Study: Marijuana Prices Could Drop to $38/Oz With Legalization

By Jeralyn, Section Crime Policy
Posted on Thu Jul 08, 2010 at 08:36:00 AM EST
Tags: marijauna reform (all tags)

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The Rand Corporation has released a new report finding legalization of marijuana in California could drop prices as low as $38.00 per ounce.

Researchers associated with the Rand Corp.'s Drug Policy Research Center said Wednesday that not much is certain about the potential impact of Proposition 19 except that the price of California's choicest weed could plunge more than 80%, down from $300 to $450 per ounce to about $38.

"That's a significant drop," said Beau Kilmer, co-director of the center. "We're very clear about the fact that the price will go down."

The implications: [More...]

Such a low price could also affect pot prices across the nation, encourage marijuana tourism in the state, increase the amount of pot shipped out of state, disrupt the smuggling of marijuana from Mexico and stimulate an underground market designed to avoid high taxes that might be imposed.

The report is called Altered States and is available here.

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Study: Marijuana Prices Could Drop to $38/Oz With Legalization | 44 comments (44 topical)

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Um...that's the idea (5.00 / 1) (#1)
by SeeEmDee on Thu Jul 08, 2010 at 07:47:30 AM EST

'...disrupt the smuggling of marijuana from Mexico..."

Uh-huh. Just like Al Capone and his bully-boys were 'disrupted' when booze became legal again. With vastly greater benefit for all (save for the control-freak, tight-arsed prudes who believe themselves to be eminently qualified to be their brother's keepers).

And as for

"...stimulate an underground market designed to avoid high taxes that might be imposed."

Only if the State government gets too greedy. The matter of the underground trade in tobacco products should serve as warning against that. But all in all, it would be vastly better than the idiocy of prohibition and the Rube Goldberg insanity of MMJ laws to work within that prohibition.

Re-legalize it already. We're too broke to play this stupid game anymore....

So, in other words, (5.00 / 1) (#2)
by scribe on Thu Jul 08, 2010 at 08:04:24 AM EST

one of the side benefits of MJ re-legalization would be that the (primarily-Mexican) drug cartels would have less money with which to buy heavy weaponry and such?

How could that be a bad thing?

Oh, yeah. I forgot. That would remove one of the bases for the huge budgets the police entities currently have.

Sounds downright Utopian:) (none / 0) (#3)
by kdog on Thu Jul 08, 2010 at 09:04:29 AM EST

But the two ton elephant in the room is how many people eat off of those 500 dolla lids, both in the trade and in the law enforcement anti-trade...if we legalized and the price reflected the true cost of production, even with a semi-obscene tax rate, you're looking at untold numbers of people with less food on their table....it is America's #1 cash crop.

It's still worth doing of course, because ending the tyrannical prohibition is the right thing to do...but you will have a lot of unhappy people with less cashish in their pockets.

How much will the Duncan Hines version (none / 0) (#4)
by Militarytracy on Thu Jul 08, 2010 at 10:42:22 AM EST

sell for though kdog? There will be a new baking frontier out there...gourmet cookies to be sold :)


: Good point... (none / 0) (#7)
by kdog on Thu Jul 08, 2010 at 11:04:59 AM EST

creative entrepreneurship can and would pick up at least some of the lost revenue/lost jobs slack...not to mention the new opportunities with industrial hemp.

I live in CA, and I expect (none / 0) (#12)
by cenobite on Thu Jul 08, 2010 at 12:59:45 PM EST

That most commercial grow operations can't survive at that price. That could nearly eliminate the commercial market, so if you want some, you better learn to grow it yourself.


Really think so? (none / 0) (#14)
by kdog on Thu Jul 08, 2010 at 01:15:52 PM EST

I would think taking away the threat of arrest and asset seizure (aka legal theft) from commercial growers, $38 bucks an oz retail sounds about right. Under prohibition you gotta make a boatload of cash and fast before storm-troopers break down your door...hence the 400-500 lid retail prices. Every harvest could be your last.

