I wonder how many people unsuccessfully tried riding that green wave and finally decided to call it quits this year?
Wholesale pot prices plummet. Now there starting to get better
- Thread starter SeniorBuzz
- Start date
Prepare For Big Weed
August 14, 2015Uncategorized
Engineers like checking things in as many ways as possible, ball-parking estimates are a favorite. I have done enough marketing and engineering plans that projected prices for that meme to come readily to mind.
I was thinking about cannabis* in a couple of posts, one I am working on projects the price of cannabis at $1000 / kilogram in the near future, and then it crashes to lower values, a dollar a pack, farm commodity prices for outdoor-grown and sophisticated grape prices for indoor. This is my estimate of future cannabis prices. I will check with some of the cannabis publication’s projections when done.**
First, everyone sees the gravy train and wants aboard. Indian tribes, Ohio, farmers in 3 states that have legalized it. All 3 have climates that will do well for outdoor corn-equivalent commercial operations. I have some judgment in this. I was a farmer in my youth, friends (not me, never touched the stuff) raised 100s of pounds of cannabis at the ends of farmer’s corn fields, down by the crick. Just scatter the seeds in the spring and fill leaf bags with bud in the fall. It is a weed, you know? They would fill their van with leaf bags full from one spot, they planted many. They gave it away by the leaf bag, told their friends where to harvest what they didn’t want. Potent stuff, I was told.
As a plant, cannabis is somewhere between hay and corn in general characteristics, assume hay as a comparison. There are many 5-ton per acre, 4 crops a year hay fields in the US. That is dried, in the barn. Assume cannabis is 5% bud, the rest waste (it isn’t). 5% of 20 tons is 1 ton, say 1000 kilograms, 1 metric ton, for ease of math. For comparison, corn is >5 metric tons per acre for the season in top quality land, and that is shelled corn kernels, not the entire plant. I would anticipate cannabis yields climbing for years.
Farmers are very happy to gross $1000/acre for corn, but profit at less than half that. At $500 / acre, land owners get about $225 per acre renting, so the farmer is grossing $275 with corn at $2.50 / bushel, 56 pounds in a bushel. Current price is about $3.75. John Deere already has the harvester for cannabis working, just waiting for the market.***
So my projections are $1000 / kilo retail for outdoor grown, top grade cannabis in the near future, then $500 / kilo and that could fall by half again. That probably means indoor (don’t smoke, people say it is smoother and it gets a premium) is not much more than 2X that. According to Youtube, indoor grow operations are labor intensive. Space is the limiting factor, so they exchange human labor for best use of space. Legalizing cannabis widely can produce more indoor grown for sale, but there will be pricing pressure from outdoor. The best comparison for a legal environment would be flowers and greenhouse tomato industries. Same kind of labor and facilities. USDA’s info on tomatos :
On average, the shipping-point price for fresh field-grown tomatoes averages about one-fourth of the retail value. This share has declined during the past three decades, averaging 37 percent in the 1980s, 31 percent in the 1990s, and 28 percent the first decade of the 2000s. Shipping-point prices for field-grown tomatoes have frequently been under pressure since the mid-1990s, largely because of increased imports and competition with hothouse products.
Worst retail prices for hothouse tomatoes I have found is $3/pound in early winter. Cannabis is inherently more costly because bud is metabolically more expensive as the psychoactive chemicals are more complex than carbohydrates, so there is relatively more weight in tomatoes vs the rest of the plant. Assume 10X as expensive as tomatoes ==> minimum of $30 / pound at some future time, a reliable projection as cannabis is just another plant, same problems growing it as tomatoes, same kind of labor. OK, happier labor due to much better bennies — working in a cannabis greenhouse will make you much more popular than working in a tomato greenhouse.
For reference, a pound of cannabis is about 450 joints. 3000 / 450 = 7 cents a joint. 20 per pack, $1.40 per pack. Plus markup for a retail chain, but the point is that cannabis is a plant, grows like a plant, base cost is the same as all other plants. As a check: say 56 pounds of corn for $5 = 10 cents per pound. 10X that base value for metabolic costs above carbohydrates is $1/pound. That is outdoor, not greenhouse, but clearly the range is $1 – $30, quite low compared to the $15 – $30 / gram in cannabis shops now.
