On May 15, the spot price for a pound of cannabis was $1,825, according to the weekly report from Cannabis Benchmarks. That is down from a peak of more than $2,500 a pound in the week of April 15, and the spot price may be on its way to a peak of $3,500 later this summer.

There is no legal market for cannabis futures, but buyers and sellers do reach agreements on longer dated deals, and Cannabis Benchmarks indicates that the forward curve on pricing out through November is trending down, from a June forward price of around $1,850 a pound to a November price around $1,250.

In the commodity markets, when the current spot price is higher than the futures price the market is said to be in backwardation. Conversely, when futures prices are higher than current spot prices the market is said to be in contango. The marijuana market is current backwardated, and all things equal, commodity markets generally prefer to be in a state of contango.

A market in contango is a market that is growing, and that is what cannabis growers are experiencing now. Here’s what Cannabis Benchmarks has to say:

As supplies dwindle, speed to market becomes more important, which forces cultivators to consider the additional time required for proper drying and curing. … We estimate that less than 10% of cultivators are properly curing cannabis flower; however, we anticipate this figure doubling or quadrupling over the coming 6 to 12 months, as the industry responds to an increasingly educated consumer. Thus, curing will soon join other variables that noticeably influence price.

Besides being important to growers, higher prices for cannabis are also important to states where sales are legal. Colorado, for example, reported March 2015 taxes, licenses and fees from marijuana sales of $9.98 million, slightly more than double the amount the state collected in March 2014. For the fiscal year to date, Colorado has collected about $80.5 million, 237% more than it had collected at the same point in fiscal year 2014.

According to PriceOfWeed.com, the average price for an ounce of high-quality marijuana in Colorado is currently $241.38. In California the price of high-quality marijuana is given as $241.92, compared with $298.22 in Florida, $317.99 in Georgia, $326.41 in Texas and $231.54 in Washington, the only other state besides Colorado where recreational use of marijuana is legal.

Cannabis is currently legal to one degree or another in 23 states and the District of Columbia. It will be difficult for other states to maintain their current laws against marijuana, both because it adds some cash to state coffers and once neighboring states have legalized marijuana the pressure rises for legalization everywhere.

The biggest driver of that change, of course, would be the federal government, which still maintains laws against the sale and distribution of marijuana, but has agree (in most cases) to close its eyes to legal state sales. If the federal government ever lifts its restrictions on cannabis, states and other institutions like banks and credit card companies will be knocking down the industry’s doors in an effort to nab some of the business.

By Paul Ausick