Inflation is all over the news, with gas prices rising, stocks plummeting into bear market territory, the war in Ukraine cutting off resources, and the pandemic still squeezing the supply chain. But there’s one place where consumers aren’t seeing prices rise: the weed store.

The weed industry hasn’t entirely escaped inflation. The cost of materials needed to grow cannabis has gone up considerably. Rather, stable prices at dispensaries indicate a high supply of weed and intense competition. There’s so much product in the market that stores are reluctant to raise prices for fear of losing customers to the shop around the corner. Growers too. 

The beginning of the pandemic saw a spike in cannabis sales, as people stocked up on weed and other goods to help them get through lockdown. There was more demand for weed than supply at first, and not enough to satisfy people’s appetites. 

Now the opposite is true. Due to inflation, people are cinching their belts and ponying up extra cash for gas, food, and other goods. That’s led to an oversupply of cannabis products, with a customer base that suddenly has less cash to spend.  

There’s too much weed in the market

Competition for customers among cannabis shops is high right now because there’s an abundance of product in the market. With most other goods in the economy going up in price, weed shops have kept their prices the same, simply to get customers in the door. 

“Any one of the shops who raises their prices on their own, [it] would be a little bit of a death sentence at this point. Customers know that they have a lot of options,” said Jason McKee, general manager and buyer at Ganja Goddess in Seattle, Washington. “It’s a dangerous game to raise prices.”

Indicative of the market as a whole, sales seem to have dipped a little bit at the Seattle store, but there’s no cause for alarm. The shop hasn’t had to cut staff or hours.

“There’s definitely been a small percentage decline in sales, especially as this drags on; gas prices are still continuing to go up. So as long as that’s the case, I think we’re going to see a slow down,” said McKee. “In general, we’re just trying to keep the customer interested and trying to keep them coming back.”

The same is true for growers. They need to compete with other growers and can’t afford to raise prices when selling to dispensaries because there’s so much product in the market. Both growers and retailers seem locked in to current pricing levels at the moment, afraid to raise prices even though their expenses are increasing. 

McKee said he buys product from about 60 growers and vendors and that only two have increased prices, and one even lowered prices. 

Growers are feeling the squeeze

The global supply chain is still a mess from the pandemic, and shipping is reduced all over the globe. Any goods coming from overseas face long waits and a backup at the dock, hiking up prices for the simplest materials, including those needed for growing and selling cannabis.

“Like almost every industry, we’re really feeling the squeeze when it comes to supply chain,” said Matt Gaboury, co-founder of House of Cultivar, a grower in Seattle. “We’ve had to switch vendors for certain things just to be even able to get the packaging materials or some of the supplies that we need… Everything is more expensive than it was three years ago.”

But as prices for materials to grow cannabis go up, the amount of money growers can get for their harvest when selling to dispensaries isn’t. Again, the abundance of weed in the market has created high competition among growers as well. Growers are keeping prices down simply to sell product, forcing them to shoulder the extra costs of materials.

“I think really where our industry is feeling the crunch is because the cost of all that stuff has been going up, so our cost to produce is obviously rising, and the price is staying static; that means that our margins are decreasing,” said Gaboury. “If anything, they have been trending downward, not upward, to match inflation.”

Supply chain issues have also affected the availability of basic materials. “Stuff that typically would take 60 days [is now taking] double that amount of time, easy. We had one container of packaging that sat in port for probably almost six months,” said Gaboury.

Even the war in Ukraine is affecting the cannabis industry. Ukraine and Russia export 28% of the world’s fertilizers (those containing nitrogen, phosphorus, and potassium). Wartime trade disruptions and economic sanctions have significantly reduced those supplies, sometimes doubling the price of fertilizers—and that includes those needed to grow cannabis.

“I can get most fertilizers, but the specific one I want for the summer is not available,” said Joe Poulter, owner of Fire Flower, a grower in Oregon. He estimates the cost of fertilizer and other materials bought from agricultural suppliers have risen about 25% in the past few months.

Additionally, items you might not think about much, but are essential to growing plants, have gone up in price. For his outdoor grow, Poulter estimates that 20-gallon pots have gone up from about $6 a pot to about $9. 

Gaboury from House of Cultivar mentioned that their coco coir, a medium used to grow plants instead of soil, has doubled or even tripled in price, because it’s obtained overseas. 

Multiply these seemingly small increases by hundreds or even thousands of plants for some grows, and it’s a significant additional cost.

What will the weed market do next?

The stock market’s dip into bear market territory last week is not a good sign for the US economy, and the Federal Reserve took a huge step to combat inflation last week, dramatically hiking interest rates to cool off the economy. 

