Cannabis Benchmarks has been collecting wholesale flower transaction data since early 2015. Originally, all of the transaction data we received and used in our spot index calculations was for “bulk” product transfers. A cultivator would weigh out the amount of a particular flower strain purchased by the distributor or retailer and deliver the product in a single package. Distributors could then sell portions of the flower to dispensaries or if a retailer purchased directly from the cultivator, they would then display the product in a “deli-style” fashion on their shelves for customers to see and the customer could then choose the amount they would like to have portioned out for their purchase.
As more cultivators entered the industry and as more state markets opened for business, a proliferation of “prepackaged” flower began being sold on the wholesale market to retailers. These prepackaged flower items are made in specific weights: Individual grams, ⅛ ounce, ¼ ounce, ½ ounce and 1 ounce. In some state markets, it is a requirement to only sell cannabis flower in prepackaged containers. For instance, in Massachusetts, deli-style flower is not offered in dispensaries; therefore, all bulk deals are going to intermediaries for extraction and/or “white label” packaging services, or the cultivator weighs and packages the flower products in advance of delivery to the dispensary. In other states, such as Oregon and Oklahoma, the majority of dispensary sales are currently deli-style. In other markets, prepackaging flower to be sold in dispensaries is not required but is a way to market a cultivator or brand of flower. Some cultivators may have several different product lines, or product brands, and by having them available to consumers in branded packaging strengthens marketing opportunities and builds customer loyalty.
The wholesale price of cannabis flower has always been subjective, based on attributes such as strain name, strain type, THC %, trichomes, trim method, color, smell, and freshness. Selling flower on the wholesale market in prepackaged portions that are shelf-ready for sale adds an additional pricing consideration. Due to the labor associated with weighing out and packaging flower ahead of sales, a higher price is often obtained for the prepackaged goods. For some cultivators, prepackaging flower may not be an option as it requires additional staff, equipment, and seed-to-sale tracking that may not be something they are in position to implement. This effort can be outsourced to a distributor that offers “white label” services, or when not required the cultivator may choose to only sell in bulk quantities. Another consideration in terms of prepackaged product pricing is that different states have different rules which impact the all-in wholesale price. For example, the state of Vermont has very restrictive rules regarding the use of single use non-recyclable packaging, potentially adding more input costs. Our data and analysis does not distinguish between individual state market requirements.
In addition to identifying wholesale product by grow type – indoor, greenhouse, and outdoor – Cannabis Benchmarks has been differentiating wholesale transactions by whether the transfer occurred as a bulk transaction or a transaction consisting of prepackaged flower. The source data we receive from our Price Contributor Network includes these details and we are pleased to now begin including additional price assessments for wholesale flower sold in bulk or in prepackaged containers. This added granularity of pricing expands our efforts to bring transparency to the wholesale cannabis market. Over the coming months we will be regularly reporting on aggregate, bulk, and prepackaged wholesale flower pricing.
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