Keeping an eye on the price of pot, a professor from Carnegie Mellon suggests it will become less expensive. After all, it is just a plant and once legalized, marijuana can become rather cheap, sort of like a tea bag. Wth legalization spreading and price plunging, marijuana markets are sure to change.
So let’s look at several developments that could affect the supply side.
More States
With California a likely yes on election day, there will be more states where recreational and medical marijuana are legal:
Bigger Sales
Noting that (estimated) recreational marijuana sales now exceed wine and chocolate candy, Bloomberg journalists suggest that big tobacco will soon be selling pot:
The revenue estimates below also show the relative size of the marijuana market:
Expanding Production
The numbers suggest that “big tobacco” could soon feel the irresistible attraction of the marijuana market. Initially regulation had mandated in-state production and favored small growers. Now though, with increasing consolidation, a minority of larger local cannabis business owners have increased output.
Meanwhile saying they hope to sell to pot growers (and expand their weed business), lawn care firm Scott Miracle-Gro has entered the hydroponics industry.
Our Bottom Line: Marijuana Markets
One message from all of these facts is the probable supply side entry of large firms. The result? Our supply curve shifts to the right and price descends.
Our sources: Once you start to look, you discover marijuana articles everywhere. The Marijuana Policy Project has a host of articles and Vox did one of its series of answer cards on pot. Meanwhile, Forbes and Fortune had some good maps and Bloomberg discussed the role of big tobacco for marijuana markets and Miracle-Gro. Finally, Business Insider conveyed some insight about why marijuana prices are descending. Please note that this post was slightly edited after publication to improve clarity and accuracy.
