Canabis: SupplHigh and Demand
David McBride
Keiser University
Cannabis: SupplHigh and Demand
Shifts in Supply and Demand
In every market there is a supply and a demand. Supply and demand is possibly one of the most essential concepts in economics and is the backbone of the market economy. This is the determining factor in which determines the price and amount supplied of any type of merchandise or service that gets provided by the merchant. I was able to locate one article that will show the changes of supply and demand curve which affects all of those who are involved. This also demonstrates how it can benefit one side and then harm another.
Would you have ever thought that a high demand product would get purchased at the retail stores desired price rather than the supplier’s? Well that’s the case with cannabis or as we commonly name it marijuana. The pot farmers have so much supply on hand that they are selling the product at the prices the retailers are willing to pay and they still can’t get rid of enough. The retail stores are now in a position where they can call the shots and are sitting in a more comfortable seat. This allows them to provide for the customer and have better prices.
Shift for the Supplier
Not too long ago, just months as a matter of fact that growers were bragging about calls from stores begging for their supply. During this time pot farmers who were receiving calls, letters, and emails felt as though they could charge excessive prices for the product to retailers and they would pay. When cannabis first became legal, suppliers were able to sell at $1,700 to $2,200 a pound, wholesale. Now however, it's like $700 to $800 a pound. Yet now this supply is surpassing the demand and the growers of cannabis that jumped on wanting to make it big are now sitting on a big supply that is not moving fast enough. Could it be that the pot farmers were just a little too good at doing their job, that maybe or could it be something else? One big contributor could be is that in Washington State legal pot can be grown outdoors and there was almost perfect weather last summer in the eastern part of the state, leading to a more plentiful crop. There is state data that shows licensed growers had harvested 31,000 pounds of bud as of January 2014.
For this situation I see the obvious choice as being Graph C seeing that the abundant surplus of cannabis on hand from a high ratio of farmers to retailers is the determinant of supply which has caused the abrupt change. Thus causing the supply curve to shift outward displaying suppliers can demand more product to be delivered to the market at a lower price.
Shift for the Demand.
Just last summer stores were begging for help for supply, they were hurting so bad that they could not keep enough marijuana to keep their doors open. There was such small amounts of marijuana around and what was around the prices were so steep it was hardly worth buying. Although in the state of Washington they limited the number of retail pot shops to 334 and about 110 have been licensed. When legalized pot stores first started they were in situations where they were just buying product from several suppliers, or producer that just so happened to come into their shop that day just to fill
