Legal weed prices in Massachusetts have been sinking steadily for over a year now, with no end in sight.
This October, the average price for a gram of adult-use bud hit an all-time low of $7.76, according to data from the state Cannabis Control Commission. That's about half the all-time high of $14.68 a gram, which was seen in January 2020. Overall, retail prices held steady at over $14 a gram for nearly two years – except for that one month when Massachusetts closed its legal weed shops in a vain attempt to stave off the pandemic.
Retail prices dipped below $14 a gram in May of 2021 and have fallen almost every month since then. The decline has been steepest this year, falling from $12.64 a gram in January to $10.58 in June and then dropping below $10 for the first time in August. Prices did actually pick back up to $8.04 last month, but that's still the second-lowest price on record in the state.
Industry insiders believe that this steady price drop is a natural consequence of supply and demand. When legal sales kicked off in November 2018, relatively few growers and dispensaries had opened their doors, so they could charge a premium for the small amount of weed they were able to produce. But as more and more businesses have come online, the competition has heated up, and companies have cut prices to help compete.
The balance seemed to reach an equilibrium last year, but dozens of new cultivation facilities opened across the state in 2022. The glut of this year's fresh, new flower has led to a serious oversupply problem, as the industry is now growing more weed than Bay Staters can actually smoke. The shifting balance of supply and demand has now tipped in favor of the customer, but the shift is so extreme that many smaller pot companies may be forced to lay off staff or close up shop entirely.
“A year and a half, two years, three years ago, it wasn’t good either,” said Joseph Lekach, CEO of Apothca, a multistate cannabis operator with three locations in Massachusetts, to Boston.com. “It was unbalanced to the high side, now it’s unbalanced for the low side. So this is temporarily good from a customer’s perspective. But a lot of manufacturers and cultivators will cut costs wherever they can just to stay alive. You’re going to have an inferior product coming out. It’s a double-edged sword.”
“We have no idea where the bottom is going to be,” Lekach added. “I think that there’s a lot of companies suffering because of this. I think you’re going to see a lot of companies going out of business probably next year and into 2024.”
That process may have already started. Earlier this week, The Source dispensary in Northampton shut its doors for good, becoming the first Massachusetts weed retailer to go out of business since sales began in 2018. Not everyone is panicking about the declining prices, though. Some retailers said they expected to see retail prices fall once the industry matured and specifically designed their business models to account for the market shift.
“I know there were people saying that cannabis was expensive a year and a half ago… part of our model was to be economical when we opened up our retail doors,” said Ulysses Youngblood, president and co-founder of the Major Bloom dispensary, to Boston.com. “That’s why for us, it’s not a drastic change, it’s the market correcting itself in a way that it should be, which is more affordable for people. We knew this was going to happen. It happens in all other markets.”
And even though prices are sinking, the Bay State's legal weed industry has sold more than $3 billion worth of legal bud over the past four years.