Sunset Island Group Inc (SIGO)

[BeerIsGood]

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How low will it go? Is California going to hit the $500-an-average-pound wholesale mark?

“Absolutely, but I don’t think any time soon,” Nevedal said, adding she’s certain that wholesalers will be selling lower-quality flower and cannabis for extraction for $500 a pound or less.

Caston said he’s already heard of cultivators having trouble offloading this year’s crop at $400-$500 a pound wholesale.

Cost of doing business

It’s not just wholesale price that should concern cultivators. They also must consider their input costs.

Input costs include license fees, the staff time required to develop a licensing application and the cost of track-and-trace compliance.

For example, in the Metrc traceability system, each plant is required to be tagged with an ID tag that costs 80 cents.

The California Department of Food and Agriculture – which licenses cultivators – released an economic impact analysis in January 2017 on the effects of the cultivation regulations.

“Their estimation is that the cost of compliance will be around $560 a pound,” Caston said.