Once a commercial op can grow and grow big without threat of arrest and seizure, you can thrive at a much lower profit margin. Think about the retail prices of oregano or lettuce.


Yeah (none / 0) (#15)
by squeaky on Thu Jul 08, 2010 at 01:22:59 PM EST

For most herbs, coffee and tea $38/pound is top dollar.

$38/ ounce falls more in the territory of saffron. Saffron, unlike MJ is a tiny plant and you get the actual saffron from scraping it off the flower stamen.

MJ, high quality humbolt can be 14 foot plants that yield several pounds per plant.

Even with a heftyf government tax. $38/ oz will yield substantial profits for farmers, imo


Actually, safron is about $15/g, or $400+/oz. (none / 0) (#17)
by sarcastic unnamed one on Thu Jul 08, 2010 at 01:56:36 PM EST

I'm not sure you can grow bud of (today's) $400/oz quality and retail it at $38/oz and make a decent profit throughout the production/distribution chain, particularly if your only market is Cali.


Yes (none / 0) (#19)
by squeaky on Thu Jul 08, 2010 at 02:03:50 PM EST

I got my ounces and grams mixed up.... but you can get saffron for $100/oz. I have a friend in spain who grows it, have seen the plants, growing and harvesting process and yield. It would take a few hundred saffron plants to start coming close to the yield of one MJ plant.

More people use MJ in the us than oregano. And MJ produces more herb than an oregano plant.


1) Only legal to grow and sell MJ in CA, not US. (none / 0) (#31)
by sarcastic unnamed one on Thu Jul 08, 2010 at 04:45:37 PM EST

Oregano production/distribution/etc is not regulated by the CA's ABC.
Oregano is a commodity, $400/oz premium quality bud is not.

No question the price would come down, over time, but I doubt to the $38/oz level.

Good wine will cost you a bundle, plonk not so much.


Totally agree with you (none / 0) (#18)
by D Jessup on Thu Jul 08, 2010 at 02:02:01 PM EST

In 1970 and 1971 the starting price was 8 dollar a pound for anything over 25 lbs. Ounces on the street was 6 to 12 dollars depending on the quality.


Needs to be cleaned up (none / 0) (#16)
by waldenpond on Thu Jul 08, 2010 at 01:43:55 PM EST

Many commercial growers are just not qualified.... too many growers are using rentals and overloading the electrical systems. Have been looking at houses ... holes in ceilings, really bad wiring, the smell, a garage in bad shape, one house some morons had even cut out two support posts under the house to make room for more plants.

You'll still get decent growers with a good price. I know many growers are against legalization but I'm voting for it.

ouch.. the site keeps going down....


: Yeah... (none / 0) (#20)
by kdog on Thu Jul 08, 2010 at 02:10:43 PM EST

and once the illegality is removed you'll see smart businesspeople get in the game, people not willing to take the great risk because they have other legal options to make a good living...right now it's a game for outlaws.
And if legalization ever did happen I would feel terrible for their loss of livelyhood...but the greater good would be served.

: Exactly (none / 0) (#40)
by cenobite on Thu Jul 08, 2010 at 07:17:01 PM EST

This is my understanding of how things actually work. Outdoor plots are mostly history because of DEA aerial surveillance.
A small operation of a 5'x10' hydroponic tray with 3 or 4 lights is not going to make rent on the structure, electricity and agricultural supplies with an 80% cut in revenue.
Really large operations (warehouse-sized) are unlikely even if the proposition passes because those will be attractive DEA targets -- and the DEA won't be stopped by California law.
Put me down for prices won't drop nearly that far.

Tax it at 100% and use the revenue for (none / 0) (#5)
by observed on Thu Jul 08, 2010 at 11:00:31 AM EST

alcohol and tobacco education, and education about the dangers of texting and driving.