The market will grow, wildly. Assume 25% of the adult-enough country, 40M people will do cannabis, say 2 joints a weekend, 25 joints a quarter for light recreational use, half use 2x that, 150 grams a year average. Easy to believe:
Many states are legalizing it in various ways, barriers to use fall.
It is being widely acknowledge to have genuine medicinal effects, is a much better pain killer than ibuprofin, very good for nausea, and won’t cause bleeding. Excuses make it easy for people to try it, and medicinal effects are good excuses.
People using cannabis habituate to it, heavy daily users use 10 – 100 times weekend recreational users.
150 grams a year * 40 million adults (60% of the 330M population is adult enough) is 6M kilos a year worth $6B. This, checking afterwards, says minimum 25.8M people in the last year, 15.2M in the last month have used cannabis in the US. Correcting for underestimates, they say about 10 metric tons, my prediction is 60% of that. Ball park estimate is OK, tho from the number of $B hauls various federal agencies have confiscated over the years, I would have expected the market to be much larger. Americans spent $39B for pizza last year, $137B for beer. Cannabis is not a large market. However, the beer market is falling, wine has peaked, cannabis is still growing.
If one field-raised, no-till, machine-planted from seed outdoor plant produces a 250 grams of bud (conservative according to on-line and a friend’s experienced estimate), that is 4 plants per kilo * 6M kilos = 24M plants. Big sativa cannabis fit >1000 plants per acre on 6 foot centers. 250 kilos per acre and retail $250,000 per acre, wholesale 250X the minimum $500 that a farmer can get for corn raised on the same acre. For comparison, that is 1/20th the weight of the corn kernels. That is 2x the metabolic cost of cannabis herbivore repellents THC and the terpenes vs tomatos carbohydrates assumed above, so this is likely to be conservative, thus higher yields and so lower prices, long-run.
6M kilos / 250 per acre is 24,000 acres. The US planted 95M acres of corn in 2012. Iowa planted more than 14M acres. 24,000 acres is 40 600 acre farms, the minimum profitable machine agriculture size. It is a small corner of a county, a specialty crop. Astonishing ROI, the price of cannabis can fall a long way.
Because large supplies of cannabis are about to arrive, Ohio’s attempt to control cannabis in their state is doomed, they can’t grow and distribute it as cheap as some farmer can raise it + a distributor can truck it in by the ton in hay bales + the markups of local distribution. Ditto all other states : they profit to the exact extent that they open up the system, treat it like any other vegetable product. Our area has plenty of cannabis stores and I nevertheless have been offered several different strains and qualities (claimed, I don’t smoke so didn’t check quality or prices) by neighbors.
With hundreds of different strains and different growing conditions developing different aspects of cannabis, and a richer society developing new sophistications, it is easy to assume a market for appreciation of cannabis in branded products, advertising, etc. There are cigar clubs and hookah clubs all over the US, why not a cannabis club? Cannabis doesn’t seem to affect peoples’ lungs, so waitresses should be OK in cannabis clubs, EPA will lose that case. Would you not like the cannabis concession at a big club? Much more profitable than the cigar concession, I think. In fact, according to friends who work in them (I haven’t been in one for years, not at all interesting for me) most big clubs already have people doing this, just ask your waitress to send one by.
The large food and beverage companies with distribution will have an advantage in developing these markets. Cigarette companies, maybe. Tobacco has a much larger barrier between grower and consumer than cannabis does, so the markup can be a lot more. Smoking a tobacco straight from the curing shed (I was around those at different times when I lived in the south, also, have never smoked tobacco) must be very different than a cigarette, because the markup is huge and tobacco is nevertheless hugely profitable, quotas on farms and imports.
Cannabis is much easier to grow, it is a weed (Although youtube says indoor grows have problems with fungi.). Anyone anywhere can have a backyard full of it. Tinctures don’t much care about the quality, I think. The potential markup above home-grown therefore is the increment in ease and satisfaction of consumption and cannot be so large, no matter how wonderful the store-bought concoction.
That also defines the amount of restrictions people will put up with. Ohio cannot keep the price high via restricting the amount they raise, because Ohio’s neighbors will be happy to take advantage of the gap to make some spending money, or save their own money.
