressure on sellers, this upcoming shift in market conditions will likely ease price competition on the Marketplace. While this turnaround could not come soon enough for many sellers, unprepared buyers may soon have to navigate a much tighter market.

Colorado’s marijuana wholesale market has always been face-paced and unpredictable; The developments we’ve covered here tell us 2016 will be no exception. In this rapidly changing environment, it's more important than ever to be following up-to-date analytics and information. Be sure to follow the Cannabase Marketplace on Twitter and subscribe to our in-app Cannalytics™ for real-time updates and market insights.

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