Oversupply or Something More Sinister for Lower Prices?
DENVER — Prices are falling for marijuana in Colorado and that could mean bad news for a market boasting it will reach $22 billion by 2021.
The wholesale price for a pound of cannabis in Colorado has plunged from $2,000 in January 2015 to $1,300 a pound. According to an analysis from the The Economist, that’s driven by benign factors such as oversupply of product. This could make smaller outfits go under, which would be bad for market diversity, consumer options – and price.
Wisconsin news site, Madison, theorizes big industry players are undercutting small businesses by slashing prices to drive them out. Last year, Colorado issued limits on licenses; therefore, businesses with licenses had the power to acquire as many as they wish. This gave the “big guys” more room to take over.
Just like when Wal-Mart drove it’s competition out of business, Business Insider indicates: though good for investors, this could lead to higher prices that push consumers back to the black market. The result is a lose-lose situation for the industry.