Shhh, don’t tell the Branding Guys, but the commercialization of cannabis has already begun (even before full federal legalization!)

We analyze cannabis prices in 35 legal markets in the US to understand how age of legalization affects prices, the difference between fully legal and medical-only states, and the pricing implications of prevalence rate, dispensary density, and market size. We also present a ranking of states to identify price leaders and laggards.

– Insight #1: Cannabis prices tend to fall as fully legalized states mature, reflecting the commercialization of marijuana; purely medical conditions are relatively unaffected. Our analysis shows that the average cannabis price in older recreational markets such as NV, MA, MI, CA, OR, AK, WA, and CO with a legal age of over five years was $249/oz on April 5th. That’s ~15% lower than the average of $290/oz for newly legalized recreational states like VA, NY, NM, CT, NJ, MT and AZ, which have legalization ages under three years. On the other hand, states that have only legalized medical marijuana have seen average cannabis prices remain stable around the $300/ounce mark. The average cannabis price in older healthcare states (AR, FL, ND, OH, PA, LA, MD, MN, NH, DE, RI, and HI) is nearly ~$50/oz higher than the average price in the older recreational markets listed above, suggesting that suggests that medicinal cannabis does not lend itself to commercialization in the same way as adult-use cannabis.

Cannabis.net dot – This trend is fueled by full federal legalization, and overserved markets of canned, high-quality cannabis like California are being shipped to underserved markets like Florida and Massachusetts.

– Insight #2: Commercialization is also visible at a regional level, with early adopter states in the West having lower prices than relatively late entrants from the Northeast and Midwest. Western states (WA, CO, CA, and NV) took the lead in legalizing recreational marijuana (as of 2012) and are now at the lower end of the cannabis price spectrum with an average price of ~$250/ounce. On the other hand, states in the Midwest (IA, MN, MO, ND, OH) and the Northeast (NH, RI, PA) – which are either medical only, in the process of legalizing recreational cannabis, or recently full legalization – have average prices of ~$311/oz and ~$303/oz, respectively.

Point Cannabis.net – Regional pricing will show this as people can bring large amounts of cannabis across state lines to non-legal states. Look at Oklahoma, which has an unlimited cannabis license market and is now growing at 10 times the amount that the state’s residents could consume. Where are we going? Texas.

– Conclusion #3: Prevalence rate and pharmacy density are the other key factors affecting pricing. Our analysis shows that states with high marijuana prevalence rates have lower cannabis prices than states with lower prevalence rates. For example, OR, which has the highest marijuana prevalence rate in any state at 26%, has an average price of $198.5/oz versus UT, which has the lowest prevalence rate at 8% but enjoys an average price of $262/oz. We also see that pricing is inversely proportional to pharmacy density. States with more than 120 dispensaries per million population—such as OR, AL, PA, NV, and CO—have an average cannabis price of ~$259/ounce. On the other hand, states with <120 pharmacies per million population - such as NY, CA, IL, OK, NM, LA, WA, etc. - have an average price of ~$292/oz. Overall, we find that cannabis prices tend to decrease as prevalence rates and dispensary densities increase, reflecting an increase in retail outlets and increased cannabis supply.

Cannabis.net Point – This is exactly the point where federal legalization and interstate commerce will eliminate the need to grow cannabis near you or be near a dispensary. Fed Ex, UPS and, let’s say, Amazon deliver cannabis to your door.

– Insight #4: Larger cannabis markets have lower marijuana prices compared to their smaller peers. The median price in large markets with annual legal cannabis sales in excess of $1 billion, such as B. CA, CO, FL etc. is $265 per ounce. This is much lower than the average price of ~$309/oz in smaller markets like UT, NH, VA etc which had less than $100M legal sales in 2021. We believe this difference is mainly due to a combination of three factors – age of legalization, prevalence rate, and pharmacy density – and reiterates our views above.

Cannabis.net Point – Cannabis is a plant that can grow indoors or outdoors in 12 to 16 weeks, it’s not a difficult process once you’ve done a few group cycles. If you want to grow from 10 to 100 and even 1000 plants, THAT is a difficult thing, but actually growing the plant is not super complex. Therefore, larger markets can grow far more weed than can be consumed by the people of this federally restricted area.

– Takeaway #5: Consumers in VA, IL, NJ, ND, IA, and MD pay more for their cannabis stash, while those in OR, WA, CO, UT, FL, and RI enjoy lower prices. Fully legalized states selling marijuana at higher prices include VA, IL and NJ – these are the top three price leaders with average prices of $542/oz, $326/oz and $323/oz, respectively. Among the medical-only states, the top three markets are ND, IA, and MD, where consumers pay $354/oz, $334/oz, and $321/oz, respectively. OR, WA and CO are the fully legalized markets at the lower end of the price spectrum with average prices of $198.5/oz, ~$216/oz and ~$221/oz, respectively. UT, FL and RI are the states where medicinal cannabis users pay less compared to consumers in other states. The average price in these three states is $262/oz, $264/oz, and $281/oz, respectively.

Cannabis.net Point – Newer markets have higher costs as they ramp up grow facilities, but as history has shown there will be a balance to this state and surplus will also be part of inventory as more cannabis is grown legally and illegal markets.