Is A Marijuana Price Drop Affecting the Market ?

The marijuana industry has been working over the course of the past few years to continue offering consumers the lowest price possible to get weed whether it be for recreational or medicinal use. During that period, marijuana prices have dropped substantially, which may seem like a positive, but there does seem to be some downsides as well.

After cannabis was legalized in Colorado and soon after Canada, prices of the substance began to drop quite quickly. This may have seemed like a solid place for consumers to get into the market, but it has been the cause of some problems throughout the industry. Marijuana prices in Colorado and Oregon have in some cases dropped as low as $100 per pound, which makes investing in the substance quite difficult. With price volatility so high, it makes it difficult for people to begin investing in the space.

One of the issues that has arisen because of this has been that some states tax cannabis-based off of the per-pound prices. Many companies have seen their revenue per sale sink due to the falling prices of cannabis. States like Colorado have also increased the tax rates throughout the industry which have contributed to some businesses failing in the aftermath. The issue with this is that taxes should be based on sales of the substance not on the price of cannabis. Some have stated that the way the regulatory system for cannabis works, is somewhat unfair to the businesses trying to survive in the extremely competitive market. The best way to continue taxing the substance is to do so by weight and not by price. This allows for the fluctuation that naturally occurs in cannabis and can help to settle some of the worries brought on to marijuana business owners all around. California is one of the states that has functioned this way, and many of the businesses within the state have benefitted from not having to worry about volatility in the market.

Cannabis as a whole still presents a large amount of legislative challenges. Since the market is so undeniably new, issue like these will continue to present themselves. Only time will how well the governments will be able to solve these problems so that businesses can function as though they were in any other industry. One of the main issues that remains is that of legislation on a federal level. Cannabis is still considered to be a Schedule I narcotic which means that it is on the same level of illegality as the likes of heroin and methamphetamine. Until the feds decide to delist cannabis to where the public would like to see it, individual states will continue to run into these issues. The overwhelming majority of the public in the U.S. have shown an extremely high amount of positivity as far as cannabis is concerned. This however, has yet to be reflected in the legislation at the national level. The hopes are high that shortly, the issues with price fluctuations can begin to settle down to allow the industry to function as well as any other.