Great weather in the Eastern part of Washington state last season resulted in a bumper crop season for cannabis. Under normal circumstances an exceptional harvest would be good news for farmers, but that is not the case in Washington as the price of marijuana has hit rock bottom.
In any market, a surplus in product causes a reduction in price, and that is exactly what is happening in the case of the recreational marijuana cultivation market in the Evergreen State.
The problem started when the state licensed recreational marijuana farmers more quickly than it licensed recreational dispensaries. The farmers ended up with more of a head start than was probably necessary.
High taxes are also, reportedly, causing some of the trouble for Washington farmers because purchases made in neighboring states, Oregon and California, do not have such a high sales tax rate attached. Farmers believe that people may be purchasing their recreational marijuana out of state to save money.
Tom Lauerman (photo above) is the face of Farmer Tom’s Organics just north of Vancouver, WA, a licensed recreational marijuana grower. Tom reported that he is only being offered a fraction of the price he is used to for a pound of his premium, organic outdoor cannabis. Lauerman had to file for bankruptcy protection because he is near foreclosure on his farm property as a result of this crop surplus. He told CNBC,
“In the early days, we were able to get, like, $1,700 to $2,200 a pound, wholesale. Now it’s like $700, $800 a pound.”
“That’s not profitable at all. I’ve got most of my stuff stashed away for later.”
According to Lauerman there are 45,000 pounds of marijuana available for wholesale in Washington, but none of it is moving. Farmers are even trying to give some of it away in order to build business relationships, customer loyalty, and also just so that some of it is used before quality suffers.
Luckily, 100 more recreational dispensaries are expected to be licensed in the next few months, so that will create more demand for legal recreational cannabis that is ready to be sold. By that time, however, much of the crop harvested last fall may not be of the best quality if it is not stored properly.
Hopefully the market will balance out in time to save those farms that are already risking foreclosure, like Tom Lauerman’s Farmer Tom’s Organics.
photo credit: Facebook