The raw numbers would be startling to a business in any industry.
In four years, the retail price of cannabis in Massachusetts has plummeted by more than two-thirds. An eighth of an ounce of pot, a typical purchase for the casual smoker, sold for about $50 on average in early 2021. Today, it goes for closer to $15, according to state data.
To customers in a turbulent national economy, that affordability may be delightful.
But in the world of legal cannabis, a nascent industry still finding its footing, the dizzying price drop has doomed some cannabis growers and sellers and has others dreading the potential loss of their livelihood. Though identifying the precise number of shuttered cannabis businesses is difficult, state officials say more than 50 have surrendered their licenses to operate.
Business owners invested volumes of cash — some, up to several million dollars — and sunk personal savings into new marijuana ventures, hoping to strike gold in the rush that followed the state’s legalization of the drug in 2016. Many optimistic entrepreneurs banked on pot prices staying high long enough to turn a profit.
Instead, they find themselves in a grueling race to the bottom.
“It’s a scary place to be,” said Will Ried, who directed operations at RiverRun Gardens in Newburyport before the small cannabis grower folded earlier this year.
For cannabis, a buyer’s market
The anxiety rippling through the cannabis industry over sinking prices is nothing new.
The downward trend was to be expected as the market grew, economists and industry experts said. Similar patterns could be found in other states as their legal weed markets matured.
Still, the price plunge hit businesses “almost like a kick in the teeth,” Jennifer Ngo, the chief of staff at Bud’s Good, which has dispensaries in Worcester, Abington and Watertown, told MassLive in December 2023.
Since then, the average price of pot has fallen another 22%.
As in any industry, some businesses are weathering the downturn. Others that opened at the right time or place have found success.
There are also those thrilled with the market settling — namely, consumers.
Massachusetts dispensaries logged a record $1.6 billion in sales last year. Since the first adult-use dispensaries opened in 2018, state and local sales taxes on pot have generated more than $1 billion.
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The booming sales figures showed that Massachusetts consumers have trust in the state’s cannabis industry and loyalty to their local cannabis businesses, Bruce Stebbins, acting chair of the state’s Cannabis Control Commission, said in December.
But there are more of those businesses now than ever.
Cannabis Culture, a Northampton dispensary, opened in July 2022.(Will Katcher/MassLive)
Nearly 400 dispensaries are selling recreational cannabis in Massachusetts, including about 50 the commission licensed since the start of last year. Nearly 140 farms across the state are growing marijuana that eventually flows into dispensaries as flower, edibles and vaporizers. About a third of the growers opened in just the last two years.
As most of the Northeast legalized pot, dispensaries found they could also no longer rely on the volumes of out-of-state customers they once enjoyed.
Massachusetts is thus left with both a surplus of cannabis and a plethora of places to find it.
“It’s a buyer’s market,” Ngo said in late 2023. It still is today.
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The nearly 70% drop in marijuana prices coupled with rising revenues “indicates a growing volume of products moving through the regulated marketplace,” Stebbins testified to state lawmakers on March 10. “This price stabilization is normal and reflects a competitive and maturing marketplace.”
“The commission acknowledges that some licensees may be facing financial difficulties for many reasons, some outside our control,” he added in a statement this week. “As regulators, we listen to our stakeholders and try to respond as best we can.”
Chris Gallant, co-founder of 253 Farmacy, a cannabis grower and retailer in Turners Falls, examines of a bag of cannabis flower in March 2021.(Don Treeger/The Republican)
For a glimpse of the future of cannabis, look west
By 2018, when Massachusetts became the first East Coast state to open recreational cannabis sales, five other states on the other side of the country already had active weed markets. Among them was Oregon, where sales began three years prior.
The current price of cannabis in Massachusetts roughly matches the price in Oregon three years ago. But today, Oregon dispensaries sell an eighth of an ounce of flower for the state’s record-low median price of about $12.
