A supply shortage of marijuana in Nevada has forced prices to rise as much as 200 percent in some cases.
Nevada’s recreational marijuana program has certainly had some highs and lows. Recreational sales started on July 1, much earlier than the originally planned date of January 2018.
Early sales were possible from a regulatory standpoint because medical shops have been up and running for approximately two years. Currently, medical dispensaries already in operation are the only approved vendors of recreational marijuana in Nevada.
Overall, shops in Nevada have largely followed strict regulations on dispensing medical marijuana and the trend has carried over into recreational sales. Authorities sent out inspectors to check for compliance violations as soon as recreational sales started. No significant violations were reported.
Unfortunately, due to delivery issues created by state regulations and the fact that liquor companies had exclusive rights to transport recreational marijuana from producers to retailers, shops have struggled to replenish their inventory. Combining that with higher than expected sales, it is easy to see how Nevada finds itself in the middle of a “marijuana drought.”
As supply and demand would dictate, less available product has caused prices to skyrocket. Brayden Sutton, CEO of Friday Nights Inc. said the price per pound for marijuana trim has risen from $150 to $450 about one month.
“We still have healthy margins, but it’s a good indication of what the market has done,” Sutton said according to Forbes.
“We predicted the supply issues in Nevada when the demand for the products quadrupled overnight,” said Joel Milton of Baker, a technology and data firm that helps dispensaries cater to their customers. “Nevada did not issue enough cultivation licenses, and it does not help that the production cycle from seed to sale in cannabis is untimely.”
A recent court ruling could help to alleviate the shortage, at least for now. Last week, a judge ruled that additional companies could be licensed to transport marijuana to dispensaries, at least for now. The judge also acknowledged that his ruling could be challenged by the liquor industry.