15% of Every Cannabis Harvest Never Makes It to Market. Here’s Where It Goes
There’s an interesting story hidden in the data that the Washington State Liquor and Cannabis Board (LCB) publishes every month.
The LCB compiles statistics on the weight of cannabis harvested, and the weight of cannabis sold.
Here’s the funny thing: The two numbers almost never match up.
There’s almost always more harvest weight than retail weight sold. Like, a lot more. Over the past 20 months, Washington farmers have brought in a total of 286,962 pounds of harvested cannabis. During that same time period, retailers sold 239,712 pounds.
That makes a difference of 47,250 pounds—23 tons of cannabis harvested but not sold.
Obviously, cannabis doesn’t go straight from the field to the store. It takes weeks to cure it, process it, package, and distribute it.
But still: The gap is there every month.
Where does the missing cannabis go?
I set out to answer that question.
There are larger processors coming into the state who might purchase the entire harvest from multiple farms.Crystal Oliver
First, it’s important to understand how the LCB records the cannabis weight that appears on its website. When a plant is freshly harvested, it has a “wet weight” that’s 80 to 90 percent more than its “dry weight,” which is its mass after curing.
“There is a pretty significant loss during the process,” explained Will Denman, president of the Washington state producer Solstice Grown. “From wet to dry, it is about 10-1 on weight, in addition to shrinkage you see throughout the post-harvest supply chain.”
But that’s not the source of the gap, because for its harvest weight figures the LCB records only the dry weight of the cannabis plant. That is, its mass after curing.
It turns out that a number of different factors contribute to the gap. Testing, market timing, and the law of supply and demand are three of the major ones.
Cannabis crops must go through quality assurance testing to make sure that there are no ‘bad’ things in the flower that could harm the consumer. According to the WLCB website, the following are tests that are done to ensure that only quality, untainted cannabis reaches the consumer:
“The general body of required quality assurance tests for marijuana flowers and infused products may include moisture content, potency analysis, foreign matter inspection, microbiological screening, pesticide and other chemical residue and metals screening, and residual solvents levels.”
Washington LCB spokesperson Mikhail Carpenter said that some of the cannabis a grower harvests could fail QA testing. That batch or crop would then be destroyed.
Monthly Allocation of the Crop
Crystal Oliver is a cannabis farmer and co-founder of Washington’s Finest Cannabis. She and her husband and business partner, Kevin Oliver, have a specific way of doing things when it comes to selling their harvest. They want to make sure they have enough cannabis to sell to their retail partners throughout the year.
“What we have done for the past two years– we harvest in the fall, and we sort of budget our flower to get us through the year,” Crystal Oliver told Leafly. “So we are generating income throughout the course of the year. Generally speaking, you want to do that because the price you would get if you tried to unload your entire harvest in October is not as good if you sell your product throughout the year.”
There’s a limit to how much cannabis flower a farmer can keep on hand, though. According to state regulations, an outdoor grow or a greenhouse operation can store an amount of cannabis equal to 125% the amount of the producer’s yearly harvest. An indoor grower, by contrast, can only have up to 50% of their annual harvest on hand at any one time.
Cannabis processor licensees are allowed to have a maximum of 50% of their average usable cannabis and 50% average of their total production on their licensed premises at any time.
Cannabis retailers, meanwhile, can store even less product in house. Retailers are allowed to have a maximum of 33% of their average inventory on their licensed premises at any given time.
Working within those limitations requires producers and processors to strategize how they sell their products to retailers throughout the year. A grower can sell their harvest in a one-time sale to a single buyer after harvest, but harvest time is usually when wholesale prices are lowest, because of the glut of product hitting the market.
Methods Used from Industry Folks
Holding back a certain amount of cannabis might be a smarter move, but that’s assuming the stored cannabis remains market-fresh and the wholesale price rebounds from its harvest-season low. And there’s no guarantee that both of those things will happen.
Will Denman of Solstice Grown said many farmers hold some cannabis in reserve just in case an adverse event hits the market and drives up the wholesale price.
“We know several (farmers) who have tonnage that they are simply sitting on, waiting for the drought,” Denman said. Cannabis doesn’t have an indefinite shelf life, though. “It is nonsensical,” Denman argued, “because the cannabis is degrading and losing value. But it’s certainly [the farmer’s] prerogative.”
As for a drought hitting the cannabis market: There’s no sign of such a thing on the horizon. Cannabis sales continue to grow in Washington. At year’s end cannabis sales topped $1 billion for the first time ever.
Crystal Oliver said that it’s rare to see a single large processor buy up all of a grower’s harvest in one purchase. But that may change. “There are larger processors coming into the state who might purchase the entire harvest from multiple farms,” she said. “But right now there are very few processors who are in a position to do that.”
“We have a relationship with a processor where we sell a portion of our product to them each month,” Oliver added. “They’re one of the top ten processors in the state, but they’re not in a position financially where they can buy our full harvest in October. So we worked it out where they buy a certain amount each month.”