When it comes to cannabis flower at dispensaries, the price range can seem as broad as the variety of strains available. Are you looking at $100, $200, or even $300 for an ounce? The truth is, the answer is “all of the above,” and it largely depends on where you are buying. The old adage “you get what you pay for” rings true, but in the cannabis world, it’s heavily influenced by the state market dynamics. This begs the question: how do dispensary prices truly compare to street prices, and what factors drive these differences?
While legal cannabis flower prices generally decrease as state programs mature, the speed of this decline is affected by numerous factors. These include the state’s licensing structure, the legal status of cannabis in neighboring states, and, fundamentally, the balance of supply and demand. Nowhere are these pricing dynamics more apparent than when comparing markets like Michigan and Illinois, which launched their adult-use sales within a month of each other in late 2019 and early 2020.
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Michigan has seen the days of $300 ounces become a distant memory. By 2023, the average adult-use cannabis flower price in Michigan dispensaries had plummeted to around $92 per ounce. In stark contrast, Illinois dispensaries averaged a hefty $293 per ounce for adult-use flower in the same year. These figures, reported by the Michigan Cannabis Regulatory Agency (CRA) and the Illinois Cannabis Regulation Oversight Office (CROO), highlight a significant price gap between these neighboring states. This difference naturally leads consumers to consider: are dispensary prices always the most cost-effective option compared to unregulated street sources?
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To understand the broader picture, let’s examine how prices have evolved in six adult-use markets of varying ages over the past four years:
| State | 2020 Avg. Price/Ounce | 2023 Avg. Price/Ounce | Price Decrease |
|---|---|---|---|
| Michigan | $419 | $92 | 78% |
| Illinois | $452 | $293 | 35% |
| Massachusetts | $394 | $173 | 56% |
| Maine | $449 | $222 | 51% |
| Oregon | $152 | $110 | 28% |
| Colorado | $136 | $98 | 28% |
As the data illustrates, Michigan’s market experienced a dramatic 78% decrease in average adult-use cannabis flower price from 2020 to 2023, while Illinois saw a more moderate 35% reduction. This stark contrast raises the question: what’s driving these price discrepancies, and how do they relate to the enduring presence of street cannabis markets?
Michigan vs. Illinois: A Tale of Two Markets and Price Points
The key difference between Michigan and Illinois lies in market competitiveness. Michigan boasts a significantly more saturated retail landscape, with 741 active dispensary licenses as of November 30th, translating to roughly 7.4 storefronts per 100,000 residents. Illinois, on the other hand, has a more restricted market with only 177 licensed dispensaries by December 15th, or about 1.4 storefronts per 100,000 people. This limited access in Illinois naturally keeps dispensary prices higher compared to a more competitive environment like Michigan.
Furthermore, Michigan’s robust cultivation sector, with approximately 950 active adult-use cannabis cultivation licenses and an additional 96 licenses for “excess growers” (allowing up to 10,000 plants each), has led to a supply glut. This oversupply has fueled intense price competition, often described as a “race to the bottom,” as cultivators and dispensaries vie for market share.
Will Bowden, CEO of Michigan-based Grasshopper Farms, highlighted this dynamic earlier in the year, stating that Michigan’s supply finally caught up with demand, triggering pricing wars. This competitive pressure forces dispensaries to lower prices, sometimes even at a loss, simply to maintain shelf space, making legal cannabis in Michigan exceptionally affordable, and in some cases, potentially even approaching prices seen in illicit markets.
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From a demand perspective, Michigan dispensaries are projected to sell around 950,000 pounds of adult-use flower in 2023, a staggering 2,175% increase from the 41,750 pounds sold in 2020. While not a direct comparison, Illinois dispensaries are on track to sell 41.7 million products in 2023, a 188% increase from 2020. These figures indicate substantial growth in both markets, but the pricing outcomes are vastly different due to supply and competition factors.
Price Dips Across Mature Cannabis Markets
Michigan and Illinois are not isolated cases. Other states with established adult-use markets have also witnessed significant price declines:
- Massachusetts saw a 56% average adult-use flower price decrease (from $394 to $173 per ounce) between 2020 and 2023.
