Anyone who shopped at dispensaries last year likely noted that marijuana prices were dropping, with flower going as low as $15 an eighth and concentrates like shatter and wax selling for $10 or $12 per gram.
So why didn't edibles get cheaper, too?
With wholesale marijuana prices dropping almost 40 percent from the end of 2017 to late 2018 in Colorado, consumers who like joints or dabbing concentrates enjoyed cheaper dispensary visits. But those who prefer edibles didn't reap the same benefits.
According to dispensary sales tracker BDS Analytics, the prices of flower and concentrates dropped 20 percent and 7 percent, respectively, from the beginning of 2018 through October, yet the price of edibles actually rose about a half a percent.
"When we look at the trends behind this, since 2014 we've had a lot of tech improvements as well as developmental efficiencies that have driven down the prices of cultivation and, to some extent, extraction," explains BDS vice president of operations Greg Shoenfeld. "That trickle-down is much slower to arrive for the edibles category, in part because it's a multiple-stage process. The flower has to be cultivated, then it has to be extracted, and then that to be infused with foods and packaged."
Infused products such as edibles, topicals and tinctures are more expensive because they're more complicated, he adds. Making a pot-infused candy bar requires more steps and ingredients, some of which are also active, such as CBD and extracted terpenes, or compounds like ginseng.
CBD products have been a big boost for edibles manufacturers, notes Shoenfeld, explaining that edibles containing CBD increased their market share to 22 percent by the end of 2018 — and typically sell for about 50 percent more than their THC-only counterparts. "I think the expansion of CBD cultivation is taking place, but traditionally there has been less availability of CBD-dominant strains and extracts. CBD prices are definitely coming down, but that just means it's being included in more products," he says.
According to two of Colorado's most recognizable edibles brands, though, prices have held tight for an entirely different reason. Incredibles founder Bob Eschino says that most edibles manufacturers infuse their edibles with hash oil that is sourced from trim, not flower — and trim hasn't fluctuated as much in price over the past year.
The decline in flower prices "just hasn't had a giant impact on the edibles market," Eschino adds, but companies are starting to feel the heat. "We haven't seen a drastic drop in costs, but there is downward pressure for pricing. We're feeling that pressure. A lot of our customers have asked for price decreases over the past few months."
Nancy Whiteman, CEO of Wana Brands, says that Wana also uses trim-extracted concentrates in its popular infused gummy edibles. "We haven't seen enormous changes in costs. For us, it's about our ability to negotiate based on volume," she says. "The drop in the cost of flower has been an advantage to us."
With more supply than demand in states such as Colorado (and, to a much larger extent, Oregon), edibles brands are able to take advantage of more dispensary traffic and cheaper wholesale products, Whiteman says.
"A lot of it is a function of how a state has set up its licensing. In a state like Oregon, they didn't put a lot of limits on the amount of cultivation or canopy space and plant counts, so people ended up producing a lot of plants," she explains. "It's basic supply and demand. But other states are just the opposite, and have been restrictive on the amount of cultivation licenses."
CBD is now much cheaper than it was years ago, thanks to vast increases in hemp-derived CBD concentrates, which are no longer federally illegal to produce, Whiteman says. Edibles companies use this for their CBD-infused edibles, because high-CBD marijuana strains are more expensive to grow and don't carry as much CBD as their hemp counterparts.
"Hemp CBD is much cheaper than marijuana. If you look back a couple of years, you'd see the cost of CBD products have jumped down significantly," she adds.
Another market advantage that edibles have over flower and concentrates is a higher success rate with branding and marketing. Although concentrates are largely branded by their extractors, the majority of marijuana used for extraction comes from dispensary cultivations, and strain names are still more recognized than cultivators.
"I think this speaks to the presence of strong brands. When you look at flower in Colorado, there are a few brands that are out there, but it's primarily a commodity product that dispensaries grow on their own," Shoenfeld says.
Despite the recent fluctuation in other cannabis product categories, Incredibles doesn't have a manufacturer's suggested retail price (MSRP) for dispensaries. "We've always considered that, but every dispensary is so different. A store on Broadway [in Denver] is different than a store in Vail or Aspen," Eschino says.
Wana hasn't changed the way it operates, either. The Boulder-based company's wholesale prices didn't decrease as flower prices continued to fall through 2018, according to Whiteman, and the company plans to keep them stable. She attributes much of this consistency to the brand that Wana has built over the years.
"Brands add value to your earning ability," she says. "I think it's much easier to hold your price on branded products than something like flower right now."