December 25, 2018

Composite Wholesale Price Index for Washington State Has Continued Declining, Will Testing Requirements Tighten Supply?


Wholesale price data from the close of 2016 and the beginning of 2017 shows supply side rates in Washington State rising in that period. Washington’s Spot Index averaged $1,309 per pound in December 2016, up by 3.8% from its mean monthly price of $1,261 per pound in November 2016. Rates would continue to rise generally through Q1 of 2017 and hold largely steady into Q2.

However, the close of 2017 marked the beginning of a downward trend in the state’s Spot Index from that point to the present moment that has been interrupted only once and in a relatively modest fashion. 2017’s annual low composite price was documented in the final week of the year, at $1,172 per pound. Washington’s Spot averaged $1,219 per pound in December 2017, down by 6% from the month prior, after wholesale prices experienced positive momentum in November 2017.

The downward slide in Washington’s Spot Index that commenced in December 2017 carried through to this year and was virtually uninterrupted from the opening of 2018 through July. However, the current historically low composite prices that have been documented in recent weeks again raise the question of where the market’s bottom might lie.

On the other hand, unlike in Colorado, Washington’s fellow trailblazer in legal cannabis, potential regulatory disruption lies ahead in 2019. While a report from The Stranger suggests that the state Liquor and Cannabis Board (LCB) may walk back prior moves that would have banned certain forms of edibles that have been manufactured and sold for years, changes to product testing requirements have been looming for some time. Given the slow pace of progress on that front – the LCB announced previously that initial draft language would be released on or after October 31st – it appears that any changes to mandated product screenings will likely not be implemented until well into 2019 at the earliest.