For now, retail prices at cannabis stores seem to be stable, but consumers aren’t buying as much weed, as more of their budget is eaten up by gas, food, and other goods that have increased in cost due to inflation. 

At this point it’s the cannabis growers who are feeling pressure the most. Eventually growers may have to raise prices to make ends meet or face going out of business. Higher wholesale prices would likely result in higher retail prices at the dispensary.

But unless all growers can collectively raise prices, some growers could be pushed out of business by others who can still afford to sell at low wholesale prices.

Aside from the troubles of the US economy, another variable in this equation is that the cannabis industry itself is volatile, constantly expanding and contracting. It’s a highly competitive industry with operators setting up shop and going out of business all the time. The fledgling market is still figuring itself out, even in states that have been selling legal cannabis for several years.

“We haven’t really reached stabilization,” said Gaboury from House of Cultivar. “In a state like Washington, we’re a little bit more of a mature industry… so I think our rollercoaster ride is starting to flatten out. Our dips and our highs aren’t as much as they used to be. It’s still variable, but it’s getting less and less, and more and more consistent.”

The full effects of inflation on weed prices are yet to be seen, but the market has proven to be resilient and able to bounce back. In the meantime, support your local weed shop and grower. 

Pat Goggins

Pat Goggins is a senior editor who handles Leafly’s informational content and specializes in cannabis cultivation after working for a commercial grower in Oregon. When not fixing typos, you’ll probably find him on a boat or in the mountains.

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Last month the Biden administration proudly announced that farmers hit by natural disasters over the past two years would start receiving relief payments from a $6 billion injection into the USDA’s Emergency Relief Program.

“Farmers and ranchers across the country have been hit hard by an ongoing pandemic coupled with more frequent and catastrophic natural disasters,” Agriculture Secretary Tom Vilsack said. These new funds will “inject financial support back into the rural economy” to farmers who lost crops due to drought, wildfire, smoke damage, flooding, and winter freeze.

New funds will help farmers recover from wildfire and other disasters. But not if you’re growing legal marijuana.

The support is expected to be especially welcome in the American West, where wildfires and smoke wiped out many crops in 2020 and 2021.

There’s only one hitch in the program, though. State-licensed cannabis farmers, whose outdoor crops in the West were severely damaged by wildfire, aren’t eligible to receive a single penny of relief.

In an email to Leafly, a USDA spokesperson confirmed that there’s no way for cannabis growers to receive any of these funds—no matter how much damage or destruction their crops may have suffered.

“Marijuana is a controlled substance, and therefore is not eligible for federal farm programs,” a USDA spokesperson wrote in an email. “Hemp,” the spokesperson noted, “is eligible for farm programs.”

Hemp is cannabis with less than 0.3% THC, but it’s not state-licensed cannabis—which, as Leafly noted last year, now comprises America’s fifth most valuable crop.

Hard to find insurance, impossible to get federal aid

America’s cannabis farmers are critical players in the effort to end illicit marijuana sales and move consumers into the licensed, lab-tested market in 19 legal states.

But because of federal prohibition, they’re forced to take on risks no other farmers must bear. Those risks include these two economic gambles:

• State-licensed cannabis farmers aren’t eligible for federal crop insurance.
• These farmers are also prohibited from receiving help from the federal Noninsured Crop Disaster Assistance Program, which helps farmers whose uninsured crops are damaged or lost due to natural disasters.

That forces cannabis farmers to turn to the private insurance market, but many find that insurance ruinously expensive—if it’s offered at all.

Private insurers have been discouraged from backing cannabis businesses due to the state-federal legal conflict.

According to the Center for Insurance Policy and Research, private insurers have been discouraged from backing cannabis businesses due to “conflicting state and federal laws” and “rapidly evolving regulations.” The organization notes that cannabis producers face the same general liabilities and risks as other farmers, such as “workplace accidents, damage to property and crop failure.” Cannabis operations are “especially prone to fires from both wild and internal sources,” according to the research center.

With no federal assistance available, and private insurance difficult to come by, there seems to be very little protection for recovering farmers in the industry.

Legal states offer no help either

In Washington state, the legal status of cannabis doesn’t gain its growers any state-level public assistance either, according to Washington State Liquor and Cannabis Board spokeswoman Julie Graham, who cited information from the state’s Department of Commerce. The commerce department itself did not respond to an email asking what resources or aid might be available.

Private insurers may cover a cannabis business’s liability and property but exclude the actual crop and resulting products, according to the Washington State Office of the Insurance Commissioner. These businesses are required by the state to purchase some coverage, albeit quite limited. “The sale of cannabis is legal in Washington state,” the agency states. “However, some insurers won’t offer you coverage because the federal government still considers it an illegal substance.”

