California’s outdoor cannabis harvest, nicknamed “Croptober,” is in full swing to beat the fall rains and frost. But what’s weighing on the expected tonnage more than the seasonal weather and years-long drought is the economic climate for the fledgling legal industry.
“It looks like every farmer has taken advantage of the opportunity to go fallow,” said Samuel Rodriguez of Good Farmers Great Neighbors, a Central Coast cannabis farming advocacy group whose members also have substantial North Coast acreage.
The scale of those cutbacks in production are ranging from 30% to half of previous levels — to fully not harvesting, Rodriguez said.
“It was driven by the shock and awe of 2020–2021, the depression of the price per pound,” he said.
Estimates of pricing for outdoor growers vary, but it is ranging from $200 to $500 per pound, Rodriguez said.
The average price in Sonoma County’s inaugural report on the legal crop was $570 a pound last year, amounting to $121 million for the 212,548 pounds harvested from nearly 50 acres, all but 3 acres of that in outdoor grows.
“But supply and demand is stabilizing, so there will be a fair price,” Rodriguez said.
The U.S. wholesale spot market index, according to Cannabis Benchmarks, was $999 a pound as of Oct. 21, down from around $1,300 as recently as May, $1,384 a year ago and $1,658 in October 2020.
But the Connecticut-based tracker of the legal trade nationwide noted that pricing for indoor-grown flower is holding ($1,284 a pound), while pricing for greenhouse (“hoop house”) and fully outdoor flower has been faltering, at $688 and $424 a pound, respectively.
“California and Oregon indoor product prices are moving higher on demand for what many connoisseurs will say is the best cannabis in the world,” the company wrote in an Oct. 21 research note.
Impact of regulation and illegal pot
But what has impacted other cannabis businesses, from cultivators to distributors, is competition with the continuing — and some say, increasing — illegal side of the industry, where operators are unlicensed, unregulated and untaxed.
California cultivators started raising an alarm nearly a year ago about the weight of state taxation on their profitability and potential as ongoing concerns. That led to Gov. Gavin Newsom’s signing a slate of legislation this summer, most importantly a cut in the cultivation tax and shift excise tax collection from distributors to retailers.
Daniel Sumner, an agricultural economist at UC Davis, said regulatory and taxation reform for the industry is a good start, but officials have to come to terms with the context for legal cannabis.
Published: October 27, 2022
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