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Some state regulators are calculating and publishing average monthly retail prices for smokable flower. Using the monthly averages of the Cannabis Benchmarks weekly cannabis flower spot price assessments, by market, we calculated the range of the wholesale to retail markups for the period September 2023 through April 2024. Most states exhibit median mark-ups in the range of 70% to 90%, indicating healthy price increases from wholesale to retail.
Of the eight state markets that regularly report average monthly retail cannabis prices, Oregon has demonstrated the highest retail cannabis flower price markup in the nine month span of our analysis. Despite the high markup, retail prices are not extraordinary due to the average Oregon Cannabis Spot Index being in the lower quartile of the 22 state markets that we report wholesale prices for.
Maryland and Massachusetts have exhibited the tightest spread of markups over the nine-month period, with a range of 16% and 17% over the period, respectively. During this period, the wholesale price in Maryland has been on a steady decline, dropping 13%. The Massachusetts Cannabis Spot Index has demonstrated volatility week-to-week, yet the current weekly spot price assessment is only $7 less than what it was in early September 2023.
The range of mark-ups varies across states and is driven by multiple factors. Some are purely state dependent, such as supply-demand balances/imbalances, competition, market maturity, and regulations (e.g., recent flower shortages in Connecticut and enhanced lab testing in Oregon). Other drivers that impact broader markets are also at play. High inflation has affected consumer spending with consumers becoming more price sensitive.
The cannabis market, while somewhat inelastic, is not immune to these broader economic pressures. Retailers in states with lower mark-ups might be using competitive pricing strategies to attract price-sensitive customers. In contrast, those in states with higher mark-ups might be capitalizing on less price-sensitive segments or limited competition. Cannabis companies must navigate these complex dynamics, balancing the need for profitability with consumer price sensitivity in an inflationary environment. Companies in high mark-up states must be particularly mindful of maintaining customer loyalty amidst rising costs.
We are now reporting price assessments for bulk and prepackaged flower in addition to our composite price assessments. Check out our recent post, “Bulk vs Prepackaged Cannabis Pricing” for more details.