Cannabis capitalism | | Santa Fe Reporter

The digital menu screens inside cannabis company Red Barn Growers dutifully display an array of strains and prices, much like most New Mexico dispensaries. Up Town Funk and Grim Glue are $10 a gram at the well-known store a few miles from the Santa Fe Farmer’s Market, as are other varieties.

Then there’s Motor Mouth, which costs $12 a gram.

The difference is not just in the THC content and flavor profiles, but where the buds were grown. Red Barn’s cultivation facility in Gallup handles much of the lifting, but another licensed grower cultivates Motor Mouth; Red Barn buys it wholesale.

According to figures compiled by the New Mexico Cannabis Chamber of Commerce, the average wholesale cost of cannabis in New Mexico has fallen nearly in half since mid-summer. But that probably won’t mean lower retail prices, according to producers who spoke to SFR. What this probably signals, they say, is a more competitive market which is less likely to lead to a Dreaded Cannabis Shortage.

Several legacy producers — those companies that operated in the state’s medical program before adult use was legalized — tell SFR that these are mostly new cannabis retailers with no independent sourcing or even cultivation license who buy in bulk.

Red Barn seems to be an exception.

The company has been stockpiling bulk cannabis to bolster supply, ahead of a run on the product this year, said executive director Ellie Besançon, who oversees operations at Red Barn Growers as well as Green Goods in Albuquerque for Vireo. Health, a national cannabis company. . But Red Barn hasn’t made a bulk purchase for about five weeks.

“Compared to some of the other biggies, we’re kind of a smaller group,” Besançon told SFR. “And so to meet the demands of [recreational-use cannabis]one of the things i did was start stockpiling in bulk, just to make sure we weren’t going to run out and to make sure we had that 25% cache for medical patients.

Red Barn and Green Goods were already bearing the extra costs of buying wholesale, she says, in order to keep retail prices around $10 to $12 a gram, a fairly standard rate in urban New Mexico. .

Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce, says his numbers, which come from members and other companies, show the wholesale price of cannabis flower has risen from around $10. a gram at around $5.

Lewinger prefers the term “fluctuation” when referring to the downside and says he agrees that the change “doesn’t necessarily mean the price is going to go down for consumers.” However, he adds, consumers will start to see more variety at the counter.

“Wholesale prices could go up and down,” says Lewinger. “I think part of the challenge is that new growers and new retailers don’t necessarily have all the connections they need to get the exact product they want.”

Len Goodman, who runs Best Daze, told SFR that the sharp drop in wholesale prices actually shows “we’re not in short supply.”

“There is some competitiveness going on” in the New Mexico market, he adds. But Goodman warns that outdoor crops are weeks away from harvest, which creates some uncertainty.

“What we don’t know is how big the fall harvest will be,” says Goodman. “So there is no shortage right now, will there be a glut? I don’t know yet… For the most part, the old producers didn’t need to buy in bulk.

Duke Rodriguez, president and CEO of prominent cannabis company Ultra Health, says he doesn’t expect retail prices to drop, even with the drop in wholesale prices. Rodriguez points out that the average wholesale price is just that, and costs can fluctuate depending on the quantity in any given wholesale transaction. He says Ultra Health buys manicured buds to add variety and toppings to make extracts and edibles, but not a lot of volume compared to what the company grows itself.

“There is a wholesale market, but I wouldn’t say it’s a very active market,” Rodriguez tells SFR.

He says that in other markets across the country where wholesale prices range from $2 to $4 a gram, retailers can triple their profits. But with higher wholesale prices per gram in New Mexico, Rodriguez believes retailers can only double the price.

“When we bring in what we call a guest strain, we don’t price it above our market rate of $8.99,” Rodriguez says. “So it’s unlikely that we would buy it at $5 a gram and then peg it at $8.99.”

Lewinger says wholesale price changes are a necessary part of an industry still in its infancy.

“It all seems normal to me,” says Lewinger. “That seems completely normal for a new industry trying to gain a foothold in New Mexico and nationally.”

The new industry recorded more than $40 million in cannabis sales in August, the highest since adult sales began in April.

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