One of the best things about cannabis legalization from the consumer perspective is the lower prices. Before medical cannabis was ubiquitous, a pound of high-quality cannabis could go for as much as $4,000. The growth of medical cannabis brought that price down, and legal recreational cannabis brought it down even further. Cheaper pounds means cheaper grams, which has delighted many cannabis consumers.

But after staying low for several years, it looks like cannabis prices in Washington might be on the rise. A recent report by Seaport Global titled “Cannabis Prices Higher in Mature Market States; What Gives?” stated that wholesale cannabis prices in Washington have increased by 46%. 

So what is causing prices in Washington’s established legal cannabis market to rise? According to the report:

“[Washington state] regulators stopped issuing new cultivation licenses during 2H:18, following oversupplied market dynamics,” The report reads. “As well, a study earlier this year found that growers in the state were using less than half of their licensed canopy. Similar to OR, weather in Washington’s main outdoor growing areas has been largely hot and dry thus far in 2019, requiring supplemental irrigation.”

What do the experts in Washington state have to say about the price increase? James Torchia, the wholesale buyer for Uncle Ike’s, one of Washington state’s largest cannabis retailers, talked with The Sesh about what he’s seen when it comes to wholesale cannabis price increases in the evergreen state. 

“We have been seeing an increase in wholesale pricing, but it seems to be more specific to outdoor grows,”  Torchia stated. “People are paying attention to pesticide testing and a lot of wholesale growers dropped out of the market, leaving extractors looking for clean tested material to run. The extracts categories (dabs, distillates, etc…) have been increasing a lot, so the demand for raw material has seen a steady increase and in turn, has increased the costs that growers can ask. The indoor market has been staying relatively stable.”

Uncle Ike’s owner Ian Eisenberg also weighed in on the role pesticide testing and extracts are playing when it comes to the price of outdoor cannabis. 

“A lot of the outdoor crop was bought out by the processors to make edibles and cartridges,” Eisenberg said. “It’s easier for a lot of the outdoor guys to just sell everything all at once for extraction, rather than trying to sell flower month in month out. I know a few cartridge companies who bought massive outdoor crops to make cartridges out of. And the extract ended up failing testing so they had to destroy all of it.” 

Having large quantities of flower and extract taken out of the market entirely due to failed testing is certainly going to affect supply, and in turn, bring the cost up. Additionally, with an increased focus on pesticide testing at the retail level thanks to OK Cannabis, producers and processors can’t easily slip their tainted cannabis through the cracks.

Cannabis producers have their own thoughts about increased prices. Matthew Frigone, the owner of Lazy Bee Gardens, shared his thoughts with The Sesh

“Thus far, wholesale prices have gone up from what I’ve seen,” Frigone said. “It’s likely to trickle into cartridges and concentrates first if I were to guess. Might see flower prices raise, but really I expect just to see the really cheap products disappear, as opposed to lots of price hikes. The processors that were lowballing farms are now having to play fair. If it hurts anyone, it will be the bad actors that have been driving the market to the basement. Should level the field a little. Honestly, it would be in the shops’ interest to get rid of the cheap product anyway. They make less on it too.”

Frigone was quick to point out that he doesn’t sell wholesale. Still, Frigone grows outdoor cannabis, and his perspective is more informed than most.

The reason outdoor growers use improper pesticides, or just too many of the allowed pesticides, is because it’s cheaper than buying approved pesticides, or putting in the labor it takes to keep cannabis pest and disease-free. So having their hand forced at the retail level, may very well be increasing the cost of their final product. 

The pesticide crackdown, in addition to the factors named in the report, a dry year, fewer licenses issued, and the alleged underutilized canopy, are likely all increasing cannabis prices. It remains to be seen how the increased outdoor wholesale price of cannabis will impact the market at the retail level. Chances are, people will keep buying the same cannabis products they have all along, regardless of price. And if that’s the cost of putting out clean products, the higher price is well worth it.