Ohio’s medical, etc. laws will immediately produce MDs who write prescriptions. I read that the first of the cannabis prescribers in California included young Harvard-trained MDs. They had student loans, were willing to work all their spare time writing cannabis prescriptions, anyone who has ever needed a pain pill or sleeping pill or felt nausea will get a prescription. Cost of prescriptions is about $50 / year in our area. Enabling those uses are exactly what the laws are meant to do, and many people do use cannabis for those reasons, just not a very high proportion of medical prescriptions.
Tinctures and elixirs will come back, as a major way of consuming home-grown. They were very popular up through the 1920s. My imagination (I haven’t looked for evidence) says that foreign pharmacies are about to start delivering those again. As far as I know, no drug I have gotten from overseas (all less expensive pharmacy, nothing illegal) has been intercepted or opened, and Silk Road did OK. So I bet you can buy those now. In fact, alcohol tinctures are something that can’t be produced in the US because of combined cannabis and alcohol laws. That is one of the places that value could be added, a marketing campaign might make that profitable. Liquors and wines with cannabis flavor and content could be big, but the young people we see using cannabis do not even drink beer, and look down on people who do as less controlled, harder to be around and have fun.
Immediately after medical cannabis is available, cops will stop arresting anyone for marijuana offenses. Many of those they could arrest will have licenses, and the rest will be too much trouble, excuses related to licenses will be many and expensive of everyone’s time, penalties will drop a lot. So medical means only prosecuting major jerks or a major dealer when police and prosecutors need some help at budget time.
Many laws are about to go away or be ignored. Social evolution is kicking into gear. Hard economic times always accelerate social, political and economic change. Cannabis would be prominent in those changes, legalization or no, but at least won’t be enhancing our police state’s powers in this next cycle.
forwarded with no link...
August 14, 2015Uncategorized
Engineers like checking things in as many ways as possible, ball-parking estimates are a favorite. I have done enough marketing and engineering plans that projected prices for that meme to come readily to mind.
I was thinking about cannabis* in a couple of posts, one I am working on projects the price of cannabis at $1000 / kilogram in the near future, and then it crashes to lower values, a dollar a pack, farm commodity prices for outdoor-grown and sophisticated grape prices for indoor. This is my estimate of future cannabis prices. I will check with some of the cannabis publication’s projections when done.**
First, everyone sees the gravy train and wants aboard. Indian tribes, Ohio, farmers in 3 states that have legalized it. All 3 have climates that will do well for outdoor corn-equivalent commercial operations. I have some judgment in this. I was a farmer in my youth, friends (not me, never touched the stuff) raised 100s of pounds of cannabis at the ends of farmer’s corn fields, down by the crick. Just scatter the seeds in the spring and fill leaf bags with bud in the fall. It is a weed, you know? They would fill their van with leaf bags full from one spot, they planted many. They gave it away by the leaf bag, told their friends where to harvest what they didn’t want. Potent stuff, I was told.
As a plant, cannabis is somewhere between hay and corn in general characteristics, assume hay as a comparison. There are many 5-ton per acre, 4 crops a year hay fields in the US. That is dried, in the barn. Assume cannabis is 5% bud, the rest waste (it isn’t). 5% of 20 tons is 1 ton, say 1000 kilograms, 1 metric ton, for ease of math. For comparison, corn is >5 metric tons per acre for the season in top quality land, and that is shelled corn kernels, not the entire plant. I would anticipate cannabis yields climbing for years.
Farmers are very happy to gross $1000/acre for corn, but profit at less than half that. At $500 / acre, land owners get about $225 per acre renting, so the farmer is grossing $275 with corn at $2.50 / bushel, 56 pounds in a bushel. Current price is about $3.75. John Deere already has the harvester for cannabis working, just waiting for the market.***
So my projections are $1000 / kilo retail for outdoor grown, top grade cannabis in the near future, then $500 / kilo and that could fall by half again. That probably means indoor (don’t smoke, people say it is smoother and it gets a premium) is not much more than 2X that. According to Youtube, indoor grow operations are labor intensive. Space is the limiting factor, so they exchange human labor for best use of space. Legalizing cannabis widely can produce more indoor grown for sale, but there will be pricing pressure from outdoor. The best comparison for a legal environment would be flowers and greenhouse tomato industries. Same kind of labor and facilities. USDA’s info on tomatos :
On average, the shipping-point price for fresh field-grown tomatoes averages about one-fourth of the retail value. This share has declined during the past three decades, averaging 37 percent in the 1980s, 31 percent in the 1990s, and 28 percent the first decade of the 2000s. Shipping-point prices for field-grown tomatoes have frequently been under pressure since the mid-1990s, largely because of increased imports and competition with hothouse products.
