Marijuana’s legalization comes with an unwanted consequence: higher prices. When you legalize a “drug” or an intoxicant, the government will naturally tax it. This part of progression and part of the legalization compromise. And when you compromise with the government, you’re going to get hit.
We’re only T-Minus 70 days until America has legal marijuana, and both Colorado and Washington will implement varying taxes (Washington’s are worse) on recreational cannabis in 2014. The consequence: the average price of weed over the counter for consumers in those states figures to be around $15 after taxes, according to Time and experts on this matter.
Compared to their current medical averages of $8-10, that is nearly double the price of medical marijuana in these states. On the dank side, this means medical marijuana isn’t going anywhere (and perhaps will become even more medical as retail’s issues reflect its need). On the schwag side, this means weed is going to get more expensive for just about everyone.
Regulators say that will put the price of marijuana pretax at an average of $12 a gram, a price that the ACLU’s Holcomb says is competitive with illicit pot on the street. Colorado votes on its pot tax — a less onerous 15% excise tax and 10% sales tax — next month. Sam Kamin, a professor at the University of Denver who advised Colorado on its regulations and who will also be serving on the ACLU’s panel to devise a plan for California, says finding the “sweet spot” for taxation is key. “We want this to be self-funding regulation that is robust, but we don’t want the price of legal marijuana so much higher than the black market that it becomes attractive again.”
Again, the evolution of marijuana requires–just like alcohol and cigarettes before it–that money goes to the coffers of our country. But, unfortunately, it’s not just recreational smokers looking for a fix that will feel this price hike: it will have an impact on medical marijuana prices.
This is one inherent draw back (and concern) that will hit these states in direct correlation to legalization–the other being a lower quality of weed. Legal weed means an influx of tourists, and tourists mean more weed will be purchased. It also means that anyone over the age of 21 without a medical marijuana card now has that option to exit the black market and purchase weed over the counter, legally. That’s a lot of new people buying weed legally.
Likewise, that means that there will be a higher demand for legal cannabis and far less supply. For the Econ majors: when you combine a 15% or 25% sales tax (15% in CO, 25% in WA), that means the average price of pot simply must rise.
Currently, if you look at Colorado or Washington dispensary menus, it’s rare to find a gram over $10 and an eighth over $40. Yes, some dispensaries will charge in the $45-50 range, but in an increasingly competitive market, it’s less and less common.
Medical weed is cheap in these states–but when there’s less weed in those states, that can’t last for long. And there simply aren’t enough growers able to meet the states’ lofty regulations to produce the amount of cannabis necessary to maintain prices.
Look no further than California and Hollywood, where dispensary caps and eighth prices (for the real OG Kush) veer towards and often over the $50 line. California has well more legal patients than Washington and Colorado, and while pastures are green in California, the high concentration of people (who want that good stuff!) makes for higher prices. And when anyone over the age of 21 can buy weed legally, Colorado and Washington will look more like California when it comes to demand per capita.
Thus, it’s no surprise that dispensary owners and growers in Colorado indicate the market cap–currently around $2,000 for a pound of high grade marijuana)–will rise to the $3,000 and perhaps beyond sometime in 2014. Recreational marijuana will, after tax charge people on average around $55, and the medical average figures to soar near at least $45 and perhaps even $50 because of that .
For medical marijuana patients, it’s a drag. No, they won’t have to pay the recreational tax, but they will clearly feel its effect through this transitory system. Immediately, there is no clearcut solution to solve this high demand conundrum. There are already, as anyone in the industry will tell you, never enough growers, never enough hash blowers, and never enough dispensaries to satisfy the people’s insatiable desire for cannabis.
Being a legal, regulated industry worker isn’t an easy thing. It’s a stigma and a Scarlet Letter in some people’s eyes. Growing–the crutch of cannabis–is a difficult profession that only a select group of people have a mastery over. Partially because it’s still, you know, federally illegal.
If these professionals aren’t the ones manning mass-production ware-houses, the product sours, and for connoisseurs, finding the headiest bud becomes a hassle (unless they’re home-cooking).
And mass production is a very scary thing–and a road, thankfully, these states are not going down. Look no further than Canada’s plan to mass-produce weed out of a chocolate factory and prohibit home growing (something Washington is considering). If you can’t even try to be economical by growing your own legally, you’re forced into either: the legal rip off or the black market.
With mass-production and no home growing, the industry would become stale and nightmarish.
Consequentially, it’s also a real concern and a likelihood that these lofty taxes will help the black market maintain its existence. Why would a grower leave his cosy, unregulated job (particularly in the overly-strict Washington) to give 25% of his profits to the government and start charging his homie down the block more? Most black market growers likely won’t, and many pros could potentially migrate there as well.
The conclusion: recreational marijuana isn’t all flowers and nuggets.
With Colorado and Washington’s bold moves comes an unprecedented microscope on the two states. Everyone is watching their moves. While the movement must remain united and optimistic that the two testing grounds for legalization will be a success, there are real concerns, some of of which are caused by the government’s insistence on making legalization as difficult as possible for people whose professional lives depend on it.
It will be a roller-coaster ride from the get go, and one that no one can predict. If it flops? Fuck it–let’s all just move to Uruguay.