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Inflation Is Making Marijuana More Expensive

There's an important change coming that may force users to change their behavior.

While inflation has already ruined many people's plans for a summer trip cross-country, the impact of rising prices may soon hit some people where it'll really hurt.

Cannabis, and many of its related products, has so far largely escaped the kind of double-digit increases seen in many food products such as chicken to avocados — one analytics firm even reported that the price of marijuana flowers, edibles and vaping products fell by a respective 16.7%, 11.8% and 12.4% between January 2021 and 2022.

But for interconnected reasons having to do with everything from lack of available materials to supply chain disruption, prices for most things have been rising steadily and at a rate unseen in 40 years. 

Even if the main item hasn't increased in price, rising costs for packaging material has left almost no industry unaffected.

Between June 2021 and 2022, the consumer price index rose by 9.1%.

Has Inflation Finally Come For People's Weed?

And, as the latest report from cannabis industry and accounting firm GreenGrowth CPAs shows, inflation may have finally started coming for the cannabis industry.

Amid rising cost of labor and materials necessary to make ready-to-consume cannabis, one in every four retailers that produce it reported that they have either raised or plan to raise prices by more than 10% in the next year.

"The COVID-19 pandemic had a comparatively limited impact on cannabis operators," reads the report. "According to last year’s data set, the top two reported issues, supply chain and difficulty hiring, affected nearly all sectors in 2021. [...] In addition, the most common issue impacting operators today are supply challenges."

Cannabis Marijuana Lead KL

The survey examined over 700 companies in states where either recreational or medical marijuana use is legal. These include both start-ups and large multi-state operators.

While 70% of operators said they would try to absorb rising costs instead of raising prices, 30% plan to raise prices preemptively to prevent losses.

Pointing the Finger 

The study's respondents split over who to blame for rising inflation, with 40% citing Biden administration policies, and 30% citing carryover effects from Trump administration policies.

Other reasons cited by operators include supply chains, conflicts with countries like Russia and China and impact from petroleum companies' way of doing business.

Nationwide numbers rarely tell the whole picture since cannabis use and production are currently illegal at a federal level. But even with rising prices, demand has been strong both during the COVID-19 outbreak and after. Some online delivery services in California reported a 500% rise in sales since the start of quarantine.

"After two years marked by crisis and uncertainty following a global pandemic, financial operators in cannabis find themselves navigating a list of new complications and business obstacles," reads the report. "But it isn't all bad news. Many operators benefited from a surge of demand and used this new windfall to enact ambitious growth plans."