marijuana prices are plummeting because big businesses are flooding the market
But the wholesale price of the drug is falling in a straight line, which is bad for small businesses and states that first legalize marijuana.
In the past year, the wholesale price of cannabis fell by 60% in 2016, from $2,500 to $1,000 today.
Com CEO Brian Shapiro told Forbes.
Video experts say the rapid decline in cannabis costs is due to large businesses entering the market, who grow more cannabis than they need
Even so fast-
Growing customer base.
In this new market, there are two ways for companies to compete: developing new growth technologies or producing more products, experts say.
But for small businesses, both measures are hard to work.
This is because the federal government still recognizes marijuana as an illegal drug, and cannabis businesses are unable to obtain loans or set up check accounts in traditional banks.
Big companies don\'t have this problem. they may be purposefully pouring into the market and launching small businesses.
If they succeed, then they can raise costs again by reducing production.
The decline in cannabis costs is also a problem for the states that paved the way for legalization.
States like Colorado and Washington state levy taxes on total sales.
As the price decreases, this means a decrease in sales and a decrease in taxes.
Other countries have seen the issue as well and have developed legislation on pot accordingly.
For example, in California, the amount of tax revenue is linked to the sales volume of the pot rather than the price.
This fast-changing market is good and bad for investors.
This is bad because lower profit margins can lead to less returns.
But it\'s also good because if the market is integrated into the hands of a few major players, investors will have a better idea of where to invest.