Worst retail prices for hothouse tomatoes I have found is $3/pound in early winter. Cannabis is inherently more costly because bud is metabolically more expensive as the psychoactive chemicals are more complex than carbohydrates, so there is relatively more weight in tomatoes vs the rest of the plant. Assume 10X as expensive as tomatoes ==> minimum of $30 / pound at some future time, a reliable projection as cannabis is just another plant, same problems growing it as tomatoes, same kind of labor. OK, happier labor due to much better bennies — working in a cannabis greenhouse will make you much more popular than working in a tomato greenhouse.
For reference, a pound of cannabis is about 450 joints. 3000 / 450 = 7 cents a joint. 20 per pack, $1.40 per pack. Plus markup for a retail chain, but the point is that cannabis is a plant, grows like a plant, base cost is the same as all other plants. As a check: say 56 pounds of corn for $5 = 10 cents per pound. 10X that base value for metabolic costs above carbohydrates is $1/pound. That is outdoor, not greenhouse, but clearly the range is $1 – $30, quite low compared to the $15 – $30 / gram in cannabis shops now.
The market will grow, wildly. Assume 25% of the adult-enough country, 40M people will do cannabis, say 2 joints a weekend, 25 joints a quarter for light recreational use, half use 2x that, 150 grams a year average. Easy to believe:
Many states are legalizing it in various ways, barriers to use fall.
It is being widely acknowledge to have genuine medicinal effects, is a much better pain killer than ibuprofin, very good for nausea, and won’t cause bleeding. Excuses make it easy for people to try it, and medicinal effects are good excuses.
People using cannabis habituate to it, heavy daily users use 10 – 100 times weekend recreational users.
150 grams a year * 40 million adults (60% of the 330M population is adult enough) is 6M kilos a year worth $6B. This, checking afterwards, says minimum 25.8M people in the last year, 15.2M in the last month have used cannabis in the US. Correcting for underestimates, they say about 10 metric tons, my prediction is 60% of that. Ball park estimate is OK, tho from the number of $B hauls various federal agencies have confiscated over the years, I would have expected the market to be much larger. Americans spent $39B for pizza last year, $137B for beer. Cannabis is not a large market. However, the beer market is falling, wine has peaked, cannabis is still growing.
If one field-raised, no-till, machine-planted from seed outdoor plant produces a 250 grams of bud (conservative according to on-line and a friend’s experienced estimate), that is 4 plants per kilo * 6M kilos = 24M plants. Big sativa cannabis fit >1000 plants per acre on 6 foot centers. 250 kilos per acre and retail $250,000 per acre, wholesale 250X the minimum $500 that a farmer can get for corn raised on the same acre. For comparison, that is 1/20th the weight of the corn kernels. That is 2x the metabolic cost of cannabis herbivore repellents THC and the terpenes vs tomatos carbohydrates assumed above, so this is likely to be conservative, thus higher yields and so lower prices, long-run.
6M kilos / 250 per acre is 24,000 acres. The US planted 95M acres of corn in 2012. Iowa planted more than 14M acres. 24,000 acres is 40 600 acre farms, the minimum profitable machine agriculture size. It is a small corner of a county, a specialty crop. Astonishing ROI, the price of cannabis can fall a long way.
Because large supplies of cannabis are about to arrive, Ohio’s attempt to control cannabis in their state is doomed, they can’t grow and distribute it as cheap as some farmer can raise it + a distributor can truck it in by the ton in hay bales + the markups of local distribution. Ditto all other states : they profit to the exact extent that they open up the system, treat it like any other vegetable product. Our area has plenty of cannabis stores and I nevertheless have been offered several different strains and qualities (claimed, I don’t smoke so didn’t check quality or prices) by neighbors.
