There is a common preconception that the legalization of weed would result in a rise in the price of marijuana. This is because of all the associated taxes and regulatory procedures that would have to be complied with once legalization took place. Though this belief is widespread nothing could be further from the truth. Prohibition always makes prices of anything shoot through the roof. It limits the number of producers a hundred fold and the producers are now risking jail time to supply their products. The main cost of black market weed is for the premium that has to be paid to the cultivator and producer for putting their necks on the line. People are no longer going to buy from black market sellers when they can simply buy the same amount of marijuana for a quarter of the price that comes with guarantees and a refund policy.
Decriminalization and Legalization
Decriminalization is not the same as legalization. Decriminalization is obviously going to reduce the price of marijuana downwards as there is less associated risk with the product. But the argument is that with legalization and the associated taxes and regulations that the price of weed will go up. Consider the following from La Weekly:
Fifteen percent taxes on recreational marijuana under the measure will boost the price of weed compared with that guy who sells it out of his apartment. Sales tax in some parts of LA County is already 10 cents on the dollar. So you’re looking at a steep price increase for your organic produce if you were to buy it legally for recreational use. Now a study says that even the base wholesale price of weed is likely to go up, at least temporarily, if voters legalize it.
While this may seem to make sense at first glance, with a dose of common sense it can be seen how ridiculous this statement actually is. From a first-grade basic economic perspective, if the price gets out of control in a legalized setting a user can simply grow it in his own home. This is free market economics, when one commercial entity goes too far with the price then you can simply go to other vendors. The issue is of course control and monopolies. When marijuana is criminalized then dealers control their own territory and set a standard price. You don’t have much choice so you have to buy from the black market. A 15% tax is actually not that draconian, though with the 10% sales tax the government might do what it does best: collect more taxes that it should. But in comparison to the exponential prices charged in a black-market setting there is simply no comparison.
If recreational marijuana is legal then one in perhaps ten or 15 houses will have a marijuana plant. This will mean that marijuana will become commonplace and friends can simply share. There is little taxes associated with recreational marijuana and it is a much more organic mode of operation. Legalization brings choice into the equation. Some may prefer higher priced marijuana and other may prefer lower priced marijuana. So along with a decrease in price you will have an increase in quality and standards. It’s a win win socially, economically and financially.
All theory and common sense aside, studies and all available data point to the fact that legalization will result in a drop in price. In Washington, legalization resulted in a 65% drop in the price of marijuana, within a mere 3 years of legalization. In California prices for weed have been declining ever since 1996 when the state first legalized medical marijuana. Legalization leads to more acceptance and demand which leads to more cultivators which results in a drop in price. Such has always been the case and such will always be the case despite all the nonsense about marijuana legalization resulting in price increases. And black-market prices also go downhill when marijuana is legalized, meaning legalization is a victory for everybody except criminals, though in a legalized marijuana world the word criminal might not be as appropriate. And in California in particular some researchers have estimated that there is up to 8 times more supply than demand in anticipation of the oncoming legalization in January 2018. This could make prices hit rock bottom and again it all comes back to simple supply and demand. Interestingly, though mid-range marijuana might be taking a hit, prices for high quality marijuana are expected to retain their price and value.
Legal Weed is Cheaper Weed
Common sense and all the available date point to the fact that legal weed is cheaper weed. But the real selling point of legal weed is that it enables people to choose. You can get low grade, medium, grade, high grade, black market or your own personal weed. To each his own, whatever his price or preferences. As long as people are free to choose the market will right itself and they can live by their own decisions, not through government mandates.