Is Cannabis Inflation Proof? – Cannabis News, Lifestyle

Is Cannabis Inflation Proof? As everything seems to be increasing in price, cannabis remains relatively cheap. Cannabis prices fell between 2021 and 2022. There are a few reasons for this. Legal farmers have to compete with legacy farmers who don’t have the same overheads. So the legal breeders are diving into their margins to stay afloat. Likewise with retailers. They absorb inflation to keep their doors open and customers happy.

So no, cannabis is not inflation proof. Inflation is not just “rising prices” but the expansion of the money supply thanks to the central bank. How this expansion will affect each industry will be different, but it will impact the economy as a whole. And we’re already seeing it with cannabis.

Is Cannabis Cultivation Inflation-Proof?

Is Cannabis Cultivation Inflation-Proof? A craft cannabis microprocessor in Vancouver, BC has felt the pinch of higher prices.

“We’ve definitely seen a significant increase in prices and shipping for all of our overseas carrier oils,” said Nico St. Tomas, Chief Marketing Officer of West Blvd Cannabis. “As gas prices have increased around the world, we’ve also seen an increase in shipping costs, which has pushed up our costs for raw materials like olive oil, coconut oil and truffle oil.”

Likewise, other cannabis growers, processors, and retailers have expressed concerns. Inflationary pressures on raw material and fuel costs have pushed up the cost of doing business.

Is Cannabis Retail Inflation-Proof?

Most Canadian provinces have a federal cannabis distribution agency. In British Columbia, for example, suppliers set the price at which they sell cannabis products to the BC Liquor Distribution Branch (LDB). The LDB then applies a markup to set a wholesale price that retailers pay before selling the products to consumers.

Suppliers can change the price they charge the LDB once a month. And then LDB relays that in their markup formula calculation. “The majority of cannabis price changes submitted by suppliers are price cuts, but recently the LDB has begun to see a small number of limited price increases, possibly due to inflation,” an LDB spokesman told CLN.

The Alberta Gaming, Liquor and Cannabis Regulator (AGLC) “has seen little impact from inflation” and says there is a supply glut. Far away from supply bottlenecks.

The wallet for cannabis consumers

“There are other goods and services competing for more constrained consumer wallets now that we have 7, 8, 9% inflation in the US and Canada,” says Nawan Butt, portfolio manager at Purpose Investments. “This means that consumers are more expensive, have less money to spend and cannabis competes with other consumer goods. There is a bit of demand pull that we can see.”

In other words, inflation drives up food and fuel prices. Someone making less than $35,000 a year could drastically limit their cannabis buying habits.

So while inflation, defined as “rising prices,” does not appear to have directly affected the cannabis industry, it cannot be said that the cannabis industry is inflation-proof. From tighter consumer wallets to supply chain costs to slight but gradual price increases, inflation is affecting the broader economy, and cannabis is not immune to it.