Nevada’s recreational marijuana sales have only been legal since July 1 and the market can’t keep up with the demand. A combination of last-minute distribution issues and larger than expected sales have caused unnecessary stress among dispensaries and producers alike. The results have led to a 200% increase in cannabis prices in just one month.
Brayden Sutton, CEO of Friday Nights Inc. said the price per pound for trim has gone from $150 to $450 in one month. Friday Nights Inc. owns a subsidiary called Alternative Medicine Association which grows cannabis and produces products that include traditional marijuana flower, pre-rolled joints, and edibles. “We still have healthy margins, but it’s a good indication of what the market has done,” Sutton said if they can grow it or make it, it sells out immediately.
While the initial problem has been the fact that there are only two distributors for the retails outlets, Friday Nights signed a deal with Blackbird Logistics to do the physical deliveries themselves. “Right now, the retail stores are really struggling with keeping a consistent product on the shelf and meeting demand,” said Sutton. “They are constrained by what cultivators can produce, which is nowhere near what they need to be right now.” Sutton is expanding his facilities to increase production. The state has 88 approved cultivation facilities. Higher production will lower cannabis prices.
“We predicted the supply issues in Nevada when the demand for the products quadrupled overnight,” said Joel Milton of Baker, a customer engagement platform for dispensaries. “Nevada did not issue enough cultivation licenses, and it does not help that the production cycle from seed to sale in cannabis is untimely,” Milton said that most of their dispensary clients are experiencing a 3-4x increase in foot traffic and 74.2% of the sales are recreational versus medicinal. Baker is also seeing some of the same purchasing patterns among customers that it has seen in other legal recreational markets.
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