- Maine experienced a 51% drop (from $449 to $222 per ounce) in the same period.
- Oregon’s price decreased by 28% (from $152 to $110 per ounce).
- Colorado also saw a 28% reduction (from $136 to $98 per ounce).
Colorado and Oregon, being among the earliest states to legalize adult-use cannabis (2014 and 2015 respectively), demonstrate a more gradual price decrease in recent years. Colorado, for instance, had a more dramatic 52% price drop in its first four years of sales (from $344 per ounce in 2014 to $165 in 2017). This initial rapid decline followed by a slower decrease is typical of maturing cannabis markets as they find price equilibrium.
Dispensary vs. Street Prices: Beyond the Dollar Amount
While dispensary prices in mature markets like Oregon, Colorado, and Michigan are becoming increasingly competitive, it’s crucial to consider the value proposition compared to street prices. Street prices may sometimes appear lower, but they come with significant risks and uncertainties:
- Product Safety and Quality: Street cannabis is unregulated, meaning there are no guarantees about its purity, potency, or safety. Consumers risk purchasing products contaminated with pesticides, molds, or other harmful substances. Dispensaries, on the other hand, are subject to strict testing and quality control regulations, ensuring product safety and accurate labeling.
- Legality and Risk: Purchasing from the illicit market carries legal risks. While cannabis laws are evolving, buying from unlicensed sources remains illegal in most jurisdictions and can lead to legal consequences. Dispensaries offer a legal and regulated avenue for cannabis purchase.
- Product Variety and Information: Dispensaries offer a wide selection of products with detailed information about strains, cannabinoid content, and potential effects. Knowledgeable budtenders can provide guidance and recommendations. The street market typically lacks this transparency and variety.
- Taxes and Regulation: Dispensary prices include taxes that fund state and local programs. While this adds to the cost, it contributes to the regulated cannabis ecosystem and public services. Street prices avoid these taxes but operate outside the legal framework.
Therefore, when comparing dispensary prices vs. street prices, consumers should weigh not only the immediate cost but also the long-term value, safety, legality, and overall experience. While mature markets are driving dispensary prices down, the added benefits of legal cannabis from dispensaries provide a compelling argument for many consumers.
The Future of Cannabis Prices: Continued Decline or Market Correction?
Looking ahead, the trajectory of cannabis prices remains subject to several key uncertainties. Will prices continue to fall, potentially further narrowing the gap with street prices? Or will market corrections and external factors lead to price stabilization or even increases?
Factors that could influence future pricing include:
- Federal Legalization and Banking Reform: The passage of the SAFE Banking Act or broader federal cannabis legalization could significantly impact the industry, potentially reducing operational costs for dispensaries and influencing prices.
- DEA Rescheduling: The DEA’s decision on the Department of Health and Human Services’ recommendation to reschedule cannabis could have far-reaching consequences for the industry, affecting everything from research to taxation and potentially prices.
- Economic Conditions: Broader economic trends and consumer spending habits will inevitably play a role in shaping the cannabis market and price points.
Market fluctuations, like those seen in Oregon where average retail prices temporarily increased during favorable COVID-19 market conditions, demonstrate that prices are not always on a downward trajectory. However, under current post-pandemic market conditions, prices in more mature markets seem to have reached a floor, at least for the time being.
Oregon’s all-time low for adult-use cannabis flower was $105 per ounce in April 2023, and Colorado’s was $92 per ounce in the same month. Michigan hit its all-time low of $80 per ounce in January 2023. Meanwhile, all-time price lows in Maine ($213), Illinois ($268), and Massachusetts ($159) were recorded just recently in November 2023, suggesting that price compression is still unfolding in some markets while others have found a bottom.
Ultimately, the choice between dispensary prices and street prices involves a complex calculation beyond just the initial cost. As legal markets mature and prices become more competitive, dispensaries offer a safer, legal, and increasingly affordable alternative to the risks and uncertainties of the illicit market.
