Professional Marijuana Growers Find It’s Difficult to Make a Profit

Professional marijuana growers, who are facing high startup costs, operational challenges and state regulations, are finding it difficult to make a profit, according to The Wall Street Journal.

An estimated 2,000 to 4,000 businesses are producing marijuana for legal purposes, the article notes. The National Cannabis Industry Association says total marijuana sales reached $1.2 billion to $1.3 billion last year.

Currently, Colorado allows about 110,000 patients to purchase marijuana if they have a prescription. Starting next January, anyone 21 or older will be able to buy the drug from retailers. According to Medical Marijuana Business Daily, annual sales in the state will triple in 2014, to at least $700 million.

In Colorado, marijuana growers must submit to background checks and place cameras in every room that has plants. While operational costs have increased, marijuana prices have dropped, partly because of increased competition. The price for a pound of high-quality marijuana in Denver decreased from $2,900 in April 2011, to $2,000 this year. Marijuana growers cannot obtain bank financing, because marijuana remains illegal under federal law.

Most of the marijuana consumed in the United States is grown outdoors in Mexico, tended by low-wage workers, according to Jonathan Caulkins, a professor at Carnegie Mellon who is studying marijuana legalization. He notes Mexican growers do not need to pay for lights or air conditioning. Prices for marijuana in areas where it is not legal are generally higher than in regulated markets, he adds.