Explaining why the value of pot has been plunging, I keep in mind what a smart economist informed me.
He stated to recollect the facility of the market.
The Plunging Value of Pot
In Massachusetts, since 2021, the value of an eighth of an oz. of pot plummeted to $15 from $50. In particular person cities, although, like Nantucket, the value drop to $35 was much less substantial.
Nonetheless, at 62%, the decline since 2018 from $14.09 to $5.36 was steep:
Past Massachsetts, the development has additionally been downward:
So sure, shoppers might be delighted however sellers usually are not. They are saying the massive downside is a surge in provide due to too many cultivators’ licenses. Amongst Massachusetts’s almost 400 dispensaries, 50 obtained licenses throughout the previous 12 months. Equally, shut to at least one third of the state’s 140 growers opened since 2022. And, additional compounding sellers’ issues, the unfold of legalization reduce the variety of out-of-state clients.
Then, to all of this we will add that Nantucket Sound is a federal physique of water. As a result of marijuana stays a Schedule 1 managed substance nationally, its transport in federal waters (like Nantucket Sound) or throughout state borders is against the law. In consequence, Nantucket’s growers and sellers have a tricky time benefiting from the efficiencies of scale.
Some anticipate that with greater than 50 producers handing of their licenses, a shrinking provide facet may ship costs up once more. Nevertheless, Massachusetts is the place Oregon was 3 years in the past. Now, Oregon’s weed costs are even decrease.
Our Backside Line: Provide and Demand
An economist would say marijuana markets are traditional provide and demand. On a graph, we simply have to shift our provide curve. Even when demand does enhance, the shift to the proper of the provision curve makes worth sink from E1 to E2:
Certainly, it’s all concerning the energy of the market.
My sources and extra: Because of the Nantucket native newspaper for alerting me to sinking pot costs. From there WBUR and the College of California’s Hashish Economics Group supplied extra of the info.
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