How much do dispensaries pay per pound? The price is dropping (2023)
Without question, the cannabis business in the state of Massachusetts is booming. As of August 2023, there were 1490 licensed cannabis establishments in the state with over 200 applications pending. According to the Cannabis Control Commission, adult-use retailers have reported an astounding $4 billion in cannabis sales since the first recreational stores opened in 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. As of January 2023, the price per pound hit $1,416.
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…
The number of cultivators remained relatively stable through 2022 at just over 70 cultivators. However, as of 2023, there were 117 cannabis cultivators with 249 more with licenses awaiting approval. The number of plants harvested in MA has also gone up drastically. In January 2021, 32,700 indoor plants were harvested versus 46,000 plants harvested in January 2022. More demand and more dispensaries naturally mean more cannabis is needed to keep the supply chain moving.
Sustaining Profits in a Lower-Priced Cannabis Market
With pricing being on a continual decline in MA, those in the cannabis business simply have to make more thoughtful moves with their operations. Case in point, profit sustainability can come from something as simple as tweaking product offerings and boosting the efficiency of your business model. Take a look at a few examples below.
Focus on Product Quality and Desirability
While supply and demand are no doubt driving factors behind cannabis prices, there are changes as the market stabilizes. Clear differences are emerging when it comes to what consumers are willing to pay for different cannabis flower strains and products. For example, a lot of cultivators are pouring focus into premium products that naturally attract more consumer interest, such as highly potent and terpene-rich craft strains. Likewise, they are working with cannabis warehouses and transporters to get cannabis harvests into customers’ hands as quickly as possible when quality is at its peak.
Money saved is money earned
If you can cut cultivation and transport costs, you can more easily 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.