With hundreds of different strains and different growing conditions developing different aspects of cannabis, and a richer society developing new sophistications, it is easy to assume a market for appreciation of cannabis in branded products, advertising, etc. There are cigar clubs and hookah clubs all over the US, why not a cannabis club? Cannabis doesn’t seem to affect peoples’ lungs, so waitresses should be OK in cannabis clubs, EPA will lose that case. Would you not like the cannabis concession at a big club? Much more profitable than the cigar concession, I think. In fact, according to friends who work in them (I haven’t been in one for years, not at all interesting for me) most big clubs already have people doing this, just ask your waitress to send one by.
The large food and beverage companies with distribution will have an advantage in developing these markets. Cigarette companies, maybe. Tobacco has a much larger barrier between grower and consumer than cannabis does, so the markup can be a lot more. Smoking a tobacco straight from the curing shed (I was around those at different times when I lived in the south, also, have never smoked tobacco) must be very different than a cigarette, because the markup is huge and tobacco is nevertheless hugely profitable, quotas on farms and imports.
Cannabis is much easier to grow, it is a weed (Although youtube says indoor grows have problems with fungi.). Anyone anywhere can have a backyard full of it. Tinctures don’t much care about the quality, I think. The potential markup above home-grown therefore is the increment in ease and satisfaction of consumption and cannot be so large, no matter how wonderful the store-bought concoction.
That also defines the amount of restrictions people will put up with. Ohio cannot keep the price high via restricting the amount they raise, because Ohio’s neighbors will be happy to take advantage of the gap to make some spending money, or save their own money.
Ohio’s medical, etc. laws will immediately produce MDs who write prescriptions. I read that the first of the cannabis prescribers in California included young Harvard-trained MDs. They had student loans, were willing to work all their spare time writing cannabis prescriptions, anyone who has ever needed a pain pill or sleeping pill or felt nausea will get a prescription. Cost of prescriptions is about $50 / year in our area. Enabling those uses are exactly what the laws are meant to do, and many people do use cannabis for those reasons, just not a very high proportion of medical prescriptions.
Tinctures and elixirs will come back, as a major way of consuming home-grown. They were very popular up through the 1920s. My imagination (I haven’t looked for evidence) says that foreign pharmacies are about to start delivering those again. As far as I know, no drug I have gotten from overseas (all less expensive pharmacy, nothing illegal) has been intercepted or opened, and Silk Road did OK. So I bet you can buy those now. In fact, alcohol tinctures are something that can’t be produced in the US because of combined cannabis and alcohol laws. That is one of the places that value could be added, a marketing campaign might make that profitable. Liquors and wines with cannabis flavor and content could be big, but the young people we see using cannabis do not even drink beer, and look down on people who do as less controlled, harder to be around and have fun.
Immediately after medical cannabis is available, cops will stop arresting anyone for marijuana offenses. Many of those they could arrest will have licenses, and the rest will be too much trouble, excuses related to licenses will be many and expensive of everyone’s time, penalties will drop a lot. So medical means only prosecuting major jerks or a major dealer when police and prosecutors need some help at budget time.
Many laws are about to go away or be ignored. Social evolution is kicking into gear. Hard economic times always accelerate social, political and economic change. Cannabis would be prominent in those changes, legalization or no, but at least won’t be enhancing our police state’s powers in this next cycle.
forwarded with no link...
the price fixes its self through market forces. you can shit in one hand and wish in the other but the price stays where its at til it runs dryer and people offer more so it gets held, then all weed goes to higher price btokers, and other brokers up offerings to compete. holding out wont make the price go up per se, but you can wait for the price to go up on its own if you can afford to. others cant, and they set the price til they sell it all. .
Mountain Sprout
Member
Prepare For Big Weed
August 14, 2015Uncategorized
Engineers like checking things in as many ways as possible, ball-parking estimates are a fa...
Wish I had that 5 minutes back... They can grow big and cheap but good luck doing organically.
