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Low prices on the California marijuana wholesale market warn some producers. No other face

When it comes to selling, the law of supply and demand is always important, even at marijuana prices. Marijuana production has increased in California over the years. As a result, prices have fallen by as much as 60% since mid-June, and the state feels it is having a negative impact on the wholesale market.

The downward spiral of price pressure has not yet affected all growth sectors in the state. Many indoor growers look better in terms of wholesale prices, as they are only 10-20% lower than what outdoor growers experience. Unfortunately, many insiders believe that this downward spiral will continue for the next few years as marijuana packaging grows more and more in the state.

STRUGGLES WITH MARIJUANA SALES

Marijuana growers in Humboldt County are drowning in the marijuana packaging market because they are already flooded. High inventories caused marijuana prices to fall, and smallholders struggled to stay on the water. Currently, they are afraid of future business sustainability. Jason German, for example, is a second-generation farmer who owns a ridgeline farm in South Humboldt. He saw the marijuana market develop from an early age. It has an advantage over its competitors because it has a brand name that is known throughout the state and region. But even with this advantage, it will be difficult to sell cannabis products.

According to German, the times are very difficult for smallholders. Most of them are in the red, and those who are lucky enough to sell their products should be happy with the average price of $ 700 per pound. This is very low. Countries demand their income, states demand their income, and banks demand their income. They also have to pay the trimmer along with other business fees. For small farmers, it costs about $ 500 to grow a pound. With every payment, they barely pay their bills.

According to Natalynne DeLapp, executive director of the Humboldt County Growers Alliance, the price of wholesale marijuana packaging in June fell by about $ 1,200 per pound. This happened when slight deprivation or “crop harvest” began to affect the market. According to DeLapp, this year’s wholesale price is between $ 650 and $ 750 per pound. In 2020, wholesale prices for high-quality flowers fell between $ 400 and $ 500 per pound. Some farmers were unable to sell their 2020 crops and are regaining them from their distributors. This is after you have already paid the pruning, testing, and state harvest taxes.

Lower the price of Marijuana

Ross Gordon, Policy Director of the Humboldt County Growers Alliance, states that credible estimates produce about twice the amount that the local market can consume at existing permit levels. Wholesale prices for marijuana packaging in California are worse than ever. This is what every farmer is thinking about now. Farmers produce twice as much as the market, so prices for their products, including deodorant bags, are plummeting. This situation is what every outdoor farmer is currently experiencing. In general, outdoor farmers keep most crops out every fall for sale next summer or spring. It is a season when supply is low and wholesale prices recover.

Factors Affecting Wholesale Prices

Adrian Sedlin, CEO of Canndescent, based in Santa Barbara, a major commercial maker, really believes there is a supply problem. According to Sedrin, it has 12 times more licensed production than licensed pharmacies. Ross Gordon of HCGA believes that the state is suffering from a “structural oversupply problem.” According to Gordon’s calculations, California has about 1,700 acres of cannabis production. However, state cannabis use only sells about 1,000 acres each year. This means that hundreds of hectares are still under development. If things don’t change, things will get worse.

Some industry insiders demand anonymity and estimate that growth licenses have increased by about 22% from more than 6,100 active growth licenses to more than 7,900. For outdoor cultivation, cannabis production. However, California does not have a state limit on the number of permits it can issue.

The COVID-19 pandemic also influenced the cannabis industry. As a result of the pandemic, the wholesale price of marijuana has risen. As a result, many farmers have decided to reinvest in more agricultural infrastructure or retain part of their harvest since last year, in anticipation of normal price increases in summer and spring. Unfortunately, that didn’t happen. Wholesale prices fell in the winter of 2020, according to Santa Barbara producer Autumn Shelton. However, when January 2021 turned around, wholesale prices did not rise. It rather fell during the summer season, when prices were supposed to hit record highs. This will be very difficult for many producers and distributors who are not prepared for this unexpected price cut.

A Call to Action

Today, some smallholders demand restrictions on cultivated land, while others prefer to change their strategies. They prefer to have short-term and long-term solutions that help smallholders get better. Hopes here are international trade and interstate trade. At this point, farmers are still a few years away. So the question is how the state will help smallholders to float. On top of that, they are wondering how they can use the time needed to establish the marijuana packaging brand to start working when new markets open in the future. The Humboldt County Growers Alliance is now hoping to win the bid to sell the country’s marijuana. The best thing a country can do now to ensure resilience is to do everything possible to develop a strategy.

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