100% works... (none / 0) (#6)
by kdog on Thu Jul 08, 2010 at 11:04:00 AM EST

still a big savings to the consumer, and doesn't leave much wiggle room for the black marketeers.


tax it as you tax booze, no more, no less (none / 0) (#8)
by Dadler on Thu Jul 08, 2010 at 11:50:37 AM EST

Just because pot has been demonized beyond all recognition, and just because it is "different", doesn't mean it deserves to be taxed at a rate any greater than legal inebriants that cause much more social harm and addiction problems.


Higher tax rate than booze... (none / 0) (#9)
by kdog on Thu Jul 08, 2010 at 11:55:44 AM EST

is a compromise I'm willing to accept...at least for 6 months, then I'll start b*tchin' about the taxes:)

As for observed's idea to fund alcohol and texting education...I think the states have their eyes on the general fund for that cashish.


: If I grow my own (none / 0) (#10)
by Militarytracy on Thu Jul 08, 2010 at 12:27:25 PM EST

I ain't paying taxes. And by god they had better allow everyone to grow it, because if you can't...then a big planthead like me wonders what's next? Pretty soon I won't be able to grow tomatoes or something.

$38 is probably on the high side (none / 0) (#11)
by Abdul Abulbul Amir on Thu Jul 08, 2010 at 12:32:56 PM EST

No pun intended. The stuff is no harder to grow than tomatoes.

November Ballot Measures (none / 0) (#13)
by squeaky on Thu Jul 08, 2010 at 01:11:05 PM EST

Some Democrats are banking on the fact that putting a MJ measure on the ballot will bring out Democrats who would have stayed home..

That would be a nice side effect, imo.

that price would be (none / 0) (#21)
by cpinva on Thu Jul 08, 2010 at 02:56:49 PM EST

pretty close to what it was in the 70's, or so i've heard.

: thats still twice as (none / 0) (#26)
by Capt Howdy on Thu Jul 08, 2010 at 03:58:50 PM EST

much as when I was in college in the 70s.
15 bucks an oz. seems like a long time ago.

So how long will it take before (none / 0) (#22)
by BTAL on Thu Jul 08, 2010 at 03:40:56 PM EST

"Big MJ" is under attack from the left like "Big Tobacco"?

Never (none / 0) (#23)
by squeaky on Thu Jul 08, 2010 at 03:52:43 PM EST

Turns out that MJ has a prophylactic effect on cancer. Not to mention a host of other medical health benefits. On the other hand nicotine is a poison, and tobacco is highly addictive.

Not the case with MJ. Were it difficult to grow and addictive US corporations would have successfully lobbied for legalization years ago.


I don't know... (none / 0) (#24)
by kdog on Thu Jul 08, 2010 at 03:55:07 PM EST

if it's when mj is as harmful as tobacco, never.

If it's when Monolith MJ Corp.'s CEO moves operations & jobs to Malaysia, the very next day.


That's the point (none / 0) (#27)
by BTAL on Thu Jul 08, 2010 at 03:58:54 PM EST

commercial production of MJ will be just like tobacco. Not only will the major corporations, like big tobacco immediately jump in, so will the govt with its eye on another massive tax opportunity.

All one needs to see is the price of a pack of cigarettes in NYC to know where this is going.

The nirvana of legal MJ will not be what is being touted here.


I dont have a problem (none / 0) (#28)
by Capt Howdy on Thu Jul 08, 2010 at 04:16:35 PM EST

at all with gov taking a piece. we should encourage it. it will ultimately be the most logical argument for legalization.

anyway, its easier to grow than tomatoes. they cant really legalize it with out allowing growing.
or it they think they can I wish them luck.


Try growing tobacco without permits (none / 0) (#29)
by BTAL on Thu Jul 08, 2010 at 04:20:58 PM EST

and see how far you get. Same with the still in you back yard.


: BS (none / 0) (#30)
by squeaky on Thu Jul 08, 2010 at 04:42:17 PM EST

You may grow up to 1/10 of an acre for personal use. No permit is needed for personal use.
A permit must be obtained to grow it commercially. It used to be very difficult to get a license but the rules have been changed recently to make it easier.

