$40 ounce… Gone forever?

In the past, when my car broke down or needed mechanic work for whatever reason, I generally call around to every mechanic in a nearby radius to get quick price quotes on my replacement transmission/tires/brake pad/ whatever issue I have.

More and more everyday this is how people are going about purchasing bulk marijuana. Over the past year, a significant percentage of the phone calls received at our shop are consumers inquiring about the cheapest ounce of flower for sale.

Where does the $20 you spend at the weed store go?

Two to three months ago you could call your average Tacoma marijuana retail shop and their cheapest ounce of flower would range from $40.00-$60.00. Twenty-eight grams for $40.00. That’s friggin’ cheap.

Fast forward to now, if you call into your average Tacoma marijuana retail shop asking for their cheapest ounce of flower they’re going to tell you $75.00-$80.00. Everybody, lend me your ears, that’s still friggin’ cheap.

Over the last two years Washington’s weed market, similar to Oregon’s, over produced useable flower, which drove prices down and created a demand for that $40.00 ounce. Today, as a retailer looking around for a producer/processor to sell us an ounce at a price point that allows us to get it to the consumer at $40.00 is impossible. With a less than standard 2.5x mark up to cover our own costs and excise taxes Tacoma’s bulk purchasing consumer is demanding a $16.00 ounce from the producer/processor.

Companies that sold their ounces at that $16.00 price point to retail shops do not exist anymore. That is a less than sustainable price to sell packaged marijuana for that is consumer ready.

Some company’s in Washington’s market have a business model in which they operate at a loss to put pressure on the market and drive consumers to their stores or create a demand for their product. This is happening at the producer, processor, and retail level.  

Personally, I am worried what effect this business model will have on the future of the industry. Lets say 30 years pass by and all the sixteen marijuana retail licenses within the city of Tacoma are controlled by 2 people, and they operate as a hive to hike the prices up or only carry certain farms and basically take out the things which make this industry good for the consumer, diversity, fair competition, small businesses, etc.

Whoa now, Ill pump the brakes on the theorizing of the future of Tacoma’s weed market… Back to cheap ounces. I am predicting that the average price of a normal budded ounce in Tacoma’s market will not drop below that $60.00 to $70.00 price point. Unless of course the retail store is letting them out the door at a stupid low price to drown the market.

3 comments on “$40 ounce… Gone forever?

    • I have occasionally seen the $30 oz, as well. Are we at that point when $10 separates an indoor oz from an outdoor variety?

  1. Hi Kyle!
    First off, Fantastic job on this commentary. As a frequent “budget customer” , I have always thought $40 oz. wasn’t a good business tactic for the growers, distributors, or especially the retailers.
    The thing most people are not paying attention to is that the cannabis market is set up to work in concert with alcohol. So as a longtime Food and Beverage guy I think it’s worth noting the disparity.
    For ever craft beer, hard alcohol shot, or glass of wine poured the price js set at .33 times the per ounce costs. So a beer from.a keg on average only costs about .75 cents, add the distributor it goes up to around $1.25, add the retailer (bar or shop) and the associated taxes and bam! It’s $7-$11 on average!
    I write all this to say that when cannabis goes fully Federally legal, it will suffer the same drastic inflation as that draft pour, so honestly $2.00 a gram will increase to atleast $10 a gram after all the federal “fees” are added. Folkx need to set there budgets to quality and not quantity. I’d rather smoke a .5 g pre-roll of quality than an ounce of weed that’s $40.
    Lastly, the real decider of what I’m willing to pay is how I’m treated by the budtenders. And your team has always treated us really well, and always finds us the best quality in our price range. So for that type of service, I’ll pay what is going to keep your business growing.

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