Bud’s Goods and Provisions in Worcester, Mass. The company’s CEO, Alex Mazin, is concerned rising cannabis retail prices will drive consumers to the underground market. Credit: Provided / Bud's Goods

Increased legal market supply may be driving down Massachusetts’ cost of adult use cannabis, but with inflation on the rise, some legal operators worry that prices in the legal market will still drive consumers to the underground market.

“It’s sort of a perfect storm in Massachusetts where it’s finally getting an oversupply of product into the market along with this inflation pricing on everything else, which causes more people to go back to the legacy markets,” said Alex Mazin, CEO of Bud’s Goods and Provisions, a chain of adult use retail stores in Massachusetts.

“I think ultimately consumers are not saying, ‘Oh, I’m not going to consume cannabis.’ But what they are saying is I’m going to a new source to get it at a lower price,” said Mazin.

Thanksgiving and Christmas are always strong sources of incomes for retail cannabis, and 2021 was no different. But since then, average prices for flower have dropped to one of the lowest levels since the 2018 launch of the adult use market.

In terms of overall spending, adult use sales in Massachusetts continue to steadily rise, according to data from the state’s Cannabis Control Commission. In 2022 alone, sales have reached a total of $349.1 million as of Mar. 27.

On the other hand, the average retail price paid per ounce of flower has dropped steadily from $380.38 last November, to $361.42 in February. Aside from two months during the start of pandemic quarantine in spring, 2020, October, 2021 was the only other month since 2018 when the average price for an ounce was lower than in February, at $358.66.

“Since then week after week it’s just climbing downward,” he said Mazin. “Obviously, there was Christmas in there, so that was a helpful boost. But ultimately, we’re still trying to get back to where we were right towards the end of summer.”

Mazin speculated that with less money to spare, the illicit market could be more appealing for consumers.

“With inflation being whatever it is on everything else, that discretionary income basically goes to zero for many people. But we know that cannabis consumers do not just stop consuming cannabis. They look for another alternative resource at a lower price,” said Mazin. 

Although the price of flower seems to not be increasing with inflation, the cost of manufactured products is increasing, according to Jesse Tolz, marketing director for The Pass, a vertically integrated cannabis company.

“It’s something that we know has impacted our team so we can only just extrapolate that it’s impacting everybody,” said Jesse Tolz. “I mean, we know it’s impacting everybody.”

With increased gas prices, fewer consumers are willing to drive as far for certain products, according to Tolz. He also said his company has felt inflation from the increased costs of materials they use for manufacturing, such as hardware and ingredients for edibles.

Wes Ritchie, co-CEO of New England Craft Cultivators, also said that inflation has been hitting cannabis manufacturing, but he was not so certain how it was affecting retail sales.

“I have to say personally that aside from some supply chain backup issues that we felt a little bit from some manufacturers, I don’t think that we’ve seen any behavior change from inflation related issues,” he said.

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Zack cut his journalistic teeth covering high school sports in the south before spending a decade covering local government, politics and the courts in the Boston, Massachusetts area. He's previously written...