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Will Recreational Marijuana Prices Plummet In Colorado Next Year?

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marijuana cash industry bankingI have always maintained that if the blackmarket is going to be put out of business in Colorado and Washington, prices would have to drop significantly from what they are right now. Sure, there are lots of people out there that are willing to pay $60-$85 an eighth, but true veterans (the consumers that make up a bulk of the market) will not pay those prices forever, if at all. Fortunately, more and more growers are getting their operations up and running and will soon be flooding the market with fresh supply. That, combined with increasing competition from new shops opening up, should affect prices quite a bit in Colorado and Washington.

At least one store owner agrees. Per Reason:

The advantages of a medical card should wane as supply rises and recreational prices fall. Kayvan Khalatbari, co-owner of Denver Relief, a medical dispensary that started serving recreational consumers in July, says after-tax prices in that market average $50 to $60 per eighth. He expects those prices to plummet by next year, however, as growers ramp up production and new suppliers enter the market. As of October 1, dispensaries no longer have to grow 70 percent of their inventory, and businesses dedicated to cultivation will be allowed.

“I would not be surprised, given the flood that’s going to happen, if we see $10 and $15 eighths by early next year,” Khalatbari says. “I would believe that. I could see ounces being sold for $50. I truly see that happening, because there is going to be so much competition [and]people are becoming so efficient in their production. They’re automating much more. We’re seeing best practices settle in. There’s less risk in operating because people are operating at a higher level. I think we’re going to become a very efficient industry very quickly. We’re going to see competition, and we’re going to see prices hit rock bottom early next year.” At that point, he predicts, the black market will dwindle away.

If prices for eighths truly fall to the $10-15 range, it would definitely eliminate the blackmarket in surrounding areas. No gang, cartel, or dealer can compete at those prices, especially since people would prefer to shop from a large selection, something that stores offer but the blackmarket generally doesn’t. Even at $140 an ounce, which is the average predicted price in Oregon if Measure 91 passes, I don’t see the blackmarket sticking around.

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