US: Supply-chain shortages starting to affect cannabis market

Getting basic materials like ceramics, stainless steel, and computer chips from China has gotten so difficult that it is about to hit one of the few industries that has so far been insulated from supply-chain woes: U.S. cannabis.

"The raw materials for the equipment, the LEDs for the grow houses โ€” all of it comes from China,โ€ says Arnaud Dumas de Rauly, CEO of Blinc Group. The company has also noticed shortages of chipsets, which are used in most technology devices.

The cannabis industry has so far been shielded from supply-chain woes because most of it is hyper-local; since it is a Schedule I substance, companies risk legal imbroglios unless they grow and process it in the state where it will be sold, but state-specific supply chains can only protect the industry for so long.

Prices of cannabis itself have fallen sharply this year โ€” the volume-weighted average spot price for cannabis for the week ended November 26 was $1,290 a pound, down 19.1% year over year, according to Cannabis Benchmarks, a division of New Leaf Data Services and Cowen & Co. Therein lies an interesting twist for the cannabis market.

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