Pot sales show steady growth, prices dropping
There’s been a slow but steady increase in pot sales month by month since the first stores opened in the state on July 8 (and the first one in Vancouver, Main Street Marijuana, opened on July 9).
The Liquor Control Board releases state sales figures every Tuesday on its Frequently Requested Lists site, if anybody wants to take a closer look.
Here’s a quick rundown:
December (Through Dec. 8): $3,735,921
And here are more details:
So far, the LCB doesn’t have a easily accessible list of how much marijuana was sold in each of those months – but it would be interesting to see that so we could get average statewide prices and see how things are moving along.
Over the last month – after cresting at prices as high as $40 a gram – retail prices have settled down quite a bit. They’re still higher than the black market and medical prices, but some per gram prices are now coming in as low as $20 per gram or in some cases $15 per gram.
Still, many strains are still in the $30 to $35 range, mostly because stores are trying to sell through the stock they bought in previous months.
Part of the reason for the price drops is that the outdoor harvests have come in and brought a lot of new stock to stores. But another reason for consumers to be hopeful that prices will stay lower is that many new indoor growers are also starting to come online, further increasing the amount of available product in the market after the shortage.
“I think within about a month, we won’t have much on the shelves that’s higher than $20 a gram or so,” said Ramsey Hamide, a manager at Main Street Marijuana. “It’s really good news for the consumer. Every week or so this fall we’ve seen (wholesale) prices drop by about 50 cents.”
As store prices drop it will be interesting to see what happens with the state weekly sales figures. If they continue to rise, that would likely mean existing customers are buying more product, or that more new customers are coming in to give it a try because of the price drops.
Hamide also gave me a fairly detailed math breakdown of why prices are likely to stay lower, which I’ll try to paraphrase.
As of the Dec. 2 LCB data release (today’s hasn’t come through yet), there were 87 approved retail marijuana stores in the state.
For math’s sake, lets say you have 80 stores, each selling 25 pounds of pot a month. That equals 2,000 pounds a month.
There are 267 approved growers so far in the Dec. 2 data release. About 60 of those are tier 1, a bit more than 100 are tier 2 and a bit less than 100 are tier 3 (the largest grower).
Smaller tier 1 growers may produce something between 10 and 80 pounds a month, give or take a bit, according to growers I’ve talked to. (conservatively let’s say 20 pounds a month at full production – those 60 tier 1s would produce about 1,200 a month for stores)
Tier 2 – and I’m speculating a bit – may produce between 80 to 125 or so pounds a month. (so let’s say 80 pounds a month each – the tier 2s would produce about 8,000 pounds a month)
A large tier 3 grower may harvest about 150 pounds or more a month. (so lets say 150 pounds a month times 100 tier 3s – they’d produce about 15,000 pounds a month)
Some of those growers (including a bunch of tier 3s) only harvest once a year in the fall, so the final monthly tally year round will probably be a bit less.
But if you look at that production – you’re getting somewhere around 24,000 pounds a month. If we cut it down allowing for outdoor grows, lets say 15,000 pounds a month.
Now, there are 2515 growers that have applied in the state – many of which are pending approval. The 15,000 pounds are from about 10 percent of the total growers that could eventually be approved.
If the state sticks with the retail store lottery, there can be up to 334 stores in Washington. If each was licensed and sold 25 pounds a month, it would take 8350 pounds a month to supply them.
Current production with just the licensed growers – according to the prior estimate – is 15,000 pounds a month. Already well over that demand.
“So say it will take five months for existing stores to get through just the outdoor harvest,” Hamide said. “That means we could get through April and it would be June before you need anything that’s in production now.”
Some growers are sitting on excess product, hoping that prices will pop back up in the summer, Hamide said.
That’s not likely given the numbers he provided, he said.
“You have to think of this as turning into a more normal business model,” Hamide said. “So if you have agricultural employees making $10 to $12 an hour, owners making $75,000 a year, that’s still pretty good. But this isn’t the get rich quick windfall that some people think it is.”
It will certainly be interesting to watch how the new market evolves. And if Hamide is right about supply it could be great news for consumers.
What do you think?