The cost of getting high is going down. 

The average cost of flower or bud in Maine’s adult-use cannabis market has decreased by over 41 percent in the last two years. 

It’s good news for customers whose wallets have been taking a hit, but it may be bad news for cultivators, who industry officials say overestimated the market and are sitting on a glut of unsold product.

When the adult-use market launched in October 2020, the average price per gram for flower was $15.83.

It decreased to an average of $12.75 per gram in 2021, and by June 2022, it had fallen further to $9.26 per gram. The year-to-date average is $10.29 per gram. The average joint contains between 0.32 and 0.5 grams of cannabis. 

Industry officials had expected prices to drop as the market matured, but the price of flower is not expected to dip much further, said Matt Hawes, head of the Maine Cannabis Industry Association. The association represents members in retail, manufacturing and cultivation.

Consumers aren’t demanding lower retail prices and cultivators are running at the low end of their margins, he said.

Hawes owns the Novel Beverage Company, which makes THC-infused drinks, and co-owns Brothers Cannabis, which has locations in Bangor and Brewer.

At the start, the industry struggled with limited supply, few options and high costs, especially when compared to the state’s prolific medical cannabis market. 

There are an estimated 3,500 medical marijuana operators – known in the industry as caregivers – in the state.

When the adult-use market first launched, only nine stores were open. 

That has increased more than tenfold in less than two years, with 100 stores now operating across Maine, according to the Office of Cannabis Policy.

Cultivators have multiplied at the same pace, with 70 licensed recreational growers, up from seven when the market launched. 

But now, with 70 growers supplying 100 stores, there’s a lot of cannabis in the market. While it’s good for consumers, who are seeing more options and prices decreasing pretty much across the board, it’s a concern for growers who may have counted on different market dynamics. 

DEMAND MAY HAVE BEEN OVERESTIMATED

Many say the demand for the adult-use market may have been overestimated.

There’s been a buzz for several months that there’s a lot of extra supply in the market, said Eben Sumner, president and legislative chair for the Maine Growers Alliance.

“I think that for all that hype that happened, it was a little bit overshot,” he said. 

Sumner owns Casco Bay Hemp and 1780 Maine, a medical marijuana caregiver store and cultivation site.

“I think it’s just a lot of cultivators pumping flower into the market,” he said, despite the fact that there’s still a lot of product that’s just sitting on shelves. He said it will take some time to even out. 

“There are these cultivators who want to encompass the whole state and they have these enormous grows (but) it’s not endless,” said David Vickers, owner of Origins Cannabis. “If you’re just a cultivator and you don’t have storefronts, I think you’re in a rocky spot.”

Origins has an adult-use location in Manchester, two medical dispensaries in Augusta, and both a cultivation site and manufacturing facility in Hallowell. 

Hawes attributes this disparity between market expectation and reality to a few things.

The medical market has continued to remain strong, partly due to its longevity and lower prices. And only about 10 percent of Maine towns have “opted in” to adult use sales, meaning the 100 stores are too concentrated, he said. They have to compete with one another instead of spreading across the state, creating cannabis deserts in the process.

MORE GROWS AND STORES COMING

This underperformance has led to saturation, and Hawes said it’s going to get worse. There are 111 additional cultivation sites in various stages of the approval process and 160 stores.

People are still building new grows – it’s the first segment of the supply chain that people invest in, he said.

“There’s this misconception with people who don’t have experience in cannabis that it’s an endless supply of easy money,” he said.

Plus, many stores, like Origins, are vertically integrated, meaning the owners choose to grow their own products, tamping down some of the demand for larger cultivators. 

Vickers said this has helped him keep prices down.

“We felt the market was overinflated when it started and we never participated in that,” he said.

Prices at launch were artificially high because there were only a few cultivators, who “held the industry hostage,” he added.

John Kreis, owner of Portland Greenhouse, said that there has been a slight uptick in sales since prices have gone down, but he said it’s difficult in a market like Portland where there’s so much competition.

Even with lower prices, Kreis said, it’s difficult to compete with the medical market, which is subject to fewer regulations, taxes and testing requirements than the adult-use segment. Prices will always be lower.

“The adult-use market is going to suffer until the state starts to regulate that,” he said.

PRICES DROPPING NATIONWIDE

Prices are dropping across the country. A wholesale price index tracked by Cannabis Benchmarks, an independent reporting agency, found that the price-per-pound for cannabis flower has been declining since last summer.

Accounting and advisory firm GreenGrowth CPAs reported that the aggregate national price for the 18 legal markets covered by Cannabis Benchmarks fell to $1,114 per pound in June, the lowest price observed in over three years.

Colorado prices plummeted to an all-time low of $709 a pound on July 1, down 46 percent from a year ago and 60 percent from January 2021, according to the Colorado Department of Revenue.

In Massachusetts, the price-per-gram is similar to Maine’s, at $10.58. Prices fell to $9.74 per gram in April 2020, but rebounded to the standard rate of around $14 before beginning to decline in June 2021 and continuing to fall each month since.

While Maine’s prices have consistently gone down, sales continue to set records.

In June, the recreational market brought in $13.4 million.

So far this year, the state’s 100 adult-use stores have brought in just shy of $65 million and are on track to far surpass last year’s $81.9 million. 

“A market that’s saturated, doesn’t mean the market isn’t strong,” Vickers said, adding that he expects it to level off soon.

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