Unhappy Croptober: Sungrown Prices Crash to Historic Lows

The mood was somber at this year’s Hall of Flowers, the annual early fall trade show in Santa Rosa, California that’s become a de-facto preview of the yearly sungrown cannabis harvest.

For years prior to legalization and the opening of California’s adult-use cannabis market in January 2018, even if indoor-grown buds glistening with trichomes commanded higher prices, outdoor farmers still enjoyed reliably healthy appetites for their lower-THC, distinctly aromatic cuts. A pound of trimmed outdoor could fetch thousands of dollars; trimmers could expect $100 and $150 for every pound they prepared for market.

Not anymore. Since the opening of legal markets, outdoor prices have fallen, but fluctuated just enough to keep people in business. But this year, with the early light-deprivation harvest competing with enormous auto-flowering hauls from the airliner-hangar-sized greenhouses in the Salinas Valley and Santa Barbara County, as well as the usual indoor supply, things were different.

As one outdoor entrepreneur grimly joked, someone could wear a t-shirt offering “$50 packs,” and instead of eliciting knowing, sad laughs, they would probably entertain serious offers.

For a pound of outdoor cannabis in 2021 in early October, before the annual “Croptober” harvest, a pound of outdoor is demanding around $500 on the market. But most are asking for even less.

“The average is probably $500, but the drop from $500 to $150 is super quick,” said Nicholas Smilgys, who owns a Mendocino County-based distribution company.

His estimates were confirmed with other outdoor growers and distributors contacted by Cannabis Now. If someone has the most gorgeous outdoor anyone has ever seen—truly flawless AAA-grade weed—that might fetch $800. But that would be for what most growers, just a few years ago, would have reserved for their private head stash. And that’s still a price so low as to make outdoor cannabis farming a losing value proposition, as Tina Gordon, the founder and CEO of southern Humboldt County-based Moonmade Farms said.

While the flooded market means wholesale buyers can be outrageously selective, for producers, production costs have increased. There’s state excise taxes to pay before a single gram has been sold to consumers as well as state and county licensing and permit fees. With all that, combined with prices this low, how does anyone using the sun to produce cannabis make money?

“You can’t,” Gordon said.

Though this is an economic disaster, none of this should come as a surprise. The slow-motion demise of California’s small craft cannabis growers has been documented in excruciating detail over the past few years.

In addition to market competition and regulatory burdens, a litany of natural disasters like wildfires and drought, added to farmers’ woes—though at least fires offered a mixed blessing: if one farmers’ crop was ruined by smoke damage, that meant less competition for the farmer on the next ridge over whose crop was untouched.

But with more and more large-scale greenhouses entering the market—a single 87-acre grow was approved in Santa Barbara County earlier this summer, and county authorities reported more than 1,575 total acres in unincorporated Santa Barbara devoted to cannabis production or cultivation—California may produce three times as much cannabis as it can consume, industry observers and experts have said.

Exactly how much legal cannabis California produces remains a literal state secret; state law allows industry regulators to keep those numbers known only to themselves and select others, including law enforcement.

That might not matter if small farmers could sell directly to consumers or market their crops across state lines—neither of which is legal under state and federal law.

Small farmers, then, have two options. They can return to the illicit market, chasing higher prices along with increased risk. After all, the high prices that some fondly remember from a decade ago were in a way artificial, inflated by the risk of prohibition. Or they can offer only a few drops into an onrushing river that’s threatening to carry away their mode of production, as well as their way of life.

“These big swings are tough for a smaller company,” Smilgys observed. “You have to scramble to make up that lost revenue somewhere else.” That might be cutting wages for workers (or releasing staffs entirely). That might be cutting corners on supplies like fertilizers. Or it might mean giving up entirely on trying to satisfy a market that, to date, simply hasn’t been efficient in the way a small, bootstrapped producer using the sun needs.

The post Unhappy Croptober: Sungrown Prices Crash to Historic Lows appeared first on Cannabis Now.