On 4/20, is Alaska's pot supply too high?
Alaskans celebrated marijuana’s high holiday on Friday, marking April 20 — which is better known to some as 4/20.
There was no shortage of pot, and the state is now worried there may actually be too much legal weed in Alaska.
The Alcohol and Marijuana Control Office (AMCO) says the trend is causing pot prices to drop, and executive director Erica McConnell is concerned some small cannabis businesses may be forced to close if the trend continues.
Catalyst Cannabis CEO Will Schneider is in his element when he’s talking to customers about marijuana. Everything on the shelves in his South Anchorage shop are his own products, but Schneider says Alaska’s legal marijuana isn’t selling for what it once did.
He says the market is so saturated with growers that the price per pound of wholesale marijuana has dropped by 40 percent in less than a year.
“We sold our first pound for $5,500, and right now we are asking between $3,200 and $3,600 for a pound,” Schneider said.
It is a scenario playing out across the state. According to AMCO’s most recent numbers, there are 124 active and operating cultivation facilities in the state and less than 60 retail stores.
“Neither Oregon or Alaska limits the number of licenses and what happened in Oregon is they have so many growers growing marijuana that they have this oversupply and the prices have come down significantly,” McConnell said.
The state requires cultivators to pay a flat tax of $50 an ounce — or $800 a pound — on cannabis sold to retailers.
“We don't want the moms and pops to go out of business,” McConnell said. “One concern is that if people can't make a profit growing marijuana, that they'll have to close.”
At the April Marijuana Control Board meeting, McConnell says Vice Chair Brandon Emmett urged other members of the board to ask lawmakers in Juneau to reconsider the way the state taxes cannabis.
McConnell says the topic is an ongoing discussion that won’t likely gain traction until next year. Meanwhile, at Catalyst Cannabis, Schneider says competition certainly comes with challenges.
“We get solicited at least two or three times a week by cultivators coming to our store with product sales,” Schneider said. “It’s showing up in person, boots on the ground — that’s really the only way people are managing to make a sale.”
Although wholesale marijuana prices have dropped, Schneider is hopeful that the industry will turn around during tourism season. He says the upside to lower prices is fewer people turning to the black market to purchase cannabis.
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