With some of the largest licensed outdoor grow facilities in the country, Pueblo County produces a significant amount of Colorado’s wholesale marijuana – and this year’s harvest could be its biggest.
It’s understandable, then, that indoor and greenhouse wholesale growers across Colorado might be worried about a possible flood of product this fall.
But the state’s growers needn’t necessarily brace for a dip in the price of a pound of cannabis, according to industry insiders.
Analysts say any worry is unwarranted because:
- Most of the outdoor crop has already been contracted as trim to marijuana-infused product companies and won’t affect the wholesale flower market.
- Markets are efficient, so Colorado has likely adjusted for the supply infusion and today’s wholesale prices already reflect what will happen in the fall.
“I don’t think the outdoor harvest this year is going to be responsible for much of a shock to the system,” said Jim Parco, an economics and business professor at Colorado College in Colorado Springs as well as owner of Mesa Organics, a cannabis retail business in Pueblo.
“Any forecasted future influences on the price of an asset are automatically reflected in the price of that asset.”
Baked in the cake
Colorado’s large-scale processors have stabilized the market by making plans to buy the supply in bulk in November and December, according to Parco. Those companies will vacuum seal and freeze dry the cannabis and process it for concentrates throughout the year, he added.
Tim Cullen, CEO of Denver-based Colorado Harvest Company, was among those initially concerned about the potentially adverse impact of the Pueblo harvest.
He had heard that massive grow operations like Los Suenos Farms, which has nearly 40 acres of licensed outdoor cultivation space, had “gotten their act together” and are ready to inundate the state with lower-cost cannabis.
He heard “there is a big harvest coming out of Pueblo and it will have an effect on the market,” he said.
But after talking with his contacts in the county, he feels more at ease.
“I really thought (the cultivators) would be out there wheeling and dealing right before the harvest, but their contracts were already tied up and they’d sold everything coming out of their gardens,” Cullen added. “A lot of the flower being grown down there isn’t top-shelf quality for sale as flower, but it would all pass the test to be extracted.”
However, a supply glut could affect the edibles market.
If lower prices for trim reduce the cost for the producer, an infused company could offer edibles at a better price and drive the market.
“You may see edibles prices come down,” Cullen said. “The other choice is that (the company) maintains the same price and enjoys a better margin.”