State Says Wholesale Marijuana Prices Are Actually Rising

Prices may be getting lower at the dispensary, but the Colorado Department of Revenue reports that the wholesale cost of marijuana has increased slightly since October, the first increase in over a year.

According to the DOR's most recent assessment of the average market rate, the average price per pound of marijuana flower now runs $781, up almost 3 percent since the agency's last appraisal on October 1. The average price per pound of marijuana trim also rose, increasing nearly 22 percent to $396.

The DOR regularly updates its figures to reflect current average prices for marijuana flower, trim, seeds, vegetative plants and whole-plant material, as well as flower and trim designated for extraction. The DOR then uses these average market rates to set the excise taxes on wholesale marijuana, taxing businesses 15 percent of the current average market rate.

After the price per pound of flower plummeted from $1,948 in 2017 to a low of $759 in October, there was some question as to whether Colorado should have a set excise tax rate for marijuana. However, DOR executive director Mike Hartman believes it's important to stay current when regulating industry taxes.

“The quarterly average market rate update is just one of many examples of the Department of Revenue's use of data in helping regulate the burgeoning cannabis industry,” he says in a statement announcing the current numbers. “Industry participants use this report as part of excise tax calculations in certain retail transactions, but the Department sees it as one of the important tools that the state uses to closely monitor supply, demand and pricing dynamics.”

On track to eclipse last year's sales of around $6 billion, Colorado's marijuana industry hasn't seen as deep a plunge in pot prices as its counterpart in Oregon, where recreational prices have dropped 50 percent in the last year. California and Nevada have also seen drops in wholesale pot prices, though not as steep as Oregon's.

The new average market rate will take effect on January 1, 2019, and will run through March 31.