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US Cannabis growers and dispensaries have been slammed by declining prices for a period of two years now, forcing expansion plans across many states to go up in smoke. Meanwhile, cost pressures on the industry have only intensified as borrowing and building become increasingly expensive. The oversupply of cannabis may have to be worked through for some time before a meaningful rebound in prices can be expected.

A lack of regulatory reform, particularly regarding cannabis firms’ access to the banking system, has only exacerbated a massive downturn in the valuations of many North American cannabis brands. Some have turned to consolidation, which could become a more entrenched trend if the situation does not begin to improve in the near-term.

Related ETFs: AdvisorShares Pure US Cannabis ETF (MSOS), ETFMG Alternative Harvest ETF (MJ)

Among the many headwinds facing the budding American cannabis industry, nothing has been worse than a persistent bout of significant oversupply. Though the US market is  largely segmented on a state-by-state basis, since the federal prohibition on cannabis remains intact and interstate commerce involving the product can oftentimes constitute a violation of the law, nearly all jurisdictions where cannabis farming and sales are legal have faced a glut of supply and a resulting decline in prices that has yet to abate.

In Michigan, one of the states where anyone 21 years or older with a valid government ID can purchase cannabis products, the number of active marijuana plants now exceeds 1.2 million, roughly six times the volume grown in 2020. Politico notes that such supply may be equivalent to three times as much weed as the state’s consumers are buying. As a result, the state’s pot prices plummeted -75% from nearly $400 an ounce to less than $100 between 2021-2022.

Amid California’s cannabis glut, the Santa Barbara Independent writes that the prices for wholesale cannabis flower have plunged by half from their peak of $1,400 in 2020 to about $660 per pound. Much like Michigan, the state is believed to be…

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