Marijuana Prices Increase by 200% as Supply Dwindles

Nevada can’t keep up with the demand for recreational marijuana. Producers and dispensaries are feeling the stress. The few issues the state has had, plus the enormous demand, have caused prices to increase by 200-percent.

In just a single month, the cost of trim has risen from $150 per pound to $450, Forbes reports. Brayden Sutton of Friday Nights Inc. said products are selling out immediately. The initial issue was the lack of distributors.

Sutton said, “We still have healthy margins, but it’s a good indication of what the market has done.”

Regarding some of the struggles, Sutton said, “Right now, the retail stores are really struggling with keeping a consistent product on the shelf and meeting demand. They are constrained by what cultivators can produce, which is nowhere near what they need to be right now.”

Friday Nights Inc. is planning to increase production. Nevada has 88 approved cultivation facilities.

Other struggles for the new recreational marijuana market include distributor licenses. A judge ruled that liquor distributors can’t have sole distribution licenses.

Joel Milton of Baker said, “We predicted the supply issues in Nevada when the demand for products quadrupled overnight. Nevada did not issue enough cultivation licenses, and it does not help that the production cycle from seed to sale in cannabis is untimely.”

Dispensaries are seeing less medical marijuana sales as 74.2-percent of sales are recreational.

Milton said, “Recreational customers substitute the most popular medical category, flower (marijuana buds), for more convenient and discreet products. Items like vape pens, or single-use products like pre-rolls or single-serve edibles are much more popular for recreational users and tourists. Pre-rolls were found in 9x as many orders since recreational went live.”

Much of Nevada’s recreational marijuana market is from tourist purchases. While the purchases are small, just enough to last through their stay, Nevada sees a lot of tourism already. Single-use products are popular because they don’t require additional accessories that the tourists can’t take back home with them after they’re used, so pre-rolls and vape pens are more popular for tourists.