While I like the general direction of your comments, no strong argument can be built on a weak foundation of misinformation. Your assertion that demand is higher for weed than tomatoes is just flat WRONG. The only way herb surpasses tomatoes is in money made- not in transactions, pounds, or any other reasonable measure. This is an error based on perspective; you live around potheads who don't buy tomatoes, and that's fine. Just don't get the idea that King Soopers is handing out tomatoes for free, and don't assume that just because you don't eat tomatoes much, that others don't as well.
Yes, the price of cannabis will fall. A little. Legalization has already been priced in to a great degree due to the relaxed legal climate Colorado already enjoys. Cheap crap will always be around- and it will always be cheap crap.
I don't see everyone beating down the door to buy another Yugo, and when this sorts itself out, BRANDING will be king, since most consumers are already trained to look for brand names as a symbol of quality. That means that if you want to have a good brand, you best not sell ditchweed. Good brands will be backed by premium product, and there will always be a niche for that. The question in my mind today is, 'how big is that connoisseur market?'