There are high taxes associated with the production and purchase of pot, but that still hasn’t stopped prices from sliding under legalization. In California, the boutique growers can probably maintain a foothold — at least for a while — but the bottom is dropping our for the mids market thanks to over-saturation.
It’s not exactly breaking news that decriminalization reduces prices for cannabis; without the artificial scarcity and monopoly-like control of criminal elements, prices tend to drop substantially. But with legalization, which entails the establishment of regulations and taxes, there is of course the possibility of higher prices.
There are still those who point to this possibility, like critics of Prop 64 who held it out as a potential in the days leading up the election.
From the 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.
That prediction hasn’t exactly panned out, at least not yet.
In Washington, legalization precipitated a 65 percent drop in the per-gram price of cannabis.
From the Washington Post:
The current retail price of $7.38 per gram (including tax) represents a 67 percent decrease in just three years of the legalization, with more decline likely in the future.
And when you talk to those who’ve been participating in California’s cannabis industry for years, they’ll tell you prices have been steadily declining since the initial move to decriminalize back in 1996.
Among them, Neil Dellacava, a cultivator and owner of boutique cannabis brand Gold Seal SF and a purchaser at Harvest medical cannabis dispensary, who told Cannabis Now that the market has seen a major decline in prices since the earliest days of Prop 215.
“When it first started there weren’t a lot of people growing; you could sell for like $4,000 even $5,000 a pound… pretty much OG Kush went for $4,000 and any other passable indoor went for $3,000,” he said — but now? “People might get $2,200 or $$2,800 for indoor – some people still pay like $3,200 for quality.”
And the prices on the illicit market? He says they’re not actually that much cheaper – $1,600 to $2,000 per pound for indoor, and those prices will also continue to fall as more growers flood the market with mid-grade bud.
But Dellacava believes while the market for mid-grade weed is seeing massive over-saturation — and by extension a steep drop in prices — the demand for boutique-quality cannabis will hold prices up for an elite segment of the market.
“There’s going to be a lot of people growing; yes the price is going to go down, but it’s going to go down for mediocre weed — the market will be flooded” he said. “As far as the top shelf market, for California especially, personally I feel people care about quality and, at least for a couple of years, growers who bring quality will be able to hold their numbers.”
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