6 ms·

We've been hearing about surplus for several years now, and yet the price of weed is going up, not down. I regularly see $400 retail ounces in Oregon for top sh

We've been hearing about surplus for several years now, and yet the price of weed is going up, not down. I regularly see $400 retail ounces in Oregon for top shelf. Supply/demand should push the price to the floor with this Surplus gargantus, and yet prices continue to climb. It's like ECON 101 doesn't apply to pot. What are they going to do? Dump it in ocean? What I want to know is how retail is maintaining these obviously, artificially high prices in a crazy-lopsided buyer's market? Collusion is the only explanation I have. They're all just colluding to prevent price collapse.

josefresco 5y ago
> Collusion It's either straight up illegal collusion or a "natural" side effect of allowing only "big business" to enter the market. Combined with sky high taxes and "community impact" fees and there's not much room for price differentiation,. I live in a state that is just now seeing recreational shops open and miraculously all their pricing is exactly aligned.
- ohyeshedid 5y ago
  Collusion doesn't need to happen at the point of sale, it could be wholesalers or the growers setting a price structure.
  - tenfourwookie 5y ago
    Sure, up and down the chain, but with that much surplus? That would be irrational. I don't understand. Do you mean it's like farmers dumping millions of gallons of milk to quash supply and support price x? To what end? They're worried if they flood the market, price drops? (To say nothing of legality, because I know nothing.)
  - atatatat 5y ago
    Or new entrants just pricing everything the same as previous entrants to grow the industry, and avoid competition on anything besides quality and specific needs/desires from the plant, but it's not surprising that an industry still maintaining some semblance of customer service is a weird sight to behold for folks.
iaw 5y ago
> I regularly see $400 retail ounces in Oregon for top shelf. I think because this article refers to Canada, not the US, we can't infer things about the market in the US due to the low likelihood of smuggling occurring. What has the quality and the cost of 'low-grade' weed done? I suspect the quality of the bottom shelf has increased drastically at the same cost.
- tenfourwookie 5y ago
  Yes, but the same is true in Oregon. Massive surplus. It was some silly number like enough weed to make 1 billion joints. I'll find the number.
  - xyhopguy 5y ago
    its not hard to get top shelf ounces for $100-140 in oregon...
    - effingwewt 5y ago
      It very much is from dispensaries, which is what is being discussed. And this does happen everywhere, where prices in dispensaries 'miraculously align' right down to the daily/weekly specials etc. What should be happening is the price going down as shops compete with each other for business- which, incidentally, they all did ~10 years ago. That also miraculously stopped at all shops simultaneously. So it's definitely collusion/price fixing but I believe rather than the supplier/seller it's both. Especially in Oregon where the shops have their own grow farms.
      - emteycz 5y ago
        Why doesn't a phone/web delivery service outcompete them?
        tenfourwookie 5y ago
        They do in Southern California. It's a brisk business. Friend says the bulk of his orders were early AM or after dinner PM. He wouldn't really work during the day. Essentially a split shift. He didn't like it much, but the tips were ludicrous.
kriskrunch 5y ago
Several reasons prices stay high: The dispensaries are limited regionally by law, so it's not truly a free market. There are often taxes on the weed as well. Gray and black market prices are significantly cheaper. A lot of the excess stuff is sold to regions where it's still illegal, although those hold outs are dwindling. Production cost per pound is expensive, and going up across the board: labor, electricity, water, commercial leases, equipment, fertilizers, and grow media. Top shelf is mostly grown indoors under artificial lights instead of in greenhouses. Further, the farmer's and dispensary's regulations are complex and daunting. Grow your own if you want it cheap. You'll quickly learn how challenging it is to produce top shelf. I'm in the States, but much of this applies to Canada as well.
- tenfourwookie 5y ago
  Can you explain to me then why there is such a surplus? All of above sound rational to me, and yet, massive and growing surplus while retail prices are increasing. There is bullshit somewhere. Is this what you mean by not quite a free market, that these surpluses are a function of market barriers? They have no one to sell it too? That might explain why concentrates are dropping in price. If you can't sell it, make something with it you can sell. Conjecture, that.
  - kriskrunch 5y ago
    Good question. I wish I had a good answer. You updated your post while I was writing my reply haha Indeed, I believe you nailed it on the update A friend had a situation where he grew a few thousand pounds too much in Oregon before his dispensaries had opened. However, the regulators knew he had produced it all and forced him to sit on the inventory... He decided to send excess trim (waste leaf trimming) from his operations in California up and bring the quality flower back to Cali to sell on the black market here. This was illegal, obviously! Later, he happily destroyed the "excess" in Oregon! Same guy, a year later had facilium wilt and powdery mildew infect his 1000 light operation in LA. He had to destroy thousands of pounds there.. but he really moved it to the black market. I feel sorry for the people that smoked those flowers. It's a shady industry! There is bullshit and fraud everywhere.
wombat-man 5y ago
if demand is inelastic, then there's actually no reason for dispensaries to lower the price. They might even be buying the weed for less and taking the profit for themselves. It could be collusion, but maybe dispensaries have tried sales and found themselves making less.
bsder 5y ago
Because these aren't really competitive systems. In the US, since cannabis/CBD/marijuana/etc. are still nominally illegal at the federal level, none of the "legal" operators can avail themselves of the financial system. This prevents things like shuffling product between states, for example, or taking out big loans for expansions that would allow flattening of the market. And, if I remember correctly, Canada's "legalization" has been one disaster after another because the big players keep buying off and sabotaging the system until they can corner it.
- tenfourwookie 5y ago
  Would like to read something on the cannibalization phenomena re: your last paragraph. Link me if you can.
  - bsder 5y ago
    There was a bunch of it at the beginning of legalization in Canada I remember reading about. It took forever to get supply. Then you had to be an "established" medical marijuana provider to get pre-approved which locked out the "little people" to start. Then there weren't enough approvals of the supply because the procedures were so involved. Then there weren't enough people to approve the paperwork even when it was finished. Then there were local vs federal issues. In all, it was the standard gigantic bureaucratic clusterfuck, with the added problem of large incumbents dragging their feet and throwing grit into the gears of anyone trying to fix it. Someone better versed with Canadian politics would probably be better at pinpointing it all because it wasn't just one single thing. It was a slow-motion train wreck.
randyrand 5y ago
Location. Weed is sold in stores at local prices. Theres lack of competition.
- tenfourwookie 5y ago
  Some areas maybe, but I'm seeing brisk competition across the product board without the related price competition you would expect. Prices are not going down in a surplus market. That's greed.
0xdeadb00f 5y ago
$400 is about how much an (illegal) ounce is where I am

