COLORADO, USA — As inflation continues to impact our wallets – we've found a product that’s getting cheaper while nearly everything else gets more expensive – marijuana.
We set out to find out why marijuana prices are dropping.
"We are currently in a period of time in which we have potentially more supply than demand. So we are seeing our wholesale prices decline," said Andrew Livingston, director of economics and research at the law firm Vicente Sederberg, which specializes in cannabis law.
Livingston is one of only a handful of full-time economic analysts in the cannabis industry.
So we asked, "Is weed immune to inflation?"
"I would say that no business is immune to inflation," was Livingston's short answer.
But, cannabis is special. Because marijuana is regulated by states and not legal at the federal level, supply chain costs are smaller, at least when it comes to moving supplies. They're saving on shipping costs that are insanely high right now.
"All of the cannabis products that are sold in Colorado are produced in Colorado. Our supply chains are shorter," said Livingston. "When we look at the prices for cannabis in the state of Colorado, what we’re seeing is there are factors even stronger which are pushing the prices downward."
But that’s not the main reason Livingston said marijuana costs less right now.
Livingston said when people stayed home during the pandemic, they spent more money on weed. Cultivators started producing more products and now supply is outweighing demand.
"As the supply of cannabis has gone up over the past 18 months or two years, we are potentially seeing a decline in the prices which may be because demand is flat or declining as well," said Livingston. "Right now, the price of cannabis at the retail level and the wholesale level are declining."
Inflation still impacts the cannabis industry in other ways. Think of the cost to ship something from Pueblo to Denver. It’s a lot cheaper than shipping something from China, but higher gas prices still cost more. Then you add in higher wages, the cost of rent, or buying land, everything is impacted when inflation increases cost.
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