The prices of premium marijuana flower in Colorado continue to climb higher and higher during the COVID-19 pandemic. What could steadily rising prices for high-quality marijuana flower mean for the cannabis industry in Colorado in 2021 and beyond? Keep reading this blog to find out.
Wholesale Prices of Marijuana Flower in Colorado Set Records
Wholesale prices for marijuana flower in Colorado are currently at their highest point in nearly five (5) years. The Colorado Department of Revenue, which maintains records on legal cannabis sales in the state, recently reported that the Colorado wholesale market price for one pound of marijuana flower has reached $1,721. According to government agency records, the last time the price eclipsed $1,700 was in July 2016. Moreover, this represents a major reversal of fortune for the marijuana flower market: just two years ago, wholesale flower prices barely hit $700 per pound.
The price of marijuana flower on the wholesale market steadily increased since the beginning of 2020 – and then saw a massive spike in the last quarter of 2020. According to data provided by state-licensed cannabis operators, wholesale flower prices in Colorado went up by more than 30% between October 2020 and January 2021.
The higher prices for marijuana flower are likely an important factor in the continued explosion of cannabis sales in Colorado. Colorado cannabis operators seemed to set a new record for dispensary sales every month in 2020. For the entire year, total sales of recreational marijuana and medical marijuana in Colorado totaled more than $2 billion.
Strong Demand for Expensive Cannabis Flower Brands Amid COVID-19 Pandemic
Marijuana retail businesses have also noticed that there is a particularly strong demand by consumers for some of the more expensive cannabis flower sold by top-tier cannabis brands. Marijuana flower sold by premium brands are in high demand right now because the demand for cannabis generally has increased during the coronavirus pandemic.
At the beginning of the COVID-19 pandemic, cannabis consumers tended to stockpile cheaper cannabis flower products because they were worried about possible lockdowns and the closing of dispensaries. (Dispensaries in Colorado and elsewhere were actually able to remain open during the pandemic because states classified the dispensaries as “essential businesses.”) What ended up happening, however, is that cannabis consumers gravitated toward the more expensive, artisanal cannabis that remained on shelves after budget flower products were gone. This led to consumers appreciating the more potent marijuana products, including premium flower brands.
Consumers Paying More for Popular Marijuana Flower Brands
While greater demand and higher prices for marijuana flower is certainly good news for marijuana cultivators, some cannabis manufacturers and retailers have been forced to adjust their sales prices to account for increased costs. Ultimately, those additional costs are passed on to cannabis consumers who don’t seem to mind as the cannabis industry targets a new, more refined demographic. These days, individuals who head to their local dispensary to purchase cannabis flower tend to seek out high-quality, small-batch flower produced by premium brands like Cookies, Kaviar, and Snaxland.
Greater consumer demand for more expensive cannabis flower has prompted cannabis businesses to set higher prices. While the average wholesale price for cannabis flower in Colorado is around $1,700 per pound, some brands price their high-grade flower product at more than $4,000 per pound. The expectation among many in the cannabis industry is that demand for premium marijuana flower will not subside even after the COVID-19 pandemic is over.
New Business Strategies for Colorado Cannabis Operators During Coronavirus
Some cannabis businesses operating in Colorado are employing new strategies to try to take advantage of the increased demand for premium marijuana flower. For example, dispensaries are collaborating with branded flower companies on new product launches to put a spotlight on higher-end marijuana flower products. Additionally, premium flower brands are taking advantage of high numbers of followers on social media platforms like Twitter, Facebook, and Instagram to create buzz around new products. Beyond that, the limited supply of certain small-batch flower makes them even more desirable to consumers who don’t want to miss out.
One premium flower cultivator in Colorado that has seen a surge in sales during the pandemic is Kaya Cannabis, a cannabis company that utilizes in-house experts to cultivate unique strains of marijuana flower and other products in small batches. The Colorado-based craft growing cannabis company currently operates dispensaries located on South Fox Street in Denver, West Colfax in Denver, and West Jewell Avenue in Lakewood. All three marijuana retail stores provide customers with a wide variety of cannabis products, including premium flower brands like Kaviar and the Kaya Cannabis in-house brand. The Kaya Cannabis Santa Fe Dispensary on South Fox Street is also used as a cannabis cultivation facility.
Colorado’s Local Marijuana Market Thriving as Cannabis Industry Gains Legitimacy
Colorado’s tourism industry is struggling during the coronavirus pandemic as most people choose not to travel across state lines and risk their health. This means that the booming cannabis economy in Colorado is driven almost entirely by local residents in towns like Denver, Aurora, and Fort Collins. What residents have realized during COVID-19 is that their disposable income may be better spent on cannabis than on trips to restaurants, concerts, or movie theaters – especially if the plan for the foreseeable future is to remain indoors and at home.
The Colorado cannabis market has also thrived as marijuana becomes more accepted and is seen as a “legitimate” industry. In the recent 2020 election, voters in five states approved ballot measures to legalize marijuana for either recreational use or medical use. With several more states appearing primed to legalize adult-use cannabis in the next few years, it seems likely that cannabis will gain even more legitimacy.
Contact Scythian Cannabis Real Estate
Scythian Real Estate is a privately held cannabis real estate fund that partners with sophisticated cannabis operators in Colorado and throughout the U.S. Scythian recently partnered with Kaya Cannabis on a sale-leaseback deal for the cannabis operator’s 1075 South Fox Street dispensary in Denver, CO. If you are a cannabis operator looking to unlock real estate equity and propel company growth, email Scythian today.
PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.