Where the Real Money in Marijuana Will be Made

Where the Real Money in Marijuana Will be Made

Where the Real Money in Marijuana Will be Made over 20 Years from CannabisNet on Vimeo.

Some people are freaking out at the fact that cannabis, in its botanical form, has seen a massive price drop. While some analysts believed that it would bottom out at 50%, the price drop has reached as high as 70% in some states. For instance, in Oregon you can buy a pound for $100 at wholesale prices.

As a result, the estimate amount of tax dollars also drop since its percentage based. California will be attempting to tax based on weight as opposed to percentages, however with an influx of cannabis within the marketplace, the prices will only continue to drop.

Does this mean that the estimates of early analysts were wrong? It is definitely wrong in terms of botanical cannabis, however the industry is still young and there is a lot of space to grow.

Why Cheap Cannabis is Good for the Consumer

The obvious winner in this scenario is the consumer. Paying between $1 to $5 per gram of cannabis will allow them to have easy access at affordable prices. Prices back in 2012 were as high as $25 per gram in some states however that was largely due to high demand and low supply.

Over the years, the cannabis industry increased its efficiency in growing and consumers found their rhythm in terms of consumption. This obviously resulted in a reduction of price per gram due to basic economics.

After all, cannabis is just a plant and when you start mass producing the plant, you start reducing the costs. While the costs of cannabis remains high (especially indoors), every year new technology allows growers to reduce those costs.

Things like utilizing solar or green houses help reduce the energy consumption, which makes up the bulk sum of the costs of growing marijuana. Once the Federal restrictions on recreational cannabis is lifted, we’ll also start seeing a greater reduction in costs by treating cannabis businesses like any other vice industry.

Why lower costs could be bad for the state?

The other side of the coin focuses on the tax revenue generated by the state. A lower cost per gram means lower income for the state. Costs are also dropping, but still remain high meaning that it could create a smaller profit margin for cannabis businesses and regulatory agencies needed to maintain the system.

This is why some people are worried about the future of cannabis, however once more…the focus remains on botanical cannabis.

Where the REAL MONEY in Cannabis is?

Let’s fast forward 20 years into the future. Cannabis is now legal on a federal level. Companies are buying cannabis in bulk from suppliers at cents per kilo, allowing them to create all sorts of infusions. In about 20 years, those who were hardcore prohibitionists would in most cases be dead, meaning that cannabis would be a part of society just like alcohol is.

While people would still be able to buy weed at stores, some people prefer to rely on craft growers. However, within this market of the future there are literally thousands of different products and services utilizing cannabis.

Virtually every sector of society can have that “cannabis edge to it”. From fitness centers to eateries, from entertainment to health, you’ll find something related to cannabis. Cannabis yoga is already a thing.

The point here is that the diversification of the marketplace will create products that will supplant the need for the tax revenue of botanical cannabis. Some people will prefer to drink a can of “Bud Cola” over smoking a joint. Especially if we work out the kinks in terms of doses.

The efficiency of cannabis infused products make will eventually be at the heart of the industry. From beauty products to our food, cannabis will infuse itself within the fabric of our society and the money generated from these transactions will continue to drive in tax revenue to the state while keeping the cost to the consumer low.

Eventually cannabis products will be as diverse as chocolate products. Different strains, different infusions, different terpene profiles. Producers will be working on creating a more satisfactory user experience.

We’re only really talking about these issues because the industry is still in its infancy. As it matures, we’ll see the kinks worked out and the expansion of product lines appear.

What you should do with this knowledge?

I know that many of you are eager to grow weed and sell it. It would be fun! However, that marketplace is currently saturated. Eventually, craft growing is where it will be heading if you really want to sell and grow weed. In this case, you need to start working on creating some epic strains and/or user experiences that can be branded under your name.

For the rest of the people who could give two shits about craft weed, the product lines of the future will supply them with their fix. Once that occurs, there will be more tax revenue than under the current model.

Where the Real Money in Marijuana Will be Made over 20 Years from CannabisNet on Vimeo.