As more and more states legalize recreational marijuana, there are also more and more people buying cannabis. And it turns out they're doing it at much cheaper prices.
Wholesale marijuana prices in the United States are plunging, and there's no indication that will stop in the near future. Since June 2016, the price of cannabis has dropped consistently each month. The price has gone from $2,100 per wholesale pound to below $1,500 today.
There are several reasons for these price drops. One is simply growers not knowing how much demand there will be for their product, so they produce more than is needed. This overproduction leads to decreased prices. Although some growers actually overproduce on purpose to show their capabilities at making large quantities of cannabis in order to secure retail deals.
But the biggest reason is simply legalization. When only Colorado legalized recreational marijuana, the demand was huge as people flocked to the state to purchase the drug legally for the first time. But now that more states have legalized it recreationally and others have expanded their medical programs, the demand for cannabis simply isn't as huge as it once was. That's part of the reason why Oregon has such a massive oversupply problem.
And as more states legalize marijuana, that will only continue. Massachusetts is set to legalize recreational sales on July 1st, and Vermont and Maine will do so in the coming months. So there will be an even greater supply of legal marijuana in the United States, meaning prices will probably continue to drop.
Obviously this is good news for consumers, but bad news for businesses. Luckily sales seem to be increasing in the industry, so it doesn't seem like it will stop growth any time soon.
(h/t Motley Fool)