Weed is inflation-proof. Its harvest value still fell in 2022

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The value of the cannabis harvest fell in California this year. You can blame it on overproduction, oversupply, less consumer demand, and a retail bottleneck, says Leafly Senior Editor David Downs. Photo courtesy of Mike Rosati for Leafly.

California is poised to overtake Germany and become the world's fourth biggest economy. One of the industries that is helping fuel that roaring engine is the state's cannabis market. 

The 2022 Leafly Cannabis Harvest Report finds cannabis is the state's eighth biggest crop, just below walnuts. That’s a drop from last year, when it ranked as the fifth largest crop

Leafly Senior Editor David Downs explains why it changed, where the cannabis crop stands in the national market, and what this year’s midterm elections have to do with it. 

Where does the cannabis crop rank nationally?

Cannabis is the sixth largest cash crop in America and it generated $5 billion in revenue in 2022. It is consistently the No. 1 cash crop in newly legal states like New Jersey. This year, we found that cannabis is a bigger crop, in terms of cash value, than rice or potatoes.

… This report also found that our cannabis farmers don't wield nearly the proportional political clout as they do their peers in corn or rice.  

Does there need to be a cannabis lobby to help consumers and farmers?

The small, legacy craft farmers would tell you they do need a lot of help. There is not a ‘Big Cannabis’ defending itself. Cannabis farmers are facing heavy discrimination at the state and the federal level — whether it's onerous taxes, onerous regulations, [lack of] access to banks … and they're being out competed by the illicit market. 

We found this year that generally in the West, farmers grew too much cannabis, and in the East, farmers haven't [grown as much]. So East Coast patients and adult-use consumers are paying more than they need to. 

At the same time, since our legal adult-use farmers in California can't send their trade East, they are going out of business. Even the illicit farmers are saying that prices are really low, because of how much they grew. The illicit market at least has the benefit of being able to ship interstate.

Has inflation hit the cannabis industry?

Good news for the holidays: Cannabis is deflationary. Eight ounces of flower, which is 3.5 grams, is running for around $20. In California it used to be up to $60. It has switched from a producer’s market to a consumer's market like it has for every other agricultural crop over the last 80 years.

Is this the lowest that prices will get?

It remains to be seen. We do see a bottom in places like Oregon, but we see continued softening in Colorado. It really has to do with your ability to produce [cannabis] outdoors cheaply, as well as limit licensing. In California we grow everything well and there really hasn't been any limit on licensing or [much] enforcement on the illicit market. So it is like a roller coaster ride headed down right now for our farmers.

Why did the cannabis crop fall in California this year?

It’s because of overproduction, oversupply, and really squelched [consumer] demand. We have a big retail bottleneck in California.

California voters approved several retail cannabis ballot measures. What does it mean for the cannabis crop?

 It's like the boot coming off the neck just a little bit. In California, roughly 30% or 40% of cities and counties allow sales.  

Los Angeles County voters passed a 4% gross receipts tax, which is unworkable, but it will unlock 25 licenses. We’ll see that happen in other places as well. Huntington Beach might allow 10 licenses for the first time after the election. 




Matt Guilhem


Tara Atrian