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people finding seeds in washington state cannabis products

When Washington’s regulators set up their market for legal cannabis, they created three tiers of pot producers based on the square footage of each farm. License different sizes of farms, the thinking went, and the market will support a range of small, medium and large producers.

Washington offers a cautionary tale for would-be pot producers. The state’s marijuana market, for which detailed information is available to the public, has faced consistent declines in prices, production consolidated in larger farms and a competitive marketplace that has forced cannabis processors to shell out for sophisticated technology to create brand new ways to get high.

“Once it’s nationally legalized and farmers can grow it just like tomatoes and asparagus, it will be crazy cheap to grow compared to what it was in the past, and it will be either crazy cheap or pretty darn cheap to process, depending on which kind of product you are making,” Caulkins said.

Declining Pot Prices

Davenport said this consolidation of cannabis farming in Washington is just a harbinger of what’s to come. “I think what has become more clear is the inevitability of pretty large-scale production, and that is really going to start to drive down production costs,” Davenport said.

This business climate appears to limit the number of companies willing to produce edibles. Of the more than 1,000 Washington companies with active licenses that would allow them to process edibles in the 12 months prior to September 2017, only 74 companies sold an edible, according to TopShelfData.com. And, just like with flower, a few large companies dominated the edible market. The five largest edible producers were responsible for 51.15 percent of the $38.7 million in edibles sold during those 12 months. The top 20 edible producers accounted for 90.48 percent of edibles during that time period.

Current regulations keep pot farms from infinitely expanding, but as legalization marches forward, bigger farms could well be permitted. This summer, regulators in Washington expanded the maximum farm size from 30,000 square feet to 90,000. California plans on capping farms at 1 acre, or 43,560 square feet, when the market first launches. But the state rules do not currently stop farmers from using multiple licenses, which opens the door for larger farms.

“The professionalization of the industry is an ongoing thing,” Caulkins said. “There has been enormous change, but there is at least as much change still to come.”

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