Harvest time has come, but American cannabis growers aren't necessarily happy with the results
Although cannabis has become the sixth most valuable crop in the United States, the illegal status of the plant at the federal level does not protect farmers in the sector and affects the value of wholesale production.
Le second annual report report published by cannabis market and information resource Leafly found that adult-use cannabis cultivators grew some 2 metric tons of adult-use cannabis in 834 cannabis-legal states in 15.
Compared to the previous year, cannabis growers grew 554 (24%) more metric tons in 2022, but the value of the crop decreased by approximately $1 billion due to lower cannabis prices legal.
The 2022 report estimates that cannabis grown in the United States is worth $5 billion a year, while the value of legal cannabis cultivation in America ranked fifth nationally in 2021.
"Only corn, soybeans, hay, wheat and cotton bring in more money on wholesale sales," reads the report.
Leafly's data is limited only to adult-use cannabis production harvested from 13297 active legal cannabis farms in 15 cannabis-legal states. They therefore do not take into account the cultivation of medical cannabis and the cultivation practiced by illegal operators.
The report aims to fill a void in federal and state authorities in assessing the value of the adult cannabis supply chain. In fact, the United States Department of Agriculture (USDA) does not track cannabis production for adult use because cultivation for recreational use is still federally illegal under Schedule I of the Substances Act. controlled. But even some states where cannabis is legal still don't collect information on growing cannabis for adult use.
“The federal government is not alone in ignoring the value of the harvest. Many legal states are still failing to capture this important information,” the report read.
That's why Leafly partnered with cannabis and hemp business-focused data, economics and consulting firm Whitney Economics to gather data, conduct interviews and analyze wholesale pricing and product categories. cannabis quality.
Leafly believes that cannabis is the number one crop in Alaska, Massachusetts and India. Leafly estimates that cannabis is the top crop in Alaska, Massachusetts and New Jersey, but the report points out that regulators do not publish production totals in two of those states.
Today, 19 US states and the District of Columbia have legalized cannabis use by adults. In 15 states, legalization is fully operational and cannabis can be sold under a state license, while the remaining states where cannabis is legal are in the process of implementing regulations to begin sales.
The illegality of adult-use cannabis at the federal level affects the ability of cannabis growers to perform the most basic functions of a business, such as owning a bank account, obtaining crop insurance, and obtaining loans.
Because growers can't sell their crops directly to consumers and don't have enough legal retail outlets for their production, wholesale cannabis prices per pound have fallen despite rising inflation in most products and services in the country.
For example, California farmers increased their production by 63 metric tons on the legal side, but the value of the cannabis crop slipped from 5th to 8th in the state due to these price declines.
“The average uncut, dried kilo might have been worth $786 wholesale in August 2022, but individual outdoor kilo fetched prices as low as $100,” the report reads.
In addition, the situation for cannabis growers has also been made worse by local municipalities choosing not to allow the legal sale of cannabis, "thereby creating economic protection zones for illicit and unlicensed cannabis sellers" to the detriment legal operators.
Overall, the report shows a scenario in which cannabis growers in the Western United States grew too much cannabis in the past year, while those in the Midwest and East did not. have not grown enough to meet the demand in their region.
As a result, farmers in the West don't have enough demand to sell their crops, while customers in the Midwest and East Coast overpay for cannabis products.
In addition, the fact that the illegal status of cannabis at the federal level prohibits farmers from selling adult cannabis across interstate lines has implications for cannabis prices.