By Harrison Bard, CEO and co-founder Custom Cones USA
In the ever-evolving landscape of legalized cannabis, the pre-roll emerges as a potent symbol of accessibility and convenience. This simple product, essentially ready-to-smoke cannabis rolled into a paper, has not only captured the hearts of consumers but has also dominated sales, particularly in 2024. Now accounting for 15% of the market, pre-rolls have proven themselves as indispensable in the burgeoning cannabis industry.
Let’s take a closer look at how pricing and other factors are contributing to the rise of pre-rolls.
Wide range of pre-roll prices
A major factor in the pre-roll’s popularity is undoubtedly its affordability. In April 2024, the average cost of a pre-roll dipped to $6.73, down from $8.03 the previous year, marking a significant 16% decrease, according to data from cannabis analytics firm Headset. This trend is largely attributed to reduced material costs in maturing markets and in spite of the effects of an increase in the luxury-infused pre-roll sector, which saw a growth of 27.9% year-over-year.
Yet, pricing dynamics vary greatly across different states, reflecting the stages of market maturity, with prices dropping as production increases.
Michigan, however, stands as an outlier, leading the pack not just in sales but in affordability, despite only opening its recreational market in 2019. Consumers there purchased a staggering 22.7 million pre-rolls at an average price of $6.39 per gram, significantly lower than the previous year. The vast majority (88%) of Michigan’s pre-roll products are priced under $10, with over half costing less than $5.
This contrasts sharply with states like New York, where the nascent market and slow license roll-out keep prices steep, averaging $24.81 for regular pre-rolls and $30.75 for infused ones.
Pre-roll price cycle
The pricing trends in cannabis markets are cyclical, often starting high in newly legalized states due to initial demand outstripping supply. Over time, as markets stabilize and production increases, prices generally decrease, and more flower is available for extraction to make concentrates. As those prices drop further, the cost of infused pre-rolls – made with a combination of flower and a concentrate – also begin to fall.
This pattern is evident in states like Colorado, Washington and Oregon, which were among the first states to open recreational cannabis markets in 2014 and 2015, now enjoy some of the lowest pre-roll prices due to their mature markets with significant portions of their products also priced under $10.
Washington boasts the lowest prices nationally, with pre-rolls averaging $6.19 and infused pre-rolls at $6.34. Oregon and Colorado follow, with average pre-roll prices at $7.51 and $7.98, respectively. In Oregon, this is a slight increase from the previous year, influenced by the sales of higher-priced infused products.
Developing markets like Massachusetts (2018), Arizona (2021), Nevada (2017) and California (2018), which have more recently legalized recreational cannabis, show intermediate pricing. Massachusetts’ pre-rolls average $9.83, while Arizona has seen a decrease to $11.87, down from $13.36 in 2023. Nevada pre-rolls sit at an average of $11.92 while California, which ranks second in total units sold (12.6 million), averages $14.11. These states still also experience high prices for infused pre-rolls, reflective of a developing market that hasn’t yet reached full maturity.
The pricing cycle is also seen in the newest markets such as Illinois, Missouri, Maryland, and New York. These states have higher average prices due to ongoing regulatory developments and the gradual scaling of production capacities. Illinois (2020) reports an average pre-roll price of $19.24, while Missouri (2023) lists an average of $14.48. Maryland (2023) and New York (2022), still in the early stages of their market development, have average prices of $14.84 and $24.81, respectively, indicating that their markets are still adjusting to demand and regulatory frameworks.
Planning ahead for pre-roll success
The trajectory of pre-roll pricing and sales underscores a broader narrative within the cannabis industry. As states move through different stages of market maturity – from the initial boom following legalization to a more stable and competitive market – prices tend to stabilize and become more consumer-friendly. This pattern not only affects consumer behavior but also shapes the strategies of producers and retailers who must adapt to the evolving landscape.
Except in Michigan, which is defying the usual market trends by maintaining low prices alongside high sales volumes, suggesting a highly efficient market that may serve as a model for other states.
As the cannabis market continues to expand, stakeholders – including growers, processors and retailers – need to stay informed of these trends and prepare for the shifts in consumer expectations and market conditions. Understanding the dynamics of pre-roll pricing and sales is crucial for maintaining competitiveness and capitalizing on the growing demand for this convenient, accessible cannabis product.
Overall, the cannabis industry, with pre-rolls at the forefront, is not just growing – it’s evolving, driven by consumer preferences, regulatory changes and market maturity. This evolution presents both challenges and opportunities for those involved in the industry, from growers to consumers, highlighting the importance of agility and planning in navigating this lucrative field.