: You can certainly grow wine grapes, (none / 0) (#32)
by sarcastic unnamed one on Thu Jul 08, 2010 at 04:49:32 PM EST

hops, barley, corn, potatoes, etc. in your back yard and ferement them legally. Home-distilling the resulting alc, however, is not legal.

If you read the linked article (none / 0) (#33)
by sarcastic unnamed one on Thu Jul 08, 2010 at 04:50:45 PM EST

you'll see that legalizing small amounts (5 plants, iirc) of home-growing is part of the measure.


I'm not so sure Marlboro, et all, will immediately (none / 0) (#34)
by sarcastic unnamed one on Thu Jul 08, 2010 at 04:51:45 PM EST

jump in. Still a stigma attached to the stuff.


they are such a (none / 0) (#35)
by CST on Thu Jul 08, 2010 at 05:01:41 PM EST

family friendly brand after all :)

I bet they will jump in. Not much worse of a stigma than regular smokes. That's a niche market they are familiar with anyway. I can't picture too many cig smokers who would draw that line in the sand.

They would be stupid not to.


Dunno, I think the cig smoking crowd (none / 0) (#36)
by sarcastic unnamed one on Thu Jul 08, 2010 at 05:25:30 PM EST

is older and more conservative, maybe, than you think it is. Maybe it's not, though, who the heck knows.

Since the measure requires the ABC to regulate MJ, as the ABC does now with alc, I would imagine the big alc distributors would be the ones who'd be in the best position to pick up that bud and run with it.

If that's the scenario, probably of the $38/oz retail price:

$19/oz will go to the liquor store,
$9.50/oz will go to the distributor &
$9.50/oz to the farmer

Can a farmer produce and sell $400/oz quality-level bud for $9.50/oz and still make an acceptable living?

Again, who the heck knows, but I'm not sure the answer's a definite yes...


: I (none / 0) (#44)
by drkazoodi on Sun Oct 17, 2010 at 10:32:25 AM EST

Don't really think so... you must live in California or something. Here in the South (virginia), where cigarettes are made, everybody smokes! Especially kids in their 20s

Hasn't seemed to hurt... (none / 0) (#38)
by kdog on Thu Jul 08, 2010 at 05:43:11 PM EST

Bob Marley's brand, one of the most popular entertainers of the 20th century.

Any stigma is tied to the illegality and decades of drug war propaganda...once legalized I think it'll fade in short order.

And it is such a proven commodity with so much profit potential...no amount of stigma is gonna keep the fat cats outta this game.


Are you seriously equating (none / 0) (#39)
by sarcastic unnamed one on Thu Jul 08, 2010 at 05:54:54 PM EST

Bob Marley's "brand" to Marlboro's?

Ah well, I guess we shall all see what happens when/if Prop 19 passes...


Why not... (none / 0) (#41)
by kdog on Fri Jul 09, 2010 at 07:59:43 AM EST

is his face, adorning t-shirts posters and the like, not as recognizable as the Marlboro logo, if not more so? And his name and face may as well be a synonym for the sweet leaf, as much as he praised the plant...he was a walking billboard for the stuff, and is to this day, long after his death.

And there is no stigma, he is beloved by user and non-user alike.


We're just going to have to agree. (none / 0) (#42)
by sarcastic unnamed one on Fri Jul 09, 2010 at 12:00:51 PM EST

to disagree on this one...


: Cool brother... (none / 0) (#43)
by kdog on Fri Jul 09, 2010 at 01:19:16 PM EST

if there is a stigma, my arse would be blind to it anyway...no stigma to sacraments:)

No doubt... (none / 0) (#37)
by kdog on Thu Jul 08, 2010 at 05:28:40 PM EST

any idea has its pros and cons, eventual corporate dominance of the industry is inevitable. Though I think small businesses would thrive as well, providing superior product to the mega-corps...much like beer and small brewers catering to the connoisseur.

The big plus is so many fewer chains on people's wrists, so many cages unlocked...that's the important thing.


where (none / 0) (#25)
by Capt Howdy on Thu Jul 08, 2010 at 03:57:42 PM EST

do I sign up?