IgniteIt · Cannabis Capital ConferenceMIAMI 2027March 24–26 · The Diplomat Beach Resort, Hollywood FL
The story behind the story.
Cannabis Prices Have a Floor. Who’s Still Above It?
Cannabis prices have been falling for years.
Operators have cut costs, expanded production, consolidated facilities, and fought for market share. And investors? They’ve watched revenue grow while margins deteriorated.
But prices cannot fall forever.
This week, our Chief Economic Columnist, Rolando García Bernado, PhD, asks what actually determines the lowest sustainable price of cannabis.
Rolando explains why some operators can survive price compression, how production costs shape the market’s floor, why others depend on restricted competition, what protects margins, and what happens when regulatory barriers begin to fall.
Before we get into it, a big thank-you to everyone who joined us last week at IgniteIt California in Los Angeles. Our next stop, bringing together operators, investors, and service providers, along with policymakers, trade associations, and regulators, is Washington, D.C., on November 18 for the Cannabis Capital & Policy Summit.
— Nico Rodriguez, Managing Editor
Nov. 18 in Washington, D.C. Cannabis Capital & Policy Summit, Grand Hyatt Washington — join us
One Number
$3.40per gram
That’s approximately how much of the per-gram retail price in Illinois remains unexplained by the production-cost differences in Rolando’s comparison with Michigan.
He estimates that cannabis selling for $2.13 per gram in Michigan would cost approximately $2.20 in Illinois after adjusting for higher production inputs.
Yet Illinois’ realized price is $5.61 per gram.
The gap points to something that cultivation efficiency alone cannot explain. That means market structure has a price. And consumers are paying it.
The Big Story
The Architecture of a Cannabis Price Floor
For years, the industry has treated falling prices as an unavoidable consequence of oversupply.
Rolando’s analysis suggests the more useful question is what remains when that pressure has run its course.
A cannabis price has several components: the cost of cultivation, processing and distribution, taxes, and the margins earned along the supply chain.
But what determines prices in the first place? Do competition and production costs push market prices toward their natural levels? Or is it a function of labor and profits that shape those prices? What role do market information and competition play? And how does imperfect competition allow businesses to sustain prices above what a competitive market would otherwise support?
Is the price of cannabis shaped by production costs, supply, and demand? Or is it also a question of market power, regulatory barriers, and, ultimately, how many businesses are permitted to compete?
Michigan: A market approaching its floor
To explore these questions, Rolando breaks down the economics behind the retail price of a gram of cannabis in Michigan.
His model starts with approximately $0.61 in cultivation costs, adds a $0.75 grower margin, roughly $0.33 in wholesale excise tax, and another $0.45 for processing, distribution, and retail.
The result closely approximates Michigan’s realized retail price of $2.13 per gram. This subnational market provides a reference point for what cannabis can cost in a highly competitive legal market.
The takeaway: Operators can start breaking down the numbers to figure out how much of their current margin comes from genuine efficiency and how much depends on the market remaining protected.
Illinois: What are limited licenses worth?
Illinois offers a striking contrast.
After adjusting the Michigan model for higher production costs, Rolando estimates a comparable price of roughly $2.20 per gram.
The actual price is $5.61.
That difference is difficult to explain through cultivation economics alone. Restricted entry can support higher prices by limiting competition for incumbents, which can produce attractive margins. For investors, however, those margins require a different valuation framework.
An efficient operator and a protected operator are not necessarily the same investment.
The former may retain an advantage when competition intensifies. The latter may face substantial margin compression if licensing expands or market access becomes easier.
What happens when the walls come down?
The financial consequences extend to acquisitions and expansion plans, with direct implications for how cannabis companies are valued.
A dispensary valued on today’s earnings may look very different if its local market becomes more competitive.
Cultivation assets built around higher wholesale prices may struggle to earn their cost of capital once prices move toward the economic floor.
And businesses with genuinely lower production costs may gain market share as less efficient competitors retreat.
So, which cannabis companies do you think will still make money when the price premium created by restricted competition begins to disappear?
Read: The Architecture of a Cannabis Price FloorAre you in the C-suite?
We want to know what you’re seeing inside your business.
If you’re a CEO, CFO, or senior executive in cannabis, tell us how pricing pressure is affecting margins, expansion plans, and capital allocation.
Email the desk. Your perspective could be featured in a future issue of IgniteIt Intelligence.
The Capital Test
Growth Is Expensive. Financing It Is Getting More Interesting.
Rolando’s price-floor framework raises another question: how should companies finance expansion when future selling prices remain uncertain?
Two developments this week illustrate different sides of the problem.
Vireo: The cost of capital
Vireo Growth secured $60 million in financing at 8.5%, providing capital for its expansion strategy.
The question behind the headline is what the company can earn on the investments that financing supports.
If retail prices continue to compress, new cultivation facilities and acquisitions need to generate returns that justify their financing costs.
The spread between borrowing costs and investment returns is where shareholder value is created — or destroyed.
Read: Vireo Secures $60 Million in Financing →
Tilray: Revenue and profitability are different stories
Tilray reported approximately $257 million in quarterly revenue, even as cannabis sales declined 13%.
The divergence illustrates why consolidated growth cannot be treated as proof that a cannabis operation is becoming more profitable.
Diversification can expand the revenue base while underlying cannabis economics remain under pressure. Rolando’s work gives us a useful way to read both companies.
The SpreadWeek 5 of 11
Curaleaf / Aurora: The Fight Continues
Curaleaf raised its offer for Aurora from $4 to $5 per share, a 25% increase.
This past week, Curaleaf pushed back against Aurora’s resistance, while speculation about a potential competing transaction added another variable to the takeover battle.