“Coverage may only be available from high-risk, non-Washington licensed insurers called surplus line insurance companies,” which are entities that cover especially risky things like a house built on the side of a steep hill or rare art, according to the agency.

Lack of insurance may lead to greater personal risk

That lack of crop insurance doesn’t just put farmers at risk of economic ruin. It can lead some to put their own lives in danger. Consider, for instance, the story of Washington state cannabis farmer Terry Taylor.

When there’s no insurance, farmers can end up needlessly risking their lives to save their property.

When a massive wildfire tore through Washington’s Okanogan County in late 2020, Taylor jumped into action. The farmer and former firefighter knew the Cold Springs Fire could destroy his family’s home—and livelihood.

“It was our whole life,” Taylor said of his company, Okanogan Gold. “We’ve spent the last seven years building this whole facility, and we didn’t want to see it go. If we knew we had insurance, we would’ve just said ‘OK, let’s just go.’”

Instead, Taylor risked his life working to save the 38-acre property, staying there after Okanogan County sheriff’s officials warned him to evacuate at 2:30 a.m. on Labor Day.

$500,000 in crop damage from wildfire

Taylor was fortunate. He didn’t lose everything. The wildfire burned more than 290 square miles near his farm, but spared his home and facilities. He said his operation suffered at least $500,000 in crop damage and another $10,000 in physical damage to equipment like irrigation pipes.

“All of the cannabis was damaged,” Taylor said. “It was full of dirt because we had 50-mph winds, and it was pushing dirt and ash. We couldn’t use it as the flower it was intended to be,” explaining that the plants ended up being categorized low-grade and had to be used mostly for cannabis oil extraction. “Most of it got sold at very low prices,” he said.

“If we would’ve lost everything in that fire, we would’ve had nothing,” he said, describing 200-foot flames on the other side of the Okanogan River, near his property. “I mean, that’s the reality of it.”

Cold shoulder from officials even in legal states

Even in America’s most well-established legal states, public officials who eagerly tout the relief offered to all other farmers go strangely silent when it comes to cannabis farmers.

Sen. Patty Murray (D-WA) last month issued a written statement praising the USDA’s disaster relief funds, noting that roughly $191 million would go to farmers in her state alone.

“I’m glad we could bring back some badly-needed federal dollars to help our farmers

and ranchers during a really tough time,” Sen. Murray said. “I will always have the backs of Washington state farmers who keep food on our tables and our families fed.”

Terry Taylor and other cannabis farmers, of course, will be excluded from the help extended to Washington’s other farmers.

That’s despite the fact that legal cannabis is estimated to be the fourth highest-earning cash crop in Washington, with a production value of $653 million in 2020, according to the 2021 Leafly Cannabis Harvest Report.

“It’s brutal,” he said. “And lately, we’ve been kinda used to it.”

Last October, Sen. Murray asked federal officials to offer help to agricultural producers not included in past relief programs. She co-authored a letter with three Congress members from her state, asking for aid to be given to “producers who suffered some of the greatest heat-related losses.”

This includes those who are “either located in counties not covered by the drought designations, experience losses not covered by drought assistance programs, or both,” the letter states.

After receiving the letter, federal officials decided to offer aid to “underserved producers who have been left out of past relief efforts,” according to the USDA Farm Agency’s description of the Emergency Relief Program.

Even so, cannabis farmers continued to be excluded. Murray’s office did not respond to an email asking if she has lobbied to get federal aid for these growers, or if she has any plans to do so, given the crop’s importance to the state’s agricultural economy.

The fact that cannabis farmers have been ignored by these efforts went unacknowledged by the senator as she applauded the program’s launch last month.

The challenges don’t stop

Meanwhile, growers throughout the West continue to grapple with extreme weather and other challenges.

“This year has been really brutal for everyone, just with the prices going down and the fires from last year, recovering,” Taylor told Leafly. The weather this year has been so cold, he said, that it’s stunted the growth of his crop. “Our auto flowers were three feet tall at this time (last year), and this year, they’re three inches tall. Some were planted last month, and they’re like we just put them in the ground.”

Canopy limits under state regulations have also forced the farm at Okanogan Gold to cut its production by about half – from 75,000 auto flower plants last year to 25,000 this year, Taylor said. Those regulations, along with the poor weather conditions, will make it extremely difficult for smaller growers to survive, he added.

“We’re going to probably be able to hold on because I don’t have any debt,” Taylor said. “But the people that owe on the property and everything – I think it’s going to be a house of cards.”

Marissa Wenzke

Marissa Wenzke covers cannabis in Los Angeles for Leafly. She is a graduate of Columbia Journalism School and works as a digital news producer for KTLA newscasts.

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