The Value of Cannabis

Read Time:2 Minute, 36 Second

When it comes to anything we as consumers purchase often, we start to get a grasp on the value of that product and its typical price point. I strongly think understanding these product pricing is extremely valuable, especially with this ridiculous inflation rate that never seems to find balance. So what is the true value of cannabis and what should you consider before spending your hard earned money?

So when it comes to pricing cannabis there are a lot of things dispensaries must take into consideration before placing products on the shelf. The main 3 things that are often looked at when it comes to pricing cannabis is the cost of manufacturing, its current average cost within the market, and what customers are willing to pay for that product. Just like any business, the pricing of a product mainly stems from its profitability. With these things in the forefront of the corporate mind, they are able to collect that information and then use one out of the two main pricing approaches. Their choices being, the Cost Approach or the Market Approach.

First let’s talk about the Cost Approach. Simple, it’s exactly what you think it is. This approach mainly focuses on the cost of production and goes from there. Businesses will look into just how much time and resources were spent when it came to cultivating cannabis. Then they will also look into how much those resources cost and build a price from there. After that, they take taxes into consideration which can greatly affect the price. About 24% of wholesale costs goes straight to Excise Tax (Greengrowththcpas.com). The Cost Approach is the simplest method to successfully allow a business to break-even.

The second approach is the Market Approach, which is all in its name. This approach works to study the current market for the type of cannabis that is being sold. Businesses will work to gather information on other competitors and what they are currently valuing their cannabis at. Then they will let all that gathered information influence their pricing in order to keep up with them. When companies decide to use this method, it can cause some cannabis products to be over priced. This is why you, as a consumer, should look into your other options.

Those are just two of the simple business approaches that can be taken when pricing cannabis. But after that, it can get rather complicated, rather quickly. When advancing towards the next steps, businesses will take an even closer look at their customer demographic and create dispensaries that cater more towards their target clientele. Depending on where their dispensary is located, it can greatly affect the pricing of their cannabis products.

So when it comes to shopping for cannabis don’t be afraid to weigh out your options! Take into consideration the location of each dispensary and their average cost. This can help give you an idea on which pricing approach each business is going for and get you the best price point! It’s your hard earned money after all!

Sources: Green Growth