Consumer cannabis prices could stabilize as California’s industry undergoes a transformation
For the past year or so, there has been a significant reduction in marijuana cultivation capacity in California. Due to difficult economic conditions and low wholesale prices, a large majority of growers have decided to stop planting or renewing their licenses in the Golden State. While this could be considered bad news, it is actually quite the opposite, as the reduction in canopy makes the stabilization of wholesale prices a reality.
After months of falling prices in the nation’s largest marijuana market, officials in the industry make it clear that a move like this could result in a slight increase in prices. According to LeafLink, the marijuana wholesale technology platform, the total square feet of grow canopy in the state has seen a reduction of at least 15% from the previous year. In hard numbers, this represents approximately 68 million square feet versus approximately 80 million square feet at this time last year.
Jason Vegotsky, CEO of Petalfast, an Irvine-based sales and marketing agency for the cannabis industry, is one of the workers who see wholesale prices already starting to take an ideal stabilization. He claims that simply because there are fewer players in the market, prices have stopped plummeting, and a fair and necessary hike could be just around the corner.
“I think that trend will continue for the next six months,” Vegotsky said. “I expect a really nice second half of the year for people who make it through the first half.” It’s certainly a good way to start 2023 in a market as paramount to the country as California is.