In California, where recreational sales began 10 months before Massachusetts, an eighth costs even less — about $9.20 on average, according to data compiled by the Cannabis Business Times.
If Massachusetts follows the trend, its prices have room to fall.
Cannabis plants grow outdoors at Grasshopper Farms in Van Buren County, Michigan, Sept. 13, 2023.(Joel Bissell/MLive.com)
But the state is not only looking to others with more mature cannabis markets for hints of its future. Michigan began recreational pot sales more than a year after Massachusetts and initially faced average prices as high as $65 for an eighth of flower.
Yet Michigan’s prices today are on par with California’s, a nosedive some attribute to a massive spike in Michigan farms cultivating marijuana.
Massachusetts cannabis prices fell most sharply in 2022, from about $45 for an eighth to $27. Over the next two years, the average price of pot slipped lower and lower, to $20 for an eighth by December 2023, then to just over $15 by the end of last year.
“It seems like it continues to drop,” Ried said.
- Read more: How many cannabis businesses have closed in Mass.? It’s unclear, but times are tough
When RiverRun, the small-batch marijuana grower he helped manage, sold its first pound of weed in the spring of 2021, it went for around $4,000.
“I think now you’d be lucky to sell one for $1,000,” Ried said. “I would hope we’re at the bottom because I don’t know how many cultivators are going to stick around if they can’t make just a little bit of money at what they’re doing.”
Employees prepare to open NETA, a dispensary in Northampton, on Nov. 20, 2018, the first day of recreational marijuana sales in Massachusetts.(Don Treeger/The Republican)
‘There’s still a lot further to fall’
As the industry matured, grew and normalized, and as companies became more efficient, prices were destined to drop and equalize between states, said Robin Goldstein, an economist and director of the Cannabis Economics Group at the University of California, Davis.
Federal legalization of marijuana and the possibility of interstate trade would only further that trend, he said, creating a singular national market for pot akin to other agricultural products.
“Massachusetts doesn’t grow its own avocados,” Goldstein noted. “The national price of avocados is wherever they’re grown most cheaply.”
Massachusetts and Michigan have robust, competitive cannabis industries, he said. If or when the federal government legalizes pot, he thinks the two states will be better suited to compete than most others in the Northeast or Midwest.
Still, Goldstein recognizes that the prospect isn’t comforting to the struggling business owners who counted on prices staying higher than they did.
“There’s a lot of businesses that are very hurt by falling prices. A lot are smaller producers. The problem is, this is a natural dynamic that happens over time,” he said. “There’s still a lot further to fall. If there are businesses out there thinking that it won’t fall further — it will.”
Heka, a cannabis dispensary in Westfield, announces its closure with a sign in the parking lot in August 2024.(Jim Kinney/The Republican)
Business owners, wary of the downward price trend, have suggested various solutions to reverse the drop, boost sales or ease their overhead costs.
Christopher Fevry, co-owner of the Natick-based marijuana delivery service Dris, supports a moratorium on new pot shops and growers.
Retailers “are all on top of each other,” he said. “There’s not enough market for them.”
The commission last year updated regulations to boost cannabis delivery services and small farms. It is now addressing other reforms that could make operating a weed business more affordable, Stebbins said.
He also committed to a deadline this year for the commission’s long-awaited regulations for pot lounges and other “social consumption” businesses, a mostly untapped side of the industry with the potential to draw new revenue and customers.
To reign in the oversupply of cannabis, the commission has also discussed “tier relegation” — or reducing a pot farm’s growing capacity if it fails to sell the bulk of its harvest.
As the volume of cannabis on the market swells and the price to buy it sinks, Ellen Brown, a member of the Massachusetts Cannabis Advisory Board appointed for her experience as a cultivator, worries that the quality of pot will suffer.
She was heartbroken to hear of RiverRun’s closure earlier this year.
“Another small business that cared so much? There’s no victory in it for anyone,” she said. “Retailers don’t like to hear it. Consumers don’t like to hear it. And it makes you worry about who’s next.”
