August 30, 2023

According to Leafly Cannabis Harvest Study 2022, it turns out that marijuana was a major player in the agriculture scene last year, ranking as the sixth most valuable crop in the whole United States. Its value? An astonishing $5 billion! Just think about that—only a few crops, like corn, soybeans, hay, wheat, and cotton, managed to outshine it. But here's the catch: this calculation focuses on states where selling legal marijuana is a thing.

That means only places where they've given the green light to selling weed. So, if you're wondering why medical marijuana states aren't in the mix, it's because this report decided to leave them out of the equation. Get ready to dive into the nitty-gritty details of this report and discover how marijuana is shaping up in the world of crops!

"Legalizing cannabis for adults has been a wise investment for the Illinois economy and sales have continued to  rise, leading to additional revenue for the state. Consistent cash flow from  the cannabis industry assists the state  with funding essential services such as  violence prevention, mental health, and local government."

Kimberly A. Lightford, Senate Majority Leader, Illinois General Assembly

How Cannabis Crop Value is Calculated

So, how does this study figure out the worth of the adult-use cannabis crop in the United States? The study wanted to be really accurate, fair, and keep things simple when calculating. Here's what they did: for each state where cannabis is legal, they looked at how much cannabis gets grown in a year. Then, they multiplied that amount by a certain price for every pound of cannabis before it's trimmed.

This gave them a way to guess how much all the cannabis grown in the country is worth. But hold on, they didn't want to show any favorites or make things unfair. They wanted to compare cannabis to other crops in the same way. So, they used the same method that really smart economists at the United States Department of Agriculture (USDA) use to figure out how much different crops are worth. These economists look at the price that crops can get when they're sold from the farm to other people.

The study focused on the price of dried cannabis when it goes from the farmer to different folks: the stores that sell the cool parts (that's the "bud"), the people who use the plant to make things like edibles or vape cartridges, and the people who help get the cannabis to the stores or the makers. All these deals are made at a lower, wholesale price for dried, trimmed pounds of cannabis.

What's the Value of a Pound?

What is the value of a pound of cannabis?

To figure this out, the study looked at the average price for a pound of cannabis that farmers receive when they sell it in bulk. The study used the prices from the most recent year-long period available in each state. For comparing the value of different crops, the study used information from the USDA for the year 2021. Each state has its own price for a pound of cannabis during its year-long period. The pricing information was obtained from a source called Cannabis Benchmarks, which tracks how much cannabis is sold for over time.

Sometimes, the study could use data from the last 12 months to calculate how much cannabis was grown in a state, like from June 2021 to July 2022. Other times, the study had to use the data for the whole year of 2021, and sometimes monthly reports from 2022 were used to estimate how much cannabis would be grown in a year (like in New Jersey, New Mexico, Montana, and Vermont). The price for a pound of good quality cannabis can be different in each state. For example, in Colorado, a pound of good cannabis might sell for about $863. But in Illinois, that same pound could be worth around $3,553.

Cannabis is a unique crop. It's affected by things like when it's harvested, and each state has its own separate market and prices. The market can be tricky, with new farmers starting and others leaving. Some crops do well, while others don't, and how much people want to buy can change too. It's interesting to note that there's an illegal market for cannabis that's about three to four times bigger than the legal one. Plus, because of the law, cannabis that's legal in one state can't be sold in another state, so farmers can't sell their cannabis to someone in another state who might offer a better price."

Breaking Down Cannabis Value: Understanding the Different Parts and Pricing

When it comes to cannabis, not all parts of the plant are worth the same, and there's a lot more to pricing than meets the eye. Here's a closer look:

• Quality Matters: The most valuable parts of the cannabis plant are the high-quality buds. On the other hand, low-quality buds (also known as "smalls") might be worth about 70% of the price of good buds, and the trim, which is the leftover plant material, could be valued at around 20% of the bud price.

• Different Yields: A dried pound of trimmed cannabis can yield approximately half a pound of high-quality flower, a quarter pound of small buds, and another quarter pound of trim.

• Finding the Formula: The study aimed to find a formula that was both accurate and fair. Using Nevada's state regulations as a benchmark, they established preset values for different parts of the cannabis plant. For instance, in Nevada, the "Fair Market Value at Wholesale" for high-quality flower is set at $2,074 per pound. By adapting and rounding up these numbers, they created a formula for each pound of harvested and dried cannabis:

• Half pound of flower: $2,074 x 0.5 = $1,037
• Quarter pound of small buds: $1,426 x 0.25 = $357
• Quarter pound of trim: $254 x 0.25 = $64

• Total: $1,458

• Conversion for Comparison: To compare prices across states, the study used a conversion ratio to turn the price of trimmed high-quality buds into the equivalent price for untrimmed buds. This allowed them to make fair comparisons and normalize data.

Understanding the pricing of different cannabis parts involves considering quality, yields, and conversion factors. It's a complex process that helps make comparisons and assessments more accurate and meaningful.

Conclusion

The Leafly Cannabis Harvest Study 2022 has shed light on the significant role that marijuana played in the agricultural landscape of the past year. As the sixth most valuable crop in the United States, with a staggering worth of $5 billion, it stood alongside crops like corn, soybeans, hay, wheat, and cotton. However, this evaluation specifically focuses on states where legal cannabis sales are permitted, excluding medical marijuana-only states from the equation. This insight encourages us to delve deeper into the intricate details of the report and explore how marijuana is shaping the world of crops.

As we wrap up this journey, the study's methodology in calculating the value of the adult-use cannabis crop becomes clearer. By accurately assessing each state's cannabis cultivation and multiplying it by a predetermined price per pound, the study provides an estimation of the crop's value. Employing a benchmark approach similar to that of USDA economists, the study ensures a fair comparison with other crops by considering the price when crops leave the farm. The study's focus on the journey of dried cannabis from farmer to retailer, extractor, or middleman, and the use of wholesale prices for dried, trimmed pounds, contributes to a comprehensive understanding of its valuation.

Furthermore, an exploration of the value of a pound of cannabis reveals varying factors at play. By considering the quality of different parts of the plant, yields, and conversion ratios, the study offers a nuanced perspective on pricing. This intricate process enriches our understanding of the diverse cannabis landscape, where market dynamics, state regulations, and consumer preferences shape the unique journey of this remarkable crop.

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