Why Pot Prices Are Plunging

Explaining why the price of pot has been plunging, I remember what a wise economist told me.

He said to remember the power of the market.

The Plunging Price of Pot

In Massachusetts, since 2021, the price of an eighth of an ounce of pot plummeted to $15 from $50. In individual towns, though, like Nantucket, the price drop to $35 was less substantial.

Still, at 62%, the decline since 2018 from $14.09 to $5.36 was steep:

Beyond Massachsetts, the trend has also been downward:

So yes, consumers could be delighted but sellers are not. They say the big problem is a surge in supply because of too many cultivators’ licenses. Among Massachusetts’s nearly 400 dispensaries, 50 received licenses during the past year. Similarly, close to one third of the state’s 140 growers opened since 2022. And, further compounding sellers’ problems, the spread of legalization cut the number of out-of-state customers.

Then, to all of this we can add that Nantucket Sound is a federal body of water. Because marijuana remains a Schedule 1 controlled substance nationally, its transport in federal waters (like Nantucket Sound) or across state borders is illegal. As a result, Nantucket’s growers and sellers have a tough time taking advantage of the efficiencies of scale.

Some expect that with more than 50 producers handing in their licenses, a shrinking supply side could send prices up again. However, Massachusetts is where Oregon was 3 years ago. Now, Oregon’s weed prices are even lower.

Our Bottom Line: Supply and Demand

An economist would say marijuana markets are classic supply and demand. On a graph, we just need to shift our supply curve. Even if demand does increase, the shift to the right of the supply curve makes price sink from E1 to E2:

Indeed, it’s all about the power of the market.

My sources and more: Thanks to the Nantucket local newspaper for alerting me to sinking pot prices. From there WBUR and the University of California’s Cannabis Economics Group provided more of the facts.