Unlike other commodities, medical marijuana is not an industry with much analysis or indexing. Joseph Slotin and Matthew Hudson are working to change that with their website, Cannabis Price Index.
“With any commodity, there is a historical index. And this is becoming … a real commodity,” Slotin said. “It’s a 20- to 50-billion dollar industry right now in the U.S. alone. It seemed like an unrepresented commodity at this point. We just identified that and made the decision to build a commodity-style site around that.”
The site — launched in February 2013 — tracks and compares the day-to-day prices of medical marijuana per gram from various retailers in Washington, Colorado and California. By comparing and tracking the prices of thousands of different strains of marijuana, CPI can build a daily snapshot of the product prices. Unlike other marijuana commodity sites, CPI does not rely on user reviews. Instead, the site derives its data from legal sales only, sourced by public advertising and retailer websites.
According to Hudson, CPI’s index is similar to what the website Priceline has done to index airline prices, something the marijuana industry hasn’t seen until now.
“Most of the other sites out there rely on user-generated content,” Hudson said. “It’s entirely surveys. It’s not scientific at all.”
By comparing prices and THC volume in different products, CPI allows consumers to get a higher quality product by comparing the average price and THC volume in other cities, according to Hudson.
“If they’re going somewhere and think they’re not getting the best deal, they can go on the site and compare the average price,” Hudson said.
However, CPI isn’t aiming to be a finder site. Although plans to add a finder option are in the works, Hudson and Slotin said the site is targeted to retailers and investors who can use the data to analyze product categories and trends and compare markets. According to Hudson, this allows businesses to forecast and compare average prices.
“People who are putting their life savings into stores, into small farms, they need to know what product to be producing and stores need to know what price they can expect to get,” Hudson said.
According to Slotin, the data CPI provides is especially important as marijuana legalization gains support. After marijuana legalization measures passed in Washington and Colorado last November, Slotin believes widespread legalization is inevitable.
“One of our main intents is to be more big-picture and future-thinking with this,” Slotin said. “The idea is that (marijuana) will be federally legal in the foreseeable future.”
As legalization gains support, Slotin and Hudson hope the website can act as a bridge between the marijuana industry and investors who currently view it as a high-risk commodity to invest in. By compiling data about the industry, Slotin said the website is giving investors a tool to work with and understand the industry.
According to Hudson, this is particularly important as the prospect of widespread marijuana legalization becomes more likely.
“When (legalization) happens, they’re going to need a price index,” he said.