Cannabis industry reports

Price Per Package or Price Per Gram? A Closer Look at Pricing Data

January 17, 2020

Executive Summary

This report examines Headset data on price from four key states with legal cannabis sales. Prices are broken down by item, the traditional method, and also by measurements unique to the cannabis industry, like grams of Flower or milligrams of THC in Edibles. This offers a unique perspective on pricing trends. Readers should use it to understand where prices will head in newly legal states, as well as to get a general idea of how much people are willing to pay for pot.

Introduction

Pricing trends in cannabis are difficult to track, because much of the market is so new. But we’re lucky enough to have significant data from two of the oldest legal states, a new but multi-year state, and a brand new state, which paints an interesting picture of where prices have gone and where they’re going. 

In the newest member of our dataset, California, prices are high by all measurements. Given how much settling out there’s been in Colorado and especially Washington, which boasts the lowest prices in the nation, California shouldn’t expect its prices to stay so high for so long. Nevada, which has had sales since 2017, has lower overall prices than California, which is to be expected for a state that’s had more time to develop its market, but significantly higher prices in the interesting and important Vapor Pens category.

In addition to examining average item prices (AIP) across the states, we’ve looked at price from a different angle: by weight and dosage. Because the popularity of different package sizes varies so much across the states, price can skew high or low based on how much volume people are buying. By looking instead at granular price data, like price per gram for Flower, Concentrate, Pre-Rolls, and Vapor Pens (which use 0.5g or 1g cartridges), or price per milligram in Edibles, Beverages, Capsules, Topicals, and Tinctures & Sublinguals, we get a clearer picture of what consumers are willing to pay in each state.

Moving deeper into package sizes, we’ve looked at Flower sales from both the AIP and the price per gram sides of the issue, and noticed a trend towards higher AIP but lower per gram prices. This suggests that people are buying more pot in fewer packages. Which is, of course, great news for everyone involved. Examining California’s Flower sales by package size, we see that, while people were buying plenty of dime bags early on, almost all sales are eighths now. Although more data suggest that people buy the most bottom tier legal cannabis in large quantities, so value consumers do exist. We’ve also evaluated demographic data, and are not at all surprised to see that older generations are willing to pay more for legal pot.

Methodology

Data for this report comes from real-time sales reporting by participating Washington State, California, Nevada, and Colorado cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. The data in this report pertain to average item prices and granular unit prices in 2018 and the first two months of 2019. Demographic data is from voluntary participants in store loyalty programs. Those data are cross-referenced with our catalog of over $4.5 billion products to provide detailed information on market trends.

Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

The Big Price Picture

AIP ranges from $15-30 across the four legal states in this report’s dataset, with the lowest AIPs occurring in states that have had more time with legal cannabis markets. This makes sense, as prices tend to fall when production ramps up to meet demand. The first day of legal cannabis sales in Washington state saw grams of cannabis being sold for as much as $30, which is unheard of now. Washington is, in fact, the home of the lowest prices in legal cannabis, with an AIP of $15.33.

However, it’s not simply more cannabis being produced for less money that determines AIP. Competition plays a major part, both within the legal cannabis industry, and from the black market. So does regulation. Washington has thousands of distinct cannabis brands, and a “tied house” market system that gives retailers a lot of power to push back on price. The result is a ton of affordable cannabis. Colorado’s system allows for vertical integration, so even though it has seen prices come down over the years, the brand landscape is less hotly contested. Prices did go down in Nevada and Colorado, though they stayed flat in Washington, where there’s really no room to drop. In California, which just came online this year, AIP has actually gone up by $5, but that can’t last forever.

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