For Colorado’s cannabis industry, 2020 was a boom year. While other sectors saw their operations severely cut down amid lockdown and self-distancing orders, Colorado categorized cannabis as essential, allowing marijuana businesses to continue selling with coronavirus-related measures in place. Even before transactions for November had been tallied, the state had hit $2 billion in medical and recreational cannabis sales.
These record-breaking sales can partly be attributed to record high, wholesale, cannabis-bud (flower) prices that in 2020 increased to levels unseen since 2016. According to the Colorado Department of Revenue, the average market price by wholesalers for a pound of marijuana flower reached $1,721 as of Jan. 1, a price last seen in July 2016. This hike in price has been fueled by increased demand for cannabis amid the coronavirus pandemic coupled with heightening consumer interest in costlier premium flower brands.
Prices for wholesale cannabis bud prices have increased by at least 30% since October, a welcome change for cannabis growers that were looking at an average price of $700 per pound just two years ago. As such, the increase in price has trickled down to manufacturers, retailers and consumers. And while one might think more expensive prices would turn consumers off, they have actually been gravitating towards these pricier, premium products.
Zachary York, inventory manager for Lightshade, a Denver-based vertically integrated cannabis company, says people have no problem paying more for higher-quality products. At the start of the pandemic, cannabis saw a hike in demand as consumers stocked up for the impending lockdown. Most of them went for lower-quality budget flower first, eventually working up to the higher-quality, pricier cannabis products. According to York, customers who sampled high-quality flower aren’t thinking of going back.
Several other cannabis executives concur, saying that consumers are willing to pay more for small-batch, premium flower brands such as Snaxland and Cookies. Knowing this, wholesalers have been able to command higher prices without much pushback from the rest of the supply chain or customers. With the growth in popularity of branded marijuana flower, certain wholesalers have been able to sell a pound of cannabis for as much as $4,000, York observed.
Tim Cullen, the CEO of Colorado Harvest CO, a vertically integrated marijuana operator based in Denver, says branded flower companies are increasing demand for top-shelf cannabis flower. They use advanced marketing techniques, are easy to recognize, and have devoted social-media followers.
Joe Spadafora, a partner and the head of marketing at Denver-based Veritas Fine Cannabis, attributes these new buying behaviors to the evolution in the tastes of consumers. “It reflects the market through its evolution,” he notes.
Outside of Colorado, California-based Green Hygienics Holdings Inc. (OTCQB: GRYN) is using cutting-edge technologies to develop products from novel cannabinoids as well as revolutionary cannabis delivery systems.
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