How much do dispensaries pay per pound? The price is dropping

Posted on July 15th, 2022 to Education

Without question, the cannabis business in the state of Massachusetts is booming. As of April 2022, there were 887 licensed cannabis establishments in the state with over 100 applications pending. And, retailers have reported an astounding $2.87 billion in cannabis sales since November 2018.

By all rights, it sounds like there’s no time like the present to be a cannabis cultivator. However, growers also have to keep an eye on the market to plan accordingly and continue to reap viable profits. The prices of cannabis have declined, but with good reason, and the market in MA is hyper-competitive. As a grower, this means sustaining profit margins can take a little more forethought, planning, and a little more marketing effort.

The Price of a Pound of Weed in Massachusetts – It’s dropping

Between October and November 2021, the retail price of cannabis per pound in MA ranged from $5,800 to $6,086. By January 2022, the average per-pound price was around $5,880. During the beginning weeks of 2022, however, the price of cannabis hit a massive decline and dropped by roughly 17 percent, and continued to fall thereafter. By mid-March 2022, the average per-pound price hit an all-time low of just $2,950.

Why does the price change? Supply & demand.

One of the biggest cost drivers in cannabis is supply and demand. When a state goes legal with cannabis sales, they often rely on slim supplies as cultivation businesses are established to feed the demand for product. This can mean the price per pound starts out pretty high compared to more mature cannabis markets in other states. In fact, MA cannabis prices remained the highest in the nation as of 2020. As the market stabilizes, however, the price per pound of cannabis flower declines as supply starts to meet the demand. This has been the case in Massachusetts.

A look into the weeds…

While the number of cultivators has remained relatively stable (73 as of January 2022), the number of plants harvested in MA has gone up drastically. In January 2021, 32,700 indoor plants were harvested versus 46,000 plants harvested in January 2022. And, the outdoor crop in MA last year was impressive with over 56,000 plants harvested in October 2021.

Sustaining Profits in a Lower-Priced Cannabis Market

Money saved is money earned

If you can cut cultivation and transport costs, you can easier absorb the lower per-pound costs without taking such a blow. Further, this could allow you to keep your per-pound costs more competitive, so retailers don’t drop your products in favor of cheaper alternatives. Something as simple as adjusting logistics and transport practices could save your operation a bundle.

Get your foot in the door by working with the right middleman

With supplies at an all-time high and prices at an all-time low, cannabis retailers are at liberty to be exceptionally particular about their suppliers and inventory. If you’re a newcomer, you can have a hard time getting your products in front of retailers. Working with an established industry middleman can help you get your foot in the door. For example, enlisting Plymouth Armor Group for help with logistics and transport gives you a line of access to top retail sources.

The Plymouth Armor Group also offers a sample delivery program. You prepare the samples, and we drop samples off at poignant retail locations. We offer you 24-hour notice in advance of deliveries, which allows you to notify prospective buyers that PAG will be dropping by samples to check out. This move saves your operation money by reducing paid work hours for the sales team and cutting fuel costs. However, it also helps get your products in front of the right retailers.

Need help in a hyper-competitive cannabis market? Plymouth Armor Group can help. Reach out.

Find out how we can make your cannabusiness more economical and efficient.

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