I was talking to a neighbor that still has outdoor from 2014 untrimmed in bins. Some bro offered him 18 for 30 but he said it was all going to his main guy that has supported him for years for 15. The bro was like "come on its only 30, help me out" and the neighbor was like "my guy needs another 2000 between now and Oct, are you going to help me with that?" He ended up selling him a few from 2013 for 15! Not sure why but in the past he was a big plant grower and this year the plants are 1/3 the size. They look healthy and its nothing obvious like russet mites. On the other hand I visited another neighbor that has some of the biggest, most consistant crops I have ever seen. Last year he sold everything from 10-11 and those same people are trying to lock in the crop at 13 this year.
With all due respect...I believe, if I may be so bold to presume, that he is suggesting that there is a lot of chest bumping and ego inflation that is made present in this thread, and that it is taken as a reflection as the overall scene by outsiders reading this thread. Ida just LOL'd if I found the comment offensive, but hey, words...
Love your threads, dude.
Little Hill
Member
Stasis seems to think his tough time in cali is the reality for everybody when really his experience was isolated to him. Its a way to push his failure onto the area as opposed to taking responsibility to for himself. Read his posts and you will see the patern.
I beleive the cheap outdoor will run out sooner this coming year so set your prices and wait for the phone call if you can afford to sit on it. Buying at bargin basement prices early may not be a bad i vest,ent either.
I beleive the cheap outdoor will run out sooner this coming year so set your prices and wait for the phone call if you can afford to sit on it. Buying at bargin basement prices early may not be a bad i vest,ent either.
^exactly, any cheap outdoor will be bought up quick, theres just less stock right now especially in ban counties that were once hotbeds.
trichrider i like the whole AG argument, but at the same time it does not currently apply because this crop is going to be regulated and taxed much higher and stricter than corn or hay. Hemp could possibly fill in for your comparison, or maybe just bulk machine processed stuff for concentrate production in that price range (it already is)….but it won't apply to the general flower market.
they are writing laws so strict it pretty much garuntees black market activity. the proposed cali laws still keep most of the main producing counties in ban status!! so its not true legalization, where we are shipping 100lbs of CA grown via bigrig and federal tax stamp attached to out of state markets. it won't be like that for a considerably long time….this is still just the beginning, its not REAL legalization so i dont want to hear any talk about cheap ass $500 gmo lbs flooding the market and killing everybody off. it hasn't happened in CO or WA yet even with all the fear mongering, i know plenty of folks still doing the black market thing with big ass legal mega grows in the same neighborhood.
trichrider i like the whole AG argument, but at the same time it does not currently apply because this crop is going to be regulated and taxed much higher and stricter than corn or hay. Hemp could possibly fill in for your comparison, or maybe just bulk machine processed stuff for concentrate production in that price range (it already is)….but it won't apply to the general flower market.
they are writing laws so strict it pretty much garuntees black market activity. the proposed cali laws still keep most of the main producing counties in ban status!! so its not true legalization, where we are shipping 100lbs of CA grown via bigrig and federal tax stamp attached to out of state markets. it won't be like that for a considerably long time….this is still just the beginning, its not REAL legalization so i dont want to hear any talk about cheap ass $500 gmo lbs flooding the market and killing everybody off. it hasn't happened in CO or WA yet even with all the fear mongering, i know plenty of folks still doing the black market thing with big ass legal mega grows in the same neighborhood.
furrywall11
Member
so what would the october-november cannabis investment scene look like? go in with 100k and hopefully get 100 units of good stuff...seal it away until May-June and get 16 for it in 20 packs? 6 months for a 60k profit. not bad if your money is just buried under a tree anyway...especially considering a CD at your local bank might only get you 2k in 12 months. not as easy as it sounds with the risk along the way and the potential for having to rent a separate spot for storage.
At $330 a lb its less than a dollar per dose (generally speaking)... That's gotta be the cheapest buzz going.... I can't think of a cheaper one anyway
I highly doubt .75 cent herb will get you a buzz. It can be hella cheap but in the end if you need to smoke an ounce to get properly lifted, it isn't so cheap.
Two hits of my herb and most mortals are white as a ghost and trembling. 10$ a gram pot, smoke two tenths and get tarded, that's still a cheap buzz IMHO and its clean organic. Which would you prefer?
Two hits of my herb and most mortals are white as a ghost and trembling. 10$ a gram pot, smoke two tenths and get tarded, that's still a cheap buzz IMHO and its clean organic. Which would you prefer?
