Msnmarijuanasup Weed Shortage Article
Cannabis Commerce: The Key to Overcoming the Weed Shortage Crisis
The cannabis industry has rapidly increased over the past few years. With legalization efforts gaining heavy momentum in many groundbreaking states, this cash crop is sure to continue its skyrocketing growth based on high consumer demand. However, all that interest in smoking, edibles, and other state-compliant packaging for marijuana products may experience a bit of a speed bump.
The supply chain issues post-pandemic, as well as strict regulation on new businesses, retailers, and growers opening their shops is causing a shortage in the industry. Some states are only allowing growing licenses after the start of the effective growing season. Meaning even if farms can push out products, it may not be the typical quality consumers desire.
What remains to be seen is how this shortage could affect the industry and what it may take to mitigate the impact of low supply with high demand.
The Current Weed Shortage
So, how did we get to a stage where weed is drastically being underproduced based on current demand? During Covid 19, there was a massive boost in productivity. Funds that would typically have gone to restaurants, stores, and other disposable entertainment were shifted to other products normally unused to such fiscal interest. Now that spending habits have returned to normal levels, with consumers happily going out to eat and enjoying tourism once again, the funds being sent to cannabis have normalized.
Then, you have a drastic shift in income and costs. The increase in inflation and the price of everyday goods means less money for growers and retailers to stock their shelves. The result is a wholesale cannabis flower U.S. spot index decline of 27% in 2022. In Colorado, for example, the wholesale price is roughly half of what it was in 2020 or 2021.
It comes down to a supply and demand issue. The demand is high, but the availability of income is low, so supply suffers. Add on top of that legislation that is taking its sweet time to work its way through the numerous state legislations, and you end up with the shortage we see today.
How Interstate Commerce Plays a Role
At MSN Packaging Inc., we frequently work with clients asking for state-compliant packaging that has to vary depending on the state they are operating within. There are so many different laws concerning how you ship, package, sell, and produce cannabis somewhere like California versus the great state of Maine. What makes this much harder is the ability of a grower in one state to supply a retailer in another.
That is why many retailers rely on investors to cover the excessive costs and challenges of interstate commerce. Trying to avoid the potential disaster of shipping when crossing through a state where there are no legal allowances for marijuana can be devastating to a business.
If we lower the roadblocks of interstate commerce, we open the industry to new supply chain innovations. That can help normalize the pricing and provide consumer demand with easy supply. For that to happen, congress would have to get involved.
Would Federal Legalization Help?
Federal legalization of cannabis has the power to potentially revolutionize the market and alleviate any future weed shortages. For starters, it would open new capital investment to businesses that cannot access federally backed banking services. This would immediately make owning, operating, and growing any cannabis company much easier and increase overall supply.
Then there is the regulatory factor. Having clarity on the precise rules and regulations for child-resistant packaging or how much can be grown and at what time of year would make it easier to operate a business. There wouldn’t have to be so many rules and regulations to follow from different states because there would be a singular set of guidelines, eliminating confusion and growing interstate commerce.
The only downside would be the potential for corporate consolidation. Like food, soda, consumer goods, clothing, and pretty much any other industry, big corporations love to gobble up the “smaller” seller in order to seize more market share. That could put a damper on the mom-and-pop shops offering a more personalized cannabis experience.
It is a sad reality that many of the bills currently in congress are still being debated at even the basic level. Even the highly anticipated SAFE (Secure and Fair Enforcement) banking act is stuck in committee while people justify its slowdown on “moral ideals” instead of realities.
What Does This Mean for the Industry
The good news is the shortage will come to an end. Like any other niche market, cannabis is going to slowly normalize, and we should see market effects create a new standard for supply and demand. Legalization will continue to march on as more and more states accept cannabis with fair state-compliant packaging is a favorable option.
As it stands, nearly half the U.S. population lives in one of the many states with legal recreational or medical sales. Millions of Americans can happily enjoy everything from a hand-rolled hybrid blunt to cannabis-infused ice cream with control milligrams.
We are also seeing a lot of innovation in growing apparatus, greenhouse involvement, and new automation that will surely help the industry rebound. In other words, hope is on the way.
The weed shortage crisis is most definitely a pressing issue for the cannabis industry. It has impacted prices, consumer access, and potential tax revenue for states. To overcome this issue, cannabis interstate commerce and possible legalization must be addressed. We need to lean into our representatives at the local, state, and federal levels and encourage them to lower regulation so more access to funds are allowed.
Cannabis is an industry that is sure to thrive in the future. The shortage will alleviate, and markets will equalize, but we cannot be complacent about this industry. We need to seize on the momentum of more states opening legalization and show the world that safe, responsible use of cannabis with child-resistant packaging is a good thing.
At MSN Packaging Inc, we do everything we can to help businesses grow and expand their cannabis operations. Our packaging materials run the range of custom designs with bespoke printing to eco-friendly options aligned with current state-compliant packaging regulations. Contact our team today and find out how we can boost your productivity and customer assurance. Supply shortage or not, we have you covered!