josefresco 5y ago

> Collusion It's either straight up illegal collusion or a "natural" side effect of allowing only "big business" to enter the market. Combined with sky high taxes and "community impact" fees and there's not much room for price differentiation,. I live in a state that is just now seeing recreational shops open and miraculously all their pricing is exactly aligned.

ohyeshedid 5y ago
Collusion doesn't need to happen at the point of sale, it could be wholesalers or the growers setting a price structure.
- tenfourwookie 5y ago
  Sure, up and down the chain, but with that much surplus? That would be irrational. I don't understand. Do you mean it's like farmers dumping millions of gallons of milk to quash supply and support price x? To what end? They're worried if they flood the market, price drops? (To say nothing of legality, because I know nothing.)
- atatatat 5y ago
  Or new entrants just pricing everything the same as previous entrants to grow the industry, and avoid competition on anything besides quality and specific needs/desires from the plant, but it's not surprising that an industry still maintaining some semblance of customer service is a weird sight to behold for folks.

iaw 5y ago

> I regularly see $400 retail ounces in Oregon for top shelf. I think because this article refers to Canada, not the US, we can't infer things about the market in the US due to the low likelihood of smuggling occurring. What has the quality and the cost of 'low-grade' weed done? I suspect the quality of the bottom shelf has increased drastically at the same cost.

