As marijuana prices in some states drop, cannabis companies blame oversupply and are demanding a halt on the issuance of new licenses.
Medical marijuana (MMJ) sales in Colorado have significantly declined. So far this year, total sales have reached more than $1 billion, yet MMJ sales for July reached just over $18 million, “the lowest monthly figure ever recorded since January 2014,” when retail sales were legalized in Colorado.
In addition to the sales decline, wholesale prices seem to be dipping to record lows, which is why a group of Colorado growers is asking the state to stop issuing cultivation licenses, reports Westword.
According to the data from the Colorado Department of Revenue, the price per pound of all commercial cannabis reached a record low in September. The coalition of thirty cannabis cultivators and dispensary ownership groups in Colorado says oversupply is the main culprit.
“For the first time since legalization was implemented, marijuana sales and the revenue generated from marijuana taxes will be substantially lower than the previous calendar year,” the coalition wrote in a Sep. 15 memo. “The problem is further exacerbated by the country’s broader economic situation, with record-high inflation driving down sales of consumer goods. Despite a decrease in demand, the supply of marijuana continues to increase, with new licenses being issued and additional cultivation capacity being authorized to current licensees.”
Similar Scenario In Michigan
The Great Lakes State seems to be facing the same issue. As a result, its largest cannabis operators recently launched an offensive meant to keep competitors from getting into the market.
Responding to demands from lobbyists for some of the state’s big growers, the Legislative Service Bureau drafted new legislation to prohibit the Michigan Regulatory Agency from issuing any new cultivation licenses.
The draft legislation effectively calls for a moratorium on licenses for an undetermined period of time.
The legislation should be presented after the November election.
Prices for recreational weed in Michigan dramatically dropped. In August, the average price of $1869 per pound fell 3.9% sequentially and 47.5% from year-over-year.
This article originally appeared on Benzinga and has been reposted with permission.