80 ounces in Michigan and 4 grams in Oregon

The Oregon Liquor and Cannabis Commission’s 2023 Recreational Marijuana Supply and Demand Legislative Report finds that cannabis prices per gram in Oregon are down 16% from a year ago, to an all-time low of $4.

Market demand for marijuana in Oregon was estimated at 52% of supply in 2021 and 63% in 2022, according to the OLCC. Despite deteriorating market conditions, 2022 was closer to achieving equilibrium between supply and demand than 2021. This was due to OLCC producers reducing annual production in 2022, offering hope for 2023. However, prices for usable marijuana continue to decline due to overstocking from previous years, which will likely continue to put downward pressure on prices.

In its report, the OLCC found that the total amount of usable cannabis sold in Oregon increased in 2021 and 2022, but only modestly. Compared to the 27% growth rate in 2020, the increase was only 1% in 2021 and 2% in 2022. The report also noted a decrease in the number of concentrates/extracts, edibles, and tinctures sold in 2022 due to the large Due to the variety of products in the market, it is difficult to directly compare the volumes sold from one year to another.

The OLCC report highlights that Oregon’s cannabis sales increased from $1.1 billion in 2020 to $1.2 billion in 2021, but fell to $994 million the following year. Monthly sales peaked in April 2021 but have since declined, with the exception of a spike in August. The report finds that the cannabis surplus in 2021 and subsequent price decline in 2022 weighed heavily on cannabis companies.

According to the OLCC, the number of licensed producers and retailers in Oregon has reached an all-time high despite the legislature’s moratorium on producer and retailer licenses. Although the moratorium only affects new licenses, some eligible applications were submitted back in 2018. However, the agency found that active businesses declined while licenses increased.

Still, the OLCC identified some positive indicators of improved market health in 2023. The agency cited a less significant decline in retail prices and “relatively strong” sales of edibles, which posted modest 0.2% growth over the past year.

In its report, the OLCC found that the Oregon recreational marijuana market bears significant similarity to other markets in terms of its ability to respond to market signals and match supply with demand. However, the market is unique due to cannabis’ federal status. As a result, Oregon is considered a “market in a box” because supply must remain within state lines despite a significant comparative advantage in cannabis production.

Michigan has too much grass

In January, marijuana prices in Michigan hit an all-time low, bringing significant benefits to retailers and customers. However, smaller growers are raising concerns about oversupply, which is driving prices down. According to state records, the market has seen an unprecedented surge in supply, with 55 times more marijuana available than two years ago. As a result, customers buy it at a price 16 times cheaper than before.

Marijuana prices have fallen significantly in Michigan, even lower than rates observed during the drug’s illicit status 30 or 40 years ago. In January, the average cost of an ounce (28 grams) fell 70% to $152 compared to $516 in December 2019. Several pharmacies in Kalamazoo sell an ounce for just $80, compared to the average price of a gram in Michigan US$5, less than half the national average.

According to Andrew Brisbo, executive director of the Michigan Marijuana Regulatory Agency, although growth is the buzzword in the industry, the market is stabilizing as prices and supply match demand. Michigan is now the fourth-largest marijuana market in the United States, with sales of $1.8 billion in 2021. While voters legalized recreational marijuana in November 2018, it took the state another year to finalize the licensing framework for sales , which led to rapid growth of the industry .

Smaller and medium-sized marijuana growers are finding it difficult to compete with larger operations as the number of licensed businesses continues to increase. Although customers benefit from lower prices, growers are struggling to match prices from larger farms. Competition among marijuana growers has increased as more cities allow operations. The number of communities licensing marijuana businesses has increased from 87 to 118 over the past year, and the number of licensed businesses has increased by nearly 150 to 1,238.

Chris Krestchmer, general manager of Lansing-based Homegrown Cannabis Company, has explained that larger marijuana growers are becoming more common, displacing smaller ones. This is reflected in the nearly four-fold increase in growers over the past two years to 1,238, of which 458 are classified as Class C, larger operations capable of harvesting 2,000 to 10,000 plants.

According to state records, the amount of recreational marijuana on the market rose from 273,453 pounds to over 1 million pounds in one year, leading to oversupply. Kretschmer explained that while they were aware of the rise, the speed and intensity of the rise exceeded their expectations, making the market difficult to navigate.

Diploma

The marijuana industry in states like Oregon and Michigan has seen significant growth in recent years, with the legalization of recreational marijuana leading to a boom in sales and the opening of new businesses. However, markets in both states have also faced challenges such as oversupply, falling prices and increasing competition, which have hit smaller growers and businesses.

Despite these challenges, industry experts and regulators remain optimistic about the future of the market, with signs of stabilization and increased demand for certain product sectors. As the industry evolves and matures, it will be interesting to see how companies adapt to changing market conditions and regulations.

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