Marijuana is Getting Cheaper
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Marijuana is Getting Cheaper
Posted by CN Staff on November 16, 2018 at 11:31:16 PT
By Keith Humphreys
Source: Washington Post
USA -- Wholesale marijuana prices in Colorado have fallen by a third in just the past 12 months, continuing a price crash that began soon after the drug was legalized. Although this implies that some marijuana entrepreneurs are going to go bankrupt, the bigger financial hit will be felt by states that tax marijuana based on its price.Marijuana prices are collapsing in Colorado and in other legalization states (e.g., Oregon, where the price can go as low as $100/pound) because a legal business is dramatically cheaper to operate than an illegal one. Because states generally set their marijuana tax rates as a percentage of price, their revenue per sale sinks in direct proportion to the fall in marijuana prices.
Ironically, in a bid for more tax revenue per marijuana sale, Colorado increased its marijuana tax rate from 10 percent to 15 percent last year, only to see the anticipated added tax revenue wiped out by falling prices in a year’s time.States may have failed to anticipate this problem because of misleading predictions about the effects of legalization. Pro-legalization economist Jeffrey Miron projected in 2010 that marijuana prices would only fall 50 percent when prohibition was repealed, leaving the drug at a price that would yield high tax revenue. That was clearly a rosy scenario.A starker prediction made by drug policy analyst Jonathan Caulkins looks more prescient every day: He forecast that legalized marijuana will eventually fall in price to the level of other easily grown, legal plants such as wheat and barley, such that a joint might sell for a nickel or even become a complimentary item akin to beer nuts at the bar. If that comes to pass, taxes based on a percentage of price might not even cover the costs of the government’s regulatory system for legal marijuana, meaning that rather than helping states’ bottom line the industry would be an outright drain on the public purse.The simplest way for states to retain some revenue from marijuana sales is to tax the drug by weight, as California has always done and Maine has started to do. The main risk of this approach is that producers will sharply increase product potency to create more “bang per ounce.” However, this shortcoming of weight-based taxes can be surmounted by capping the allowed potency of marijuana products, a policy for which there is already a good case to be made on public health grounds.Keith Humphreys is a Professor of Psychiatry at Stanford University and is an affiliated faculty member at Stanford Law School and the Stanford Neurosciences Institute.Source: Washington Post (DC)Author: Keith HumphreysPublished: November 16, 2018Copyright: 2018 Washington Post CompanyContact: letters Website: URL: -- Cannabis Archives 
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Comment #11 posted by The GCW on November 21, 2018 at 14:45:06 PT
In Denver Post too
Marijuana is getting cheaper. For Colorado and some states, that’s a problem
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Comment #10 posted by FoM on November 18, 2018 at 15:10:47 PT
My 2 Cents
Quality will continue to get better and as the market gets flooded the price will drop. Supply and demand will determine prices in the end. When people are allowed to have a small garden of their own it will help people who just can't afford high prices.
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Comment #9 posted by Hope on November 18, 2018 at 11:52:11 PT
Keith Humphreys
I'm pretty sure, is a prohibitionist. He was a drug policy advisor to two administrations. You know he never advised anything but prohibition. He has fifteen articles here on C_News. None of them for legalization. He talks like a guy without an iron in the fire... but he's got opinions and they are more in line with prohibition.He tries to sound like he's not leaning either way... but he is. He's an "Expert". Those so-called, "Experts" have always aligned themselves with prohibitionists as far as cannabis relegalization is concerned. His true colors peek out all over this article and others.
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Comment #8 posted by Sam Adams on November 18, 2018 at 08:46:18 PT
Take a look
actually some of the organic weed is selling at FOUR hundred per ounce.Unfortunately with legalization the media's incredibly bad reporting on cannabis has not stopped!  Have a look - no glut here, Deep Creek's buds sell out quickly....some of these are still not 100% organic......
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Comment #7 posted by John Tyler on November 18, 2018 at 08:44:52 PT
parsley, sage, rosemary, and thyme
Take a stroll down the spice isle of your local grocery store. Look at the jars and bottles of dried herbs and spices such as parsley, sage, rosemary, and thyme. Yes, the pun is intended. at what it is, processed dried leaves, (regular or organic) in various size jars and bottles. Do any of them cost a huge amount of money? No, they do not. Prohibition created huge “overhead” costs that made it expensive. Now the overhead cost is being reduced prices are coming down, which is good for the consumers. The legal states will still be making lots of tax revenue as I am sure they will “tweak” the system with special taxes like those on tobacco and alcohol. It has been a long time coming. Many thanks for everyone's support.
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Comment #6 posted by Sam Adams on November 18, 2018 at 08:44:15 PT
what about quality
this guy should stick to psychology and not business hahahaha. Jeff Miron is an Economics professor, dissing him drops this guy's credibility to zero.Increasing taxes on cheaper weed is just going to kill the legal weed market and drive buyers back to the underground. A big reason for the glut of weed is that it's taxed too high to compete with black market weed - it must be sold in stores at high taxes and thus does not sell at all.The missing part of this discussion is of course quality. I recently talked to Professor P of Dynasty Seeds and Deep Creek Gardens in Oregon. The big glut in Oregon is only "mids" and "regs" i.e. corporate-farmed, low-quality weed. Outdoor grown with chemical ferts and pesticides, machine trimmed, often stored for months. But Deep Creek's hand-trimmed, organic-soil grown herb is still selling out quickly at $300 ounce in Portland dispensaries. Of course outdoor-farmed weed with mininmal post-processing shouod only cost a few dollars per ounce, but it can't with effective tax rates of 50%. People can easily grow a huge crop of schwaggy outdoor weed themselves, why would you pay $150/ounce at the store for that type of herb.A friend of mine just gave me a huge jar, 3 ounces or more, of weed from his vegetable garden this summer. He'd got pounds of it at his house and is struggling to give it away. It's low quality. Just like all other commodities people are only going to pay high prices for very high quality weed - which is still very difficult to produce. There is almost no 100% organic weed being sold in the legal market.
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Comment #5 posted by Hope on November 17, 2018 at 18:01:20 PT
Yep, Hempworld... 
It's been a long time coming. We that have been discussing this problem here for years can certainly say that we have been all about patience, peaceful resistance to unjust laws, telling the truth in the face of lies, and never, ever giving up. It's happening!I like this smiling when I'm checking in with C-News. We've seen a lot of sorrow and injustice and there's been a lot of tears shed. It's time for all this good news and better times. Congratulations to us all! We lived to see it!
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Comment #4 posted by HempWorld on November 17, 2018 at 16:13:55 PT
Yes, Sisters FoM/Hope and Brothers afterburner etc
I warned about this eons ago, in one of my posts;"Market correction will be brutal and without mercy!"Here we are...Big shakeout also in CBD market/products, now!I agree with Hope, legal like tomatoes, hence oh well, I guess I'm getting old, like all of ya posters, here...Ha, ha, ha!
Legal Like Tomatoes!
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Comment #3 posted by Hope on November 17, 2018 at 09:05:36 PT
It wouldn't be an "Outright drain"...
It would be "Legal". "Like tomatoes."
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Comment #2 posted by afterburner on November 16, 2018 at 20:15:34 PT
On the Other Hand: Corporations Drool about Future
‘Very, Very Rich Market’: Why Top Canadian Marijuana Companies All Have Their Eyes on Europe
By Jeff Lagerquist, Yahoo News	on November 16, 2018 out the comments!
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Comment #1 posted by FoM on November 16, 2018 at 11:32:32 PT
The Time is Getting Closer
The prices are dropping and that is a good thing.
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