Shouldn’t Legal Pot Be Cheaper?


Cannabis enthusiasts have spent the last few months checking real estate listings in Colorado, where the naturally-occurring substance finally became completely legal (to adults) at 12:01am on January 1, 2014. Legal pot shops have opened across the state, prompting a whole new round of debate about whether or not this is a good idea.

Some people seem to believe that legalization will automatically turn the entire populace into couchlocked zombies, American productivity will plummet, the welfare rolls will multiply with layabouts spending all their food stamps on microwave popcorn and ice cream, and we’ll all be watching Chinese TV by the end of the decade (but won’t notice it’s in Chinese).


I don’t have much to add to the debate, mainly because I don’t think there’s any changing anyone’s mind on this topic. Nobody who thinks that smoking pot is inherently dangerous and life-destroying is likely to be swayed by the mountains of evidence to the contrary, and no one who has any actual experience with it is likely to believe that it can or will set you on a path any more ruinous than a wasted evening looking at ’80s videos on YouTube. And anyway, this argument is going to settle itself, because it’s entirely generational.

There are only a few points I would make.

One: Does anyone really think that there’s anyone in America who wants to smoke pot but isn’t doing it because it’s illegal? Except for people older than about 40 — the age at which finding a hookup gets a little more difficult, not that I’d know anything about that — I promise you that everyone who wants to smoke weed is smoking weed.

Two: it’s important to remember that although marijuana is enjoyed by a lot of people, it is emphatically not enjoyed by just about as many. It seems to affect different people differently. Some people get a burst of creative thought accompanied by restless energy, which is why artistic types so often seem to favor it (not that I’d know anything about that). Other people seem to immediately fall asleep the moment they exhale (not that my wife would know anything about that). No matter how legal they make it, the people in the latter category are not going to suddenly change their mind and decide they enjoy elective narcolepsy.

Among several other benefits — dramatically reducing the number of people put in prison for nonviolent offenses; putting the tax revenue from marijuana sales to good use; eliminating (the marijuana portion of) the violence and turf battles that come with drug smuggling; disempowering black market cartels — one that I haven’t seen mentioned is that marijuana smokers (or eaters, or drinkers) will actually know what it is they’re consuming.

Because (not that I’d know anything about this) there are different types of weed, and they do different things. Some strains are good for relaxing and bonding with your couch at a subatomic level. Some work more on the mind than the body, and seem to facilitate creative thought. Others are good for painting your apartment without getting bored. Once the stuff is legitimized and labeled, people will be able to use different strains for different things, and consume it in the manner they prefer. There is of course the old-fashioned roll-it-and-smoke it method, but there is also a wide variety of edibles, candies, lollipops, even fruit punch. All of these can and will be sold with a variety of strains and at a variety of potencies, and I am looking forward to trying all of them for the first time in my entire life as soon as it’s made legal in New York State (which seems to be on the distant horizon).

All that is really just a preamble to what I really find interesting, though: The Colorado shops are selling their wares for $45 for an eighth of an ounce, and $400 for an ounce. So my question is, how did they arrive at that price? And for that matter, how did they decide to sell it by even-numbered fractions of an ounce (eighth, quarter, half, etc.)?

Because — not that I would know anything about this — that is exactly how pot is sold on the black market, at nearly identical prices. So what is the methodology that went into arriving at these prices, and these quantities? One assumes that at least half of the price of black-market weed is to compensate for the risk: smuggling weed across borders, or even being caught with it with evidence that you might want to sell some, carries a heavy jail sentence. Naturally, anyone taking that kind of risk wants to be compensated accordingly.

It certainly doesn’t cost anywhere near $45 to produce an eighth of an ounce of pot. That’s about what it costs to produce a whole plant, which will yield (not that I’d know anything about this) between 3 and 8 ounces of smokable bud (plus a garbage bag full of cookable leaves). Reports indicate that 20% of the price tag in Colorado goes to taxes, as well it should, so where’s the other 80% going? Why does legal weed cost the same as illegal weed?

One would assume, that absent the risk-of-death-and-imprisonment surcharge, plus the fact that absent any stigma or legal risk for growing it, more and more people will go into the grow business and supply will more than meet demand, that prices would fall as low or lower than tobacco. We’ve all been hearing since the ’80s that Marlboro and Philip Morris have their marijuana growing, packaging, and marketing schemes all set up and ready to go, and that a pack of joints will be roughly the same price as a pack of cigarettes.

Indeed, in Northern California, where entire local economies are propelled by marijuana growers (some licensed under the state’s medical marijuana laws, some not so much, and the cops look the other way regardless), there is so much of the stuff floating around that people can’t give it away. I have a good buddy in Oakland who repairs guitars, and he reports that almost everyone tries to pay him for his services in cannabis. So, absent the factors that drive prices up, I ask again: why does legal weed cost the same as illegal weed?

Well, because, I mean, you know, that’s just, like, what it costs, man.

Everyone is so excited that this has finally happened, that no one is bothering to look the gift horse in the mouth, but once the novelty wears off, it will be interesting to watch when the stoners start conducting Republican-esque inquiries into where all this money is going and why. But that’s probably years away, and by then most of us will be too absorbed by Beijing’s Got Talent to care.

2 Responses to Shouldn’t Legal Pot Be Cheaper?

  1. Zannie says:

    I think in the long run prices will fall some, but currently:

    1) It’s still illegal according to the feds, so while the risk of being arrested by state or local authorities has been eliminated in those states, by complying with what the law says to operate legally, they are openly declaring themselves to be breakers of federal law. The risk is somewhat lower, but not gone–merely shifted. It’s no longer a matter of trying to hide what you’re doing, it’s now a matter of hoping the feds don’t decide to enforce, now that they’ve got a handy list of lawbreakers.

    2) There’s more overhead to running a business on the up and up than under the table. There’s health insurance, payroll taxes, paying rent and keeping the lights on in a retail store, having people to staff said store, business licenses, etc. Not to mention these businesses are all new, and have up front costs to cover like remodeling the premises.

    I think once legal pot is more established it will be less of a risk, both legally and financially, and prices will come down.

  2. D.T. says:

    The main reason prices are temporarily high is due to a lack of actual supply of legalized marijuana to meet the demand. To be clear, there is plenty of pot in CO, but the way that A64 works is that recreational shops could open on Jan. 1, but the only shops that could open in the first year are those that were already established as medical dispensaries prior to A64. In order to sell pot starting January 1st meant that they had to transition a regulated portion of their previous medical supply over to recreational supply for sale. They were unable to plant any recreational seeds until January 1st, meaning that there just isn’t enough supply (until the first recreational yield in a few months) to meet the demand. It’s really just simple economics. The prices will drop a lot in a few months.

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