Cannabis Price Compression: What’s Driving It and Why It Matters

Cannabis prices across the U.S. are dropping fast. A few years ago, legal cannabis came at a premium, but as markets mature, prices are nosediving. While great for consumers, it’s shaking up the industry, forcing businesses to adapt or get left behind.

Take Michigan. In October 2023, the average ounce of cannabis was just $73.99, compared to $287.92 in 2019 a 75% drop in four years (Michigan Cannabis Regulatory Agency). Meanwhile, in Maryland, where adult-use sales only launched in 2023, ounces still sell for around $283, mirroring Michigan’s early days. Will Maryland’s prices follow the same trend?

The Bigger Picture: How Other States Stack Up

Michigan and Maryland aren’t alone other states have seen similar drops:

• Colorado: Ounce prices peaked at $200+ in 2015, but by 2023, they hovered around $100 

• California: Wholesale flower prices crashed from $1,000+ per pound in 2020 to as low as $300 in 2022, dragging retail prices down

• Washington: Once $250+ per ounce in 2014, you can now find ounces for $50-$75 in many dispensaries

This pattern is clear: as legal markets grow, prices shrink. More supply, more competition, and shifting consumer behaviors all play a role.

The Ripple Effect on Businesses

For ancillary businesses, cultivation supplies, packaging, security, and logistics this is a wake-up call. As cannabis companies tighten budgets, service providers must adapt. The winners? Those who innovate, offer competitive pricing, or pivot to new revenue streams.

Yet, it’s not all bad news. Lower prices often mean higher sales volume. And the biggest growth areas? Delivery services, cannabis lounges, tourism, and large-scale events. The industry is shifting from just selling flower to selling experiences.

The Future of Cannabis: Beyond Just Selling Flower

Here’s my take: the real shift in cannabis industry revenue isn’t going to come from just selling individual products it’s about creating experiences. We’re already seeing signs of this transformation:

• Social consumption lounges emerging in states like California and Nevada, allowing people to enjoy cannabis in a social setting.

• Cannabis tourism gaining traction, with dispensary tours, weed-friendly Airbnbs, and cannabis-infused dining experiences popping up.

• Large-scale cannabis events and festivals bringing in big crowds and major sponsorships, creating a new kind of industry revenue stream.

This is where the future lies. The market is shifting from simply selling cannabis to curating immersive experiences, and the companies that recognize this now will be the ones leading the industry in the coming years.

So, what does the future hold?

• Will interstate commerce finally happen, creating a true national cannabis market?

• Could an International Cannabis Trade Commission emerge, setting global industry standards?

• How will banking, federal laws, and taxation change as more states push for reform?

Price compression is just one chapter of the cannabis industry’s evolution. The real transformation is yet to come, and it’s going to be massive. No matter where the market moves, cannabis isn’t going anywhere. This industry is just getting started, and its economic impact will be bigger than most realize.

Why was the cannabis so cheap? Because even the price took a hit!

Thanks for reading! Stay informed, stay ahead, and let’s keep the conversation going. Check out The High Index for more insights into the evolving cannabis industry.