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HOW BIG ARE RETAIL MARGINS FOR CANNABIS FLOWER? Image: Cova Software/Unsplash
November 7, 2023

Several states provide data on the average retail price for cannabis flower in their respective markets, allowing us to compare it with Cannabis Benchmarks wholesale price assessments to gauge average retail markups. The data shows retail markups for cannabis flower can vary greatly between different state markets. Volatility in wholesale flower prices also means that retail markups can fluctuate significantly within state markets over time. This article examines data on retail markups for cannabis flower from a half-dozen legal markets and provides context for the differences across states.

Cannabis Flower Retail Markup Data

The table below shows average retail and wholesale flower prices for September, along with the retail markups in each market.

2023 Cannabis Retail - Wholesale Price Markups

Why Do Retail Markups for Cannabis Flower Vary Between States?

The data above includes several interesting and surprising findings: 

  • Unsurprisingly, Illinois has some of the strongest markups among the selected states. Roughly 20 businesses own the only available large-scale production licenses in the state, along with a significant portion of the first 110 adult use retail licenses that were issued. This allowed those businesses a greater ability to set prices that ensured favorable markups. Although over 50 additional independently-owned retailers have opened – and retail and wholesale prices have come down a good deal in the last year or so – retail markups remain strong.
  • Maine and Massachusetts retailers are seeing very similar markups, on average, in New England’s two oldest adult use markets. We have previously discussed price convergence in New England, where nearly all the states in the region have legal adult use cannabis markets open for business. 
  • With some of, if not the lowest retail flower prices in the country and stiff competition amongst 729 licensed storefronts as of September, Michigan retailers have the slimmest markups of the state markets under discussion. 
  • In perhaps the biggest surprise contained in the data, Oregon retailers have the largest average markups of the states shown above. Although Oregon’s retail flower prices are among the lowest in the country, wholesale prices are as well. While Oregon has in recent years been an extremely tough market for producers, it appears retailers have a bit more breathing room compared to other states with low wholesale prices. 
  • Washington, DC is an example of how operating in a limited-license medical market is not always advantageous. With low patient numbers and under $3 million in monthly sales in recent months, DC businesses are not able to capture economies of scale on the production side. Meanwhile, medical dispensaries in the nation’s capital are competing with myriad unlicensed sales channels, the result of DC’s legalization of cannabis for adult use along with the U.S. Congress blocking the District from establishing a licensed and regulated recreational market. 

Conclusion

Despite selling essentially the same product, retail markups for cannabis flower can vary a great deal across state lines. Seasonal and event-driven movement in wholesale cannabis prices means that markups within states will surely change over time. Analyzing retail markups data for cannabis flower and other products using Cannabis Benchmarks’ validated, unbiased wholesale price data is essential for those evaluating opportunities in different legal cannabis markets.

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