Growers in California are leaving the industry in droves. This comes as prices hit record lows and the industry becomes stagnant. Cannabis wholesale technology platform LeafLink reports that the total square footage of cultivation canopy in California has dropped over 15% when compared to the same time a year ago. Today, there is roughly 68 million square feet of cannabis cultivated land while last year there was over 80 million square feet of cultivated land.
Many experts such as Jason Vegotsky believe that this trend will continue for at least the next six months. Vegotsky is the CEO of Petalfast, an Irrvine-based sales and marketing agency for the cannabis industry. But although Vegotsky expects the next six months to be rough, he believes that if these growers can make it through, the latter half of the year will be profitable.
There are many reasons as to why the market is declining in California. One of the reasons is wholesale prices. Prices for whole pounds of marijuana are as low as a couple hundred dollars. These slim margins are cutting out farmers who aren’t financially stable. To mix with the low wholesale prices, the retail sector is becoming increasingly weak due to the lack of demand. Many companies and marijuana corporations are laying off workers in mass due to the inability to pay them without losing money.
Experts do believe that there is an upside to all of this though. It is expected that in the later half of the year, demand will increase, saving all these cannabis businesses from bankruptcy. Prices for cannabis will unfortunately rise yet again, but many of the small businesses will be saved and once again be on track to make profit.
Read the whole article from MJbizDaily here.