Majority Of Marijuana Growers Feel 'Terrible' Or 'Bad' About Current Market Situation, Finds Wells Fargo Survey

How the cannabis market treats consumers and retailers is a common topic, but what about the people without whom there would be no market...the cultivators. How are marijuana growers handling these turbulent times for the industry?

The third edition of the U.S. Cannabis Cultivator Survey from Wells Fargo Equity Research (NYSE:WFC) provides insight into cannabis growers' sentiment amid plummeting wholesale prices, oversupply challenges, strict regulations and delays in reforms. To paint a picture, let's look at Oklahoma, which recently made headlines for its huge oversupply of cannabis...a whopping 32 times more marijuana than necessary to meet market demand.

The drop in wholesale prices goes beyond the U.S. Just last week, Ontario announced a reduction in wholesale markups as large weed operators continue to struggle.

Nonetheless, according to the survey's key takeaways provided by Green Market Report, cultivators are not happy but they are not giving up either.

Survey Highlights

• More than 400 marijuana growers from eight states took part in this questionnaire;

• 58% of growers feel “bad” or “terrible” about the market, versus 11% who reported feeling “good” or “great” about the current market situation; 

• California, which has the most growers, found that 66% of them revealed a “bad” or “terrible” outlook;

• Growers are mostly unhappy because of the low wholesale prices (34%), followed by limiting regulations (29%);

• As many as 59% confirmed they were selling marijuana for under $750 per pound, which is below the average breakeven price of $800 per pound.

Despite feeling terrible at the moment, it must be that most growers are optimistic about the future, as only 19% of them plan to partially or completely leave the industry. This compares to 22% from a fall survey and 27% from the prior one last spring.

Cannabis operators that closely feel the impact of the growers’ sentiments are those who provide them with cultivation equipment like Agrify (NASDAQ:AGFY), Scotts Miracle-Gro Co. (NYSE:SMG), Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), GrowGeneration Corp. (NASDAQ:GRWG), and urban-gro Inc. (NASDAQ:UGRO).

See more details on the survey at Green Market Report.

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Photo: Courtesy of Cannafornia via Pexels.