Cannabis crisis: falling prices and million-dollar losses

Why the US hierba market is deflating: neither addictive nor profitable

The legal hierba sector in the United States is going through an unexpected crisis. Prices are plummeting, companies are racking up million-dollar losses and consumption keeps falling. This is not about prohibition, but quite the opposite: just as legalization advances, demand is evaporating. A phenomenon that contradicts all of the industry's projections.

The data point to a combination of factors. For one, hierba has lost its appeal as forbidden fruit. Without the transgressive element, many consumers get bored and quit without difficulty, as longitudinal analyses of habits show. For another, the correlation with tobacco is key: hierba use drops sharply as smoking declines. Those who quit tobacco do not adopt the joint as a substitute; on the contrary, they also abandon the associated paraphernalia.

Oversupply makes the picture worse. Legalization has triggered industrial production, while demand is not growing at the same pace. Wholesale prices have collapsed, and companies that bet on scaling quickly are watching their margins evaporate. Some investors talk of a bubble bursting on the demand side: the consumer is not as elastic as was thought.

Is this good news for public health? Undoubtedly. But for the owners of grow operations and dispensaries, it is a financial catastrophe. The recreational hierba business model, which promised stratospheric returns, is colliding with a stubborn reality: people get tired of joints. And when there is no strong chemical hook, the market crumbles.

The question hanging in the air is whether the industry can reinvent itself with derivatives such as CBD or medical hierba, or whether the recreational business is heading for irreversible decline.