Aurora also reported plans to double German cannabis production, reinforcing the importance of its international medical operations to the company’s standalone investment case.
Curaleaf / AuroraAs of Oct. 13 close
5.3%Aurora’s discount
to offer value
to offer value
Aurora closed at $4.29 against consideration now worth $4.53. A week ago the gap was 8.4%.
40%Annualized return
if it closes
if it closes
$4.53Offer’s value today,
down from $5.01
down from $5.01
51Days until
Dec. 4 expiry
Dec. 4 expiry
Why it matters: The headline is still $5. The value isn’t. Most of the offer is paid in Curaleaf shares, and those fell 12% in a week, taking the bid’s implied value from $5.01 to $4.53. Aurora slipped too, but by less, so the gap narrowed. Aurora is now holding out for more against an offer that’s worth less than it was.
The question this week:
Does Aurora have enough leverage to demand more than $5?
DW Analysis
Schedule III Opens a Federal Door. What Will It Cost to Walk Through?
The DEA’s April 23 final order created a federal Schedule III pathway for qualifying state-licensed medical marijuana businesses.
But Dickinson Wright’s analysis makes a distinction: medical operations may qualify for federal recognition while adult-use cannabis remains Schedule I.
The order provides federal registration categories for manufacturers, distributors, and dispensers, with an expedited six-month review process. It also contemplates accepting existing state records and compliance requirements wherever permissible.
For businesses operating in both medical and adult-use markets, the challenges are less straightforward.
The same cannabis plant may receive different federal treatment depending on the legal channel through which it is produced and sold.
And while the order indicates that qualifying medical licensees will no longer face Section 280E’s deduction disallowance, it expressly leaves individual federal tax liability unresolved.
The registration decision
For an operator, federal recognition may create opportunities for tax relief and improved access to capital.
But management must also consider registration requirements, inventory controls, recordkeeping, federal oversight, and the treatment of businesses that serve both medical patients and adult-use consumers.
Dickinson Wright also highlights an unusual provision requiring DEA to act as purchaser and reseller of crops produced by federally registered manufacturers. Operators and investors should then project how much of that value remains after the cost of operating within the federal system.
Analysis based on work by Dickinson Wright attorneys Scot Crow, Jonathan Wachs, Lloyd Pierre, Benjamin Sobczak, and Jessica Kaiser.
Partner InsightSponsored
From our partner, Azuca
What Does a Better Gummy Actually Cost to Make?
Fast-acting edibles are often marketed around particle size.
Azuca wants manufacturers to evaluate something broader: how an infusion system performs in the finished product — and what it costs to manufacture that product at scale.
Kim Sanchez Rael · Co-founder & CEO, Azuca
Coming soon
We’re preparing an exclusive interview with Kim Sanchez Rael, co-founder and CEO of Azuca, to examine the business economics of fast-acting edibles, from integrating new infusion technology into existing production lines to manufacturing costs, efficiency, and scalability.
How much does it cost to integrate a new infusion system into an existing gummy line? What happens to drying time, throughput, waste, and shelf life? How should a manufacturer compare ingredient costs with the economics of the finished product?
And what should a brand measure before deciding that a successful pilot is ready for commercial production?
Those are among the questions we’ve put to Azuca. In the meantime, manufacturers can explore the research behind the discussion.
Explore the Science of Fast Acting white paper →
Sponsored content produced in partnership with Azuca.
Signal
Three Developments Worth Watching
Trulieve pays down debt
Trulieve repaid a $65 million mortgage, reducing secured borrowing obligations.
In a market where financing remains expensive, debt reduction can improve financial flexibility. But it also competes with expansion, acquisitions, and other potential uses of capital.
Read: Trulieve Pays Off $65M Mortgage →
California questions the cost of compliance
California’s cannabis industry continues to debate whether its track-and-trace requirements impose more operational friction than necessary.
Recent Metrc research points to consumer interest in verified product information, while state policymakers are considering ways to reduce compliance burdens.
Read our California compliance analysis →
The IRS puts 280E on its agenda
Treasury and the IRS included Section 280E guidance in their 2026–27 Priority Guidance Plan.
The Bottom Line
Know What You’re Paying For
Rolando’s price-floor analysis challenges a familiar assumption in cannabis investing.
High prices don’t always mean a company has a superior business.
Sometimes they reflect efficient production, strong brands, and disciplined operations. Sometimes they reflect a market where competitors face barriers to entry.
Rolando asks how many businesses will remain profitable when cannabis prices approach their economic floor.
So here’s what we’d like to ask you:
Would you rather invest in the lowest-cost cannabis operator or the company with the strongest protected market position?
From Los Angeles to Washington
November 18 · Washington, D.C.
Thank You, California. Next Stop: D.C.
To everyone who joined us at IgniteIt California Market Spotlight on October 7, thank you.
To our speakers, sponsors, attendees, and the operators who shared their experiences: your participation makes these conversations possible.
The challenges discussed in California don’t stop at state borders.
Federal tax policy, access to capital, banking, market consolidation, and regulatory uncertainty are shaping investment decisions throughout the industry.
And on November 18, we’re bringing that conversation to Washington, D.C.
Cannabis Capital & Policy Summit
November 18, 2026 · Washington, D.C.
IgniteIt’s Cannabis Capital & Policy Summit brings together cannabis executives, investors, policymakers, and financial professionals to examine the decisions that will shape the industry’s next phase.
Whether you’re allocating capital, evaluating acquisitions, financing expansion, or preparing for federal regulatory change, this is an opportunity to engage directly with the people confronting those questions.
Don’t just follow the policy debate. Join the people making the business decisions around it.
Register for IgniteIt Washington, D.C.Upcoming IgniteIt Events
Cannabis Capital & Policy SummitNov 18 · Washington, D.C.