California has a flood of bud, but that’s not good for cannabis growers

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“Since sales started in 2018, we've been waiting for this inflection point,” says Leafly Senior Editor David Downs about cannabis prices in California. Photo courtesy of David Downs/Leafly.

If you’ve been to your local dispensary lately, you may have noticed your favorite bud is cheaper than usual. Sure, the total balance on your receipts may still be high, but that’s usually thanks to high state and local taxes, not the flower. However, while you may be enjoying the cheaper prices, someone else is feeling the heat: farmers. 

Supply and demand economics appears to be favoring consumers in California’s cannabis market. That’s because an increasing number of growers have been producing more weed than stores know what to do with. 

Leafly Senior Editor David Downs talks to KCRW about it. 

KCRW: This summer appears to be a lot different than last year when it comes to pricing. What’s changed?

David Downs: “There's a lot of affordable, tested cannabis flower to smoke at lower prices, which is what legalization initially promised. That's new and different from last year. 

Last year, we were in a cannabis drought that was brought on by both COVID demand and a lack of legal supplies. … On the westside of LA, we were seeing dispensaries like the Higher Path with ounces at $140 and half ounces at $55. [We were] seeing similar price ranges at the Pottery and Herb and Med Men Venice, which gets pilloried for prices.

That's really competitive with the illicit market. … At the lower end, legal cannabis can now provide the number one value proposition of the illicit market, which was low prices. And that's on top of convenience, legality, testing and safety. Since sales started in 2018, we've been waiting for this inflection point, and the question now is whether things will continue to change.”

Why have prices dropped?

“Because we have 7,911 farm licenses for cannabis in California. Experts think that translates to roughly 1,700 acres of cannabis production that's actually operational. At the same time, there might only be 1,000 acres worth of sales going on at legal stores. So, basic supply and demand still holds. 

Farmers had a really great 2020 outdoor harvest of which they held on to a lot, and they're trying to unload it this year. What they're encountering is even more cannabis that [grew] this spring that is coming into stores. And [there’s] more cannabis that's coming in from the harvest this year behind it. 

Structurally, the farmers are saying [they’re] seeing an oversupply problem and the illicit market. And that's going to continue to drive prices down.”

Is this something growers could see coming?

“I remember 10 years ago RAND researchers said, ‘Hey, we ran the numbers. And if you fully legalize cannabis, it can be one-tenth the price of cannabis at prohibition prices.’ And that's the case.

At the peak in the 90s, you could get $6,000 a pound for indoor OG Kush. Right now, farmers are reporting getting $600 a pound for that same strain. … The question was how fast and how soon those price declines would come for California [with] regulation and implementation.”

But that already happened in Oregon. In 2019, I went up there and bought an eighth ounce for $6. That's not $60 or $16 — $6. 

We're in this period of industrialization and economies of scale that have happened to every other plant on the planet previous to cannabis. And with prohibition lifting, that change is coming. That's been basically eight years in the making.”

What’s light deprivation, and how is it affecting the market?

“We're in August right now, and it’s the full season of outdoor cannabis plants. Cannabis is an annual plant that gets planted in the spring and usually gets harvested in the fall. That stuff is still ripening in the fields according to the timeline of the sun and the length of the night. 

But farmers figured out that you could trick the plant into flowering early by creating longer nights by depriving the plant of light. That is [done by] throwing tarps over a greenhouse while the day is still going, making the plant think that it's actually the fall and the night is really long. 

Light deprivation has revolutionized cannabis cultivation and will continue to do so. I think the future of cannabis grown in California will be grown in greenhouses year round, using these light deprivation techniques. 

It's only taken off over the last five or 10 years, and it's completely changed the game. Light deprivation cannabis will be sub-indoor quality in terms of the THC and the terpenes, but the savings from using the sun as well as hitting in different times of the season changed the game for consumers. They're going to be able to have the best year round and pay really low prices for it.”



Larry Perel


Tara Atrian