Reading the Tea Leaves Amid Falling Prices in California
September 10, 2017Agreement Beforehand Is the Best Policy Against Risk of Shipment
September 12, 2017
- Colorado’s Marijuana Enforcement Division sets the average market rate (AMR) for unprocessed cannabis, the figure used to fix the 15% excise tax rate for wholesale transactions.
- After fluctuating between $1,800 and $2,000 between Q1 2014 and Q4 2016, the AMR plunged to $1,300 in Q3 2017.
- The 35% decline in wholesale prices has been driven by the increased amount of growers (and more competition), the economies of scale through expanded operations, and improvements in operational efficiency (e.g., refined processes and lower production costs).
- Further declines are expected as the market matures, emphasizing the need for growers to anticipate where pricing is headed, rather than where it stands.