tenfourwookie 5y ago
Yes, but the same is true in Oregon. Massive surplus. It was some silly number like enough weed to make 1 billion joints. I'll find the number.
- xyhopguy 5y ago
  its not hard to get top shelf ounces for $100-140 in oregon...
  - effingwewt 5y ago
    It very much is from dispensaries, which is what is being discussed. And this does happen everywhere, where prices in dispensaries 'miraculously align' right down to the daily/weekly specials etc. What should be happening is the price going down as shops compete with each other for business- which, incidentally, they all did ~10 years ago. That also miraculously stopped at all shops simultaneously. So it's definitely collusion/price fixing but I believe rather than the supplier/seller it's both. Especially in Oregon where the shops have their own grow farms.
    - emteycz 5y ago
      Why doesn't a phone/web delivery service outcompete them?
      - tenfourwookie 5y ago
        They do in Southern California. It's a brisk business. Friend says the bulk of his orders were early AM or after dinner PM. He wouldn't really work during the day. Essentially a split shift. He didn't like it much, but the tips were ludicrous.

kriskrunch 5y ago

Several reasons prices stay high: The dispensaries are limited regionally by law, so it's not truly a free market. There are often taxes on the weed as well. Gray and black market prices are significantly cheaper. A lot of the excess stuff is sold to regions where it's still illegal, although those hold outs are dwindling. Production cost per pound is expensive, and going up across the board: labor, electricity, water, commercial leases, equipment, fertilizers, and grow media. Top shelf is mostly grown indoors under artificial lights instead of in greenhouses. Further, the farmer's and dispensary's regulations are complex and daunting. Grow your own if you want it cheap. You'll quickly learn how challenging it is to produce top shelf. I'm in the States, but much of this applies to Canada as well.

tenfourwookie 5y ago
Can you explain to me then why there is such a surplus? All of above sound rational to me, and yet, massive and growing surplus while retail prices are increasing. There is bullshit somewhere. Is this what you mean by not quite a free market, that these surpluses are a function of market barriers? They have no one to sell it too? That might explain why concentrates are dropping in price. If you can't sell it, make something with it you can sell. Conjecture, that.
- kriskrunch 5y ago
  Good question. I wish I had a good answer. You updated your post while I was writing my reply haha Indeed, I believe you nailed it on the update A friend had a situation where he grew a few thousand pounds too much in Oregon before his dispensaries had opened. However, the regulators knew he had produced it all and forced him to sit on the inventory... He decided to send excess trim (waste leaf trimming) from his operations in California up and bring the quality flower back to Cali to sell on the black market here. This was illegal, obviously! Later, he happily destroyed the "excess" in Oregon! Same guy, a year later had facilium wilt and powdery mildew infect his 1000 light operation in LA. He had to destroy thousands of pounds there.. but he really moved it to the black market. I feel sorry for the people that smoked those flowers. It's a shady industry! There is bullshit and fraud everywhere.

wombat-man 5y ago

if demand is inelastic, then there's actually no reason for dispensaries to lower the price. They might even be buying the weed for less and taking the profit for themselves. It could be collusion, but maybe dispensaries have tried sales and found themselves making less.

bsder 5y ago

Because these aren't really competitive systems. In the US, since cannabis/CBD/marijuana/etc. are still nominally illegal at the federal level, none of the "legal" operators can avail themselves of the financial system. This prevents things like shuffling product between states, for example, or taking out big loans for expansions that would allow flattening of the market. And, if I remember correctly, Canada's "legalization" has been one disaster after another because the big players keep buying off and sabotaging the system until they can corner it.

tenfourwookie 5y ago
Would like to read something on the cannibalization phenomena re: your last paragraph. Link me if you can.
- bsder 5y ago
  There was a bunch of it at the beginning of legalization in Canada I remember reading about. It took forever to get supply. Then you had to be an "established" medical marijuana provider to get pre-approved which locked out the "little people" to start. Then there weren't enough approvals of the supply because the procedures were so involved. Then there weren't enough people to approve the paperwork even when it was finished. Then there were local vs federal issues. In all, it was the standard gigantic bureaucratic clusterfuck, with the added problem of large incumbents dragging their feet and throwing grit into the gears of anyone trying to fix it. Someone better versed with Canadian politics would probably be better at pinpointing it all because it wasn't just one single thing. It was a slow-motion train wreck.

randyrand 5y ago

Location. Weed is sold in stores at local prices. Theres lack of competition.

tenfourwookie 5y ago
Some areas maybe, but I'm seeing brisk competition across the product board without the related price competition you would expect. Prices are not going down in a surplus market. That's greed.

0xdeadb00f 5y ago

$400 is about how much an